The Estée Lauder Companies (EL) Deutsche Bank dbAccess 2024 Global Consumer Conference summary

Profit Recovery Plan and margin initiatives

• Focused on gross margin recovery through inventory management, reduced obsolescence, and discounting improvements.

• Enhanced demand forecasting and process changes to improve supply chain agility and SKU accuracy.

• Innovation pipeline streamlined to prioritize high-margin, profitable launches, with benefits expected in the next fiscal year.

• Manufacturing footprint right-sized to match production needs, with procurement and restructuring programs driving further savings.

• Targeting $1.1–$1.4 billion in net savings over two years, with reinvestment accelerating in fiscal 2025.

Capital allocation and M&A strategy

• Recent acquisitions include full ownership of Deciem and the one-year anniversary of Tom Ford.

• Free cash flow prioritized for debt repayment and shareholder returns, with disciplined inventory management supporting liquidity.

• Ongoing market scanning for margin-accretive M&A, especially in luxury skincare.

• M&A environment seen as conducive, with expectations for increased activity in coming months.

Working capital and operational efficiency

• Inventory levels have improved, with further reductions planned and supply chain agility enhanced by new facilities in Asia.

• Additional working capital savings expected from payables and receivables management.