It’s safe to say that for any business, being associated with one’s grandparents or older family members doesn’t leave much for growth. Reaching younger consumers is one of the main reasons Stephane de La Faverie, the new chief executive officer of prestige beauty conglomerate Estee Lauder, has instituted a sprawling strategic overhaul of the company.
In the past, the company has been described as resistant to change, due to an antiquated distribution strategy and a failure to revise its digital presence to meet consumers where they are: online. That hasn’t boded well for Estee Lauder, whose profit fell more than 100% in 2025 from the previous fiscal year, which ended June 30.
Estee, which owns marquee brands like its namesake, Mac, Clinique, and La Mer, faces a saturated beauty landscape and stiff competition from rivals both domestically and abroad.
In the fight to win over younger consumers, Estee has launched a digital-first focused turnaround strategy. It has established a presence on TikTok Shop, the social media platform that is popular with Gen Z. It recently announced a partnership with ecommerce platform Shopify and expanded its offerings on Amazon Premium Beauty to new countries. It rolled out a new collaboration between M.A.C. and Sephora, which de La Faverie told analysts on a call last month would help Estee “better connect with younger consumers.”
“Fundamentally, the strategy is to start winning more consumers,” Akhil Shrivastava, chief financial officer, said on the call.
“The company was really not spending enough time and effort on digital platforms or connecting to the younger consumer,” said Dan Su, an analyst at Morningstar. “But there has been a change of direction since the new management took over this year. There is a real sense of urgency that they need to step up on the digital initiative.”
Teens already represent 10% of the U.S. beauty market, according to data from Boston Consulting Group. Though millennials currently make up the largest cohort of beauty markets, Gen A and Z are “projected to account for the bulk of the population in the fastest-growing beauty markets,” according to a report.
The company’s efforts to capture younger shoppers come amid an environment where consumers have pulled back on discretionary spending due to massive tariff headwinds and economic uncertainty. Demand for mass channel beauty has outweighed prestige for the first time in several years, according to data from market research company Circana.
For shoppers to choose to buy cosmetics with a heftier price tag, analysts say Estee needs to prioritize investing in product innovation to match consumer trends and demand, a phenomenon that has over the past decade become largely shaped by social media.
Estee has long relied on consumers seeking out its established brand names, according to Sky Canaves, an analyst at EMarketer. “Their really big brands haven’t been quite as innovative with their products to respond to what younger consumers are looking for, at least in the U.S.”
For instance, analysts say haircare is a missed opportunity for capturing new consumers and growing sales. Prestige haircare is a high-growing segment in beauty and especially popular with younger shoppers due to the so-called “skinification,” or skincare-like treatment of hair, according to Canaves. At Estee, net sales in haircare declined 7% in the first fiscal quarter of 2026 from the same period last year.
But the company has excelled at tapping into prestige fragrance, which it projects to be prestige beauty’s fastest-growing category in fiscal year 2026. Fragrance sales grew 13% in its last quarterly earnings report, driven by nearly triple-digit growth by perfumery Le Labo.
“Younger consumers are using fragrance as a tool for part of their wardrobe; you’re seeing them use it as self-expression,” said Angelica Gianchandani, a global brand strategist and New York University professor of e-commerce. “Estee Lauder is rethinking how they appeal to that younger consumer, and thinking about how they are buying and what their behaviors are.”
In an era where newer, trendy indie brands and Korean beauty have disrupted more established players, part of the mad-dash to capture new consumers is deriving the right combination of product innovation, influencer marketing and social media, according to analysts.
But Canaves said that in general, Estee has not leaned hard enough into influencer marketing and social media in the way that a lot of their competition has, especially smaller indie brands.
“I think younger consumers are constantly looking at new products, refreshing what they buy, and are open to trying new brands–they haven’t really invested as heavily there,” she said.
Others are more encouraged by the company’s efforts. “They really stepped up in terms of digital engagement in North America, putting more of their top selling brands on Amazon platforms, working more closely with the content creators on the digital platforms to reach more consumers- the younger generation of beauty shoppers,” Su, the Morningstar analyst, said.
Analysts say Estee Lauder’s reliance on department stores and travel retail as its primary distribution strategy has been a hindrance to growth, given that younger consumers prefer shopping at beauty specialty stores like Sephora and Ulta, as well as online stores like Amazon Premium Beauty and TikTok Shop. Recently, the company has been steadily increasing its presence in these platforms.
“For a long time, Estee Lauder was very focused on departmental stores, and we have seen a lot of departmental store closures in the last couple of years. You can understand if the distribution is not working and is something that caters to an older audience, then that’s what you’re stuck with,” said Pallavi Seghal, a luxury brand consultant who works primarily with startups. She said she has not worked with EL directly.
The company has long struggled with sales in China due to promotions and discounting that marred its brand image. But analysts say they are seeing improvement in consumer sentiment in the region, as the company brings in new consumers due to more innovation. China sales grew 9% in Q1 2026, compared to the previous year.
However, Estee Lauder experienced lesser growth at 4% in Europe and a 1% decline in the Americas.
That tracks, according to Seghal.“When it comes to the European and US markets mainly, it’s more of a brand that older consumers identify with,” she said.
Estee Lauder has not yet responded to a Times Square Investment Journal request for comment.