The Estée Lauder Companies (ELC) is close to resolving a US$210 million lawsuit taken collectively by shareholders who had alleged the American beauty giant had concealed its over-reliance on daigou sales within China.
If approved, an agreed settlement – filed on 7 May in a Manhattan federal court and requiring approval by US District Judge Arun Subramanian – will provide a recovery of that amount in cash.
This will resolve the proposed securities class action pending against defendants ELC, ex-CEO Fabrizio Freda and ex-CFO Tracey Travis. The proposed agreement, dated 6 May, was entered into by both parties.
The proposed settlement covers “all persons and entities that purchased or otherwise acquired the publicly traded common stock of The Estée Lauder Companies Inc. during the period from 3 February 2022 through 3 February 2025.”
The claim alleged The Estée Lauder Companies concealed an over-reliance on daigou resellers in China, particularly related to Hainan offshore duty-free.
When the company disclosed that a Chinese government crackdown on these resellers, effective 1 January 2022, was badly hurting sales, shares dropped -19% in November 2023, erasing some US$8.7 billion in market value.
The action commenced on 7 December 2023 through the filing of an initial complaint in the United States District Court for the Southern District of New York alleging violations of the Securities Exchange Act. It was served on behalf of those who purchased or otherwise acquired Estée Lauder common stock during the class period.
On 22 March 2024, an amended claim was filed, alleging that from 3 February 2022 through 31 October 2023, inclusive, the price of ELC common stock was artificially inflated through false and misleading statements and omissions.
In August 2025, the parties began discussions over a negotiated resolution. Ultimately – with an adjusted time frame of 1 January 2020 through 28 February 2025 – the court granted the lead plaintiff’s motion.
Now, it appears the end game is near. ELC will recover part of the costs through insurance and will continue to pursue its encouraging revival through Beauty Reimagined, the group’s 2025 strategic, multi-year turnaround plan led by CEO Stéphane de La Faverie to restore sales growth and profitability. ✈
