The news: Estée Lauder plans to eliminate 9,000 to 10,000 positions as part of its restructuring, up from its prior estimate of 5,800 to 7,000. The additional cuts are expected to generate another $200 million in savings as CEO Stéphane de la Faverie pushes a broad overhaul, per Bloomberg.

More than 70% of the new cuts are tied to department store roles, reflecting a shift in investment toward faster-growing digital and specialty channels like Ulta, Sephora, Amazon, and TikTok Shop.

Why is this happening? Traditional beauty channels have been losing share to ecommerce and specialty retailers for years, and the trend is still accelerating. Ecommerce’s share of US cosmetics and beauty sales is projected to grow from 23.0% this year to 27.6% by 2030, per our forecast.

Estée Lauder has already been moving in that direction. Eleven of its brands now have Amazon storefronts, up from just three a year ago, and its online sales hit records in fiscal 2025.

The timing of the cuts is also tied to its confirmed pursuit of Puig. The two companies are in talks on a deal that would create a beauty company with a market cap of roughly $40 billion. Cutting roles now could make integration smoother and help avoid deeper layoffs if a deal goes through.

That said, Puig’s premium positioning adds risk at a time when prestige beauty is losing some ground to mass-market alternatives. Mass fragrance sales rose 15% in 2025, compared with 5% for prestige, per Circana.

Implications for brands: Estée Lauder’s move signals the company knows its old playbook no longer works. Expanding into channels like Ulta, Sephora, Amazon, and TikTok Shop requires significant changes, including faster content cycles, creative tailored for social platforms, and direct customer relationships that department store counters never enabled.

A combination l with Puig would add more leverage with retail partners and a broader portfolio, but integration at that scale could pull focus away from product innovation during an already fragile turnaround. Brands in prestige fragrance and premium skincare should watch for any slowdown in innovation and be ready to capture share if gaps emerge.