McAlice v. The Estée Lauder Companies, Inc.

Labaton Keller Sucharow serves as court-appointed lead counsel in a securities class action against The Estée Lauder Companies, Inc. (Estée or the Company), a leading manufacturer and seller of luxury cosmetics, skincare products, and other related goods.

On January 22, 2024, Labaton Keller Sucharow filed a securities class action lawsuit (the Complaint), on behalf of its client West Virginia Laborers Pension Trust Fund, against Estée and certain Estée officers (collectively, Defendants).  The action asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission Rule 10b-5 promulgated thereunder, on behalf of all persons or entities who purchased or otherwise acquired Estée common stock between February 3, 2022, and October 31, 2023, inclusive (the Class Period).  The Complaint expands upon a related action against Estée by extending the initial class period of August 18, 2022, to May 2, 2023.

On February 20, 2024, the court consolidated the two related actions and appointed Macomb County Employees’ Retirement System, Macomb County Retiree Health Care Fund, and Wayne County Employees’ Retirement System as lead plaintiffs.

The action alleges that during the Class Period, Defendants misled investors by touting Estée’s revenue growth and issuing favorable financial guidance while failing to disclose that (1) Estée’s revenue growth prior to the Class Period was largely driven by purchases made by resellers, (2) stricter regulations on resellers were causing them to purchase fewer Estée products, which was resulting in elevated inventories throughout the supply chain and a sales slowdown for the Company, and (3) these elevated inventory levels were forcing Estée to discount its products in an attempt to reduce inventory, leading to lower revenues and profit margins.

The truth began to emerge through a series of disclosures in late 2022 and 2023.  As Estée’s product sales to resellers slowed down, inventory piled up forcing the Company to repeatedly lower its revenue forecasts which partially exposed the Company’s supply chain and inventory issues to investors.  The full truth about Estée’s issues was revealed on November 1, 2023, when Estée lowered its financial outlook citing a slower pace of recovery in net sales and profit margins.

The consolidated case is McAlice v. The Estée Lauder Companies, Inc., No. 1:23-cv-10669-AS (S.D.N.Y.).  Labaton Keller Sucharow represents lead plaintiffs Macomb County Employees’ Retirement System, Macomb County Retiree Health Care Fund, and Wayne County Employees’ Retirement System.

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