Estee Lauder Companies Inc. (EL) shares plummeted over 9% in pre-market trading on Tuesday as the cosmetics giant delivered a dismal earnings outlook for the fiscal third quarter and unveiled a massive restructuring plan involving job cuts of up to 7,000 positions.

For the fiscal third quarter ending March 31, 2025, Estee Lauder expects adjusted earnings per share (EPS) of $0.20 to $0.30, far below analysts' consensus estimate of $0.63. The company cited continued weakness in retail trends, particularly in the Asia travel retail business, as a significant drag on organic net sales growth, which is projected to decline 10% to 8%.

The gloomy forecast was accompanied by Estee Lauder's announcement of its "Beauty Reimagined" strategic vision, aimed at restoring sustainable sales growth and achieving a solid double-digit adjusted operating margin over the next few years. As part of this initiative, the company plans to expand its Profit Recovery and Growth Plan, including a significant expansion of its restructuring program.

The expanded restructuring program will result in a staggering $1.2 billion to $1.6 billion in pretax charges, consisting of employee-related costs, contract terminations, asset write-offs, and other expenses. Estee Lauder estimates a net reduction of 5,800 to 7,000 positions, including approvals to date, representing a substantial downsizing of its workforce.

The company's CEO, Stéphane de La Faverie, acknowledged the challenges ahead, stating, "While we are not satisfied with our third quarter outlook, it primarily reflects weak retail sales trends in our Asia travel retail business, which deteriorated in our second quarter driven by Korea."