In re The Estée Lauder Companies, Inc. Securities Litigation

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.

The action alleges that during the Class Period, February 3, 2022, and October 31, 2023, Estée, its former CEO Fabrizio Freda, and its CFO Tracey Thomas Travis (collectively, Defendants) misled investors by touting Estée’s revenue growth and issuing favorable financial guidance while failing to disclose its reliance on grey-market revenue sources.  Specifically, the action alleges that (1) Estée’s revenue growth prior to the Class Period was largely driven by “daigou” resellers who purchase luxury goods at reduced, duty-free prices and resell them to end-consumers at a price below retail; (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 initial complaint was filed in the action on January 22, 2024, asserting 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 February 20, 2024, the court consolidated 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 and Labaton Keller Sucharow as lead counsel.

On March 31, 2025, Labaton Keller Sucharow overcame Defendants’ Motion to Dismiss, with U.S. District Judge Arun Subramanian noting that “Plaintiffs successfully point to several misleading omissions, and even the allegedly forward-looking statements and opinions at issue are mired in half-truths.”  

"Sure, daigou are gray, not black, markets,” said Judge Subramanian.  “But omitted sources of revenue don't need to be 'fraudulent or otherwise illegal' for a statement to be misleading . . . Estée Lauder touted the reasons for its success while leaving out the parts of the truth it found inconvenient.  The telling of half-truths—that's what the securities laws don't tolerate."  Furthermore, “while defendants enjoy protection under the PSLRA for their forward-looking statements, they aren’t entitled to base their projections on half-truths about the current goings-on in the market.”

The case is In re The Estée Lauder Companies, Inc. Securities Litigation, No. 23-cv-10669 (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.