Shares of Estée Lauder (EL) plunged 21% after the cosmetics company slashed its quarterly dividend payment to stockholders in half.
The company, known for its make-up and fragrances, reduced its distribution to $0.35 U.S. a share, down 47% from $0.66 U.S. previously.
Estée Lauder previously had a strong dividend yield of 3.86%.
In a written statement, the company said it is necessary to cut the dividend because of weak consumer demand for its products, notably in China.
Along with the reduced dividend payout, Estée Lauder also lowered its forward guidance, saying it now expects a profit in the current quarter of $0.20 U.S. to $0.35 U.S. per share.
The new outlook is well below the consensus forecast of analysts that called for earnings per share (EPS) of $1.06 U.S.
Estée Lauder added that it expects its net sales to decline 6% to 8% in this year’s fourth quarter. That compares with an estimate on Wall Street of 0.24% growth.
The cosmetics company also recently promoted longtime executive Stephane de La Faverie to be its new chief executive officer (CEO) starting on Jan. 1, 2025.
The latest plunge in Estée Lauder’s stock accelerates a steady decline in the share price that has been ongoing for years.
So far in 2024, Estée Lauder’s stock has decreased 53% to trade at $68.94 U.S. per share.