The New Guard: Fabrizio Freda Takes the Reins

Fabrizio Freda, recently appointed ceo of the Estée Lauder Cos., reveals his sweeping vision for transforming the prestige player into a global powerhouse.

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Appeared In
Special Issue
Beauty Inc issue 05/08/2009

Lauder praises the 51-year-old Freda for bringing new focus to the company, citing admirably his dictum, “Don’t get lost in the weeds.” He describes his new ceo as possessing an unusual combination of “market savviness and marketing savvy.” Lauder says Freda is a leader who has the focus to take the constituent companies and market countries in multiple directions with a multidisciplined approach, adding that his partnership with William has filled him with “optimism and happiness.”

“We are going to see the golden era of the company,” Lauder says, with a surge in energy and profitability that “we can be proud of.” He expects major improvements to be made in operations, which he admits “were the caboose of the Lauder train.”

In early February, Freda began to outline the broad strokes of a four-year restructuring plan is expected to help achieve just that. The goal is to wring out $450 million to $550 million in costs. The first steps of that effort include trimming its workforce by 6 percent, or 2,000 employees, over the next 18 to 24 months.

As a result of the plan, the firm expects to achieve an operating margin of 12 to 13 percent. Longer term, Freda forecasts the company has the potential to achieve a 15 percent operating margin with a solid growth plan. He acknowledges because of the recession’s grip, Lauder is now operating in the 7 to 8 percent arena. The company’s goal — even in this recession period — is to grow 1 percent ahead of the global markets. “If it is a recession, the markets will be flat, so we expect to grow at least 1 percent,” Freda says. “If one day the markets go back to growing 5 percent a year, we expect to grow a minimum 6 percent a year.”

The unveiling of the plan to resize the company led a few old Lauder hands to grumble that these ideas were either obvious or already in the works. Freda, however, demonstrates a perceptive power capable of not only being able to grasp small details, but also to soar to near operatic heights.

For instance, to leverage Lauder’s scale, Freda plans to organize the company’s brands by channel and consumer segmentation. His leadership team, effective July 1, is slated to include John Demsey, who currently is the group president of the Estée Lauder, MAC Cosmetics, Tom Ford and Prescriptives brands, and will now add the Specialty Group of Bobbi Brown, La Mer and Jo Malone to his portfolio.

Reporting to Demsey and taking on a new role will be Jane Hertzmark Hudis, who currently leads Beauty-Bank, Origins and Ojon, and will become global brand president of the Estée Lauder brand; Maureen Case, who will continue as the global brand president of the Specialty Group and oversee the Bobbi Brown, La Mer and Jo Malone brands, and Caroline Geerlings, who will continue in her role as senior vice president/general manager, Prescriptives.

Lynne Greene, currently the global president of Clinique, will now become the global brand president of the Clinique, Origins and Ojon brands. Reporting to Greene will be Jane Lauder, the senior vice president/general manager, Origins.

Veronique Gabai-Pinsky, who currently oversees Aramis, and Designer Fragrances, will become the global brand president, Aramis, Designer Fragrances, Beauty-Bank and IdeaBank, Lauder’s entrepreneurial think tank. Dominique Conseil, who is currently president of Aveda, will become the global brand president of Aveda, and the salon and pharmacy channels. Peter Lichtenthal will continue in his role as president of Bumble and bumble and Darphin, reporting to Conseil.

When asked what mark he would like to leave on the company, Freda seizes upon what he sees as the difference between being an international company and a global one. “We are a very strong North American company with an international business, which means we have been historically bringing the best of North America to the rest of the globe,” he says.

His vision for the next 10 years is “to bring the best in North America to the rest of the world, but also to bring the best of Asia to the rest of the globe, including North America, the best of Europe, the best of Brazil” and so on.

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