TIVP028: ESTÉE LAUDER (EL): MICHAEL BURRY’S BIG BET

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

13 July 2025

Daniel Mahncke and Shawn O’Malley take a closer look at Estée Lauder’s turbulent turnaround, tracing the beauty giant’s fall from pandemic favorite to contrarian play. After years of strong growth, the company was hit by an inventory pileup, the collapse of China’s daigou shopping channel, and a broader slowdown in its most important market. In this episode, they explore whether the “Beauty Reimagined” strategy and the arrival of new CEO Stéphane de La Faverie can reignite growth through cost savings, better channel mix, and stronger appeal to younger consumers.

Daniel and Shawn debate how realistic a turnaround is, whether the risk/reward resembles Nike’s recent playbook, and what needs to go right for Estée Lauder to reclaim its former strength. They also touch on wider beauty industry trends, the role of R&D as a competitive moat, internal tensions within the Lauder family, and the growing strategic weight of China for global fashion and cosmetics brands.

Prefer to watch? Click ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to watch this episode on YouTube.

SUBSCRIBE

IN THIS EPISODE, YOU’LL LEARN:

  • How Esther Lauder built the beauty giant
  • Why Estée Lauder’s business and stock fell so dramatically
  • How Social Media and personal brands changed the beauty industry
  • Why China played a major part in the company’s rise and fall
  • How the family drama caused a management crisis
  • How Estée Lauder plans to rise to the industry’s top again
  • Whether Estée Lauder is attractively valued at its current levels
  • Whether Shawn & Daniel add EL to The Intrinsic Value Portfolio
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Intro: You are listening to The Intrinsic Value Podcast by The Investor’s Podcast Network. Since 2014, with over 180 million downloads, we’ve learned directly from the world’s best investors. Now we are applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. And now here are your hosts, Shawn O’Malley and Daniel Mahncke.

[00:00:29] Daniel Mahncke: Michael Burry sold all of his US holdings except for a single one, Estee Lauder. He loves situations where the stock has been hammered and he can bet on a turnaround. Lauder has lost 80% of its market value from its peak in 2021 due to serious problems in the Chinese market.

[00:00:48] Daniel Mahncke: It started with a slower than expected economic recovery, but it worsened significantly. When the government disrupted the Daigo business and the travel retail sector just collapsed.

[00:00:58] Shawn O’Malley: All global premium and luxury brands suffered. But no other company struggled as much as Estee Lauder Between its declining sales and growing costs, it just evaporated profits and cash flows.

[00:01:11] Daniel Mahncke: Yes, and surprisingly, its market share has survived. It’s still the number one makeup and skincare brand, and the turnaround strategies show the first signs of success as well.

[00:01:29] Shawn O’Malley: Today we are talking about a company that was once considered one of the biggest beneficiaries of these secular growth trend in fashion and beauty, and that is Estee Lauder. In 2021, it reached pretty incredible highs and was valued well north of a hundred billion dollars. And well, since then, the stock has seen one of the most severe downturns you could really imagine for a company of its caliber.

[00:01:54] Shawn O’Malley: Even Deep value investor, Michael Burry, who was made famous by the really great movie, The Big Short, has jumped on the bandwagon and is long Estee Lauder. So for value investors like us kind of sounds like the perfect time to take a closer look.

[00:02:10] Daniel Mahncke: Absolutely, and that’s why I bought the company today. We have a lot of Burry fans in our intrinsic value community.

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