Estée Lauder warns of “disappointing” annual outlook.

Consumers are spending againbut not that much beauty and well-being.

Estee Lauder (HE) reported quarterly earnings Monday, which revealed buyers in the US and China remain cautious – so much so that the cosmetics giant is preparing for a decline.

The company warned that its sales and profit outlook for fiscal 2025 would be “disappointing.” Estée Lauder shares have lost about 75% since hitting a record high of $374 in January 2022. The decline is due in part to ongoing inflation and China-led weakness.

Fabrizio Freda, the current chief executive of Estée Lauder, also said he plans to retire in June 2025 after 16 years at the helm. The company’s board said it was considering both internal and external candidates for his replacement, which comes amid a season of CEO changes at other large retailers such as Chipotle, Starbucksand Victoria’s Secret.

Despite its gloomy outlook, Estée Lauder beat Wall Street’s earnings expectations for the fourth quarter, reporting revenue of $3.87 billion, or about 64 cents a share. Analysts had estimated revenue of $3.81 billion, or about 26 cents per share.

Bank of America (BAC) downgraded Estée Lauder shares from “buy” to “neutral” and cut its price target from $140 to $100, citing a weaker-than-expected performance in the Chinese beauty market, which historically represents a third of the company’s sales.

Competitors Estée Lauder and Chinese imports data for fragrances, makeup and skin care items point to a “category sequential slowdown” in the company’s major market, BoA said in its research note.