Estée Lauder Companies has agreed to a $210m all-cash settlement to resolve a shareholder lawsuit alleging it concealed its dependence on grey-market sales in China.
Preliminary settlement papers filed in Manhattan federal court in the US, as cited by Reuters, show the proposed agreement is still subject to approval by Judge Arun Subramanian.
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The litigation centred on claims that the cosmetics group misled investors regarding its reliance on so-called “daigou” sales – a practice whereby resellers buy luxury goods at discounted duty-free prices and resell them below standard market rates.
Shareholders alleged that the US-headquartered firm grew increasingly dependent on daigou activity in China’s Hainan province following the onset of the Covid-19 pandemic.
They further claimed the company was slow to disclose the consequences of a Chinese government crackdown on the practice in January 2022, with full disclosure of the sales disruption not emerging until 1 November 2023.
Mainland China’s market accounts for approximately a fifth of the company’s total revenue.
In March 2025, Judge Subramanian denied the company’s motion to dismiss the case, finding that it had highlighted favourable aspects of its business performance “while leaving out the parts of the truth it found inconvenient”.
Estée Lauder denied any wrongdoing as part of the settlement and indicated that insurance would cover a portion of the agreed sum.
The shareholder group is led by three Michigan public pension funds, whose legal representatives intend to seek fees of up to 32% of the settlement, equivalent to $67.2m.
Earlier this month, the company reported third-quarter results for the period ending 31 March 2026, posting a 5% increase in net sales to $3.71bn, while organic net sales rose 2% to $3.61bn.
Adjusted profitability also improved, and the company revised its full-year guidance.
Estée Lauder said it continues to monitor geopolitical risks, tariffs, inflation and consumer demand trends as it advances its Beauty Reimagined strategy and broader operating model transformation.
