US judge says Lauder must stand trial over concealment of ‘daigou’ sales in China

THE WHAT? The Estee Lauder Companies will have to defend itself in court against charges of defrauding shareholders. A US District Judge found that the prestige beauty giant made ‘several misleading omissions’ and ‘half truths’ in disclosures.

THE DETAILS According to a report published by Reuters, Lauder is accused of concealing its overdependence on gray-market sales in China. The class action charges the owner of Tom Ford with hiding its dependence on ‘daigou’ sales, especially following a crackdown on these resellers.

THE WHY? Judge Arun Subramanian ruled, per Reuters, “Defendants attributed the decline to everything but the crackdown and reassured investors that an upswing was coming soon.”
The Estee Lauder Companies declined to comment when contacted by Reuters.

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