Estee Lauder Settles China Sales Lawsuit for $210 Million
Estee Lauder will pay $210 million to settle a class action lawsuit over its China sales practices. The company denied any wrongdoing in the preliminary deal.
ESTEE LAUDER COMPANIES-CL A reached a $210 million preliminary settlement to resolve a class-action lawsuit alleging it defrauded shareholders regarding its sales practices in China. The all-cash agreement filed in a United States federal court on Thursday evening addresses claims the cosmetics giant concealed its reliance on gray-market resellers, which erased $8.7 billion in market value. The settlement ends a legal battle after shareholders alleged concealment of the company's exposure to a practice banned by Chinese regulators.
### The Cost of Concealing Daigou Dependence Shareholders led by three Michigan public pension funds alleged the company failed to disclose its overdependence on "daigou" traders. These resellers purchase luxury goods at duty-free prices and sell them below market rates to consumers. Investors argued the company remained silent on how a January 2022 Chinese government crackdown on these practices was eroding its revenue.
