The long-serving chief executive of Estée Lauder is set to retire next year in further change at the top of the cosmetics conglomerate.

Fabrizio Freda, 66, who has run the New-York based Estée Lauder for nearly 16 years, will retire next June, the company said. His planned departure comes only a month after Tracey Travis, its chief financial officer, said she would step down after more than 12 years at the company.

Estée Lauder said it was “well advanced” in its search for a new chief executive and was considering internal and external candidates.

The news was accompanied by a forecast of lower sales than had been expected previously, which delivered an early shock to the company’s share price. The stock recovered earlier heavy losses to close down $2.11, or 2.2 per cent, at $92.86in New York on Monday. The shares have slumped by nearly 75 per cent since hitting a record high of $370 at the end of 2021 as prolonged inflation and an economic slowdown in China have hit the demand for luxury products.

Estée Lauder now expects its annual sales to fall by as much as 1 per cent or to rise by 2 per cent, far worse than previous analysts’ estimates of a 6.4 per cent increase, according to data from the London Stock Exchange Group. Demand for even “affordable luxuries” such as lipsticks and perfumes, widely considered to be recession-proof, are being affected, with the group expecting further woes in China.

In a statement, Freda said: “For fiscal 2025, we anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers. We intend to drive share gains in a market that continues to hold strong long-term promise. In the rest of our business, we are planning to deliver improved performance across both developed and emerging markets.”

The company, which plans to focus on growing sales of skincare and high-end fragrance products, is in the midst of a turnaround plan that involves cutting costs and simplifying the business to be “more agile and faster to market”.

“From La Mer’s entry into night-specific consumption to The Ordinary’s expansion into new markets and more brands debuting in new channels like on Amazon’s US Premium Beauty store, we have a rich slate of initiatives to drive new consumer acquisition,” Freda said.

Estée Lauder reported sales of $15.61 billion for the year to the end of June, a decrease of 2 per cent from a year earlier, driven by declines in skincare and haircare sales. Total operating income fell by 36 per cent to $970 million. In constant currency terms, adjusted operating income decreased by 10 per cent to $1.64 billion.

Dana Telsey, of Telsey Advisory Group, a broker, said: “It’s not a surprise that Fabrizio is stepping down. It was a long-anticipated change of the guard, given the results over the past few years and the need certainly for newness.”