Estée Lauder board sued by stockholder over alleged daigou gray-market sales
Estée Lauder stockholder sues the board in Manhattan
A stockholder named Portia McCollum has sued Estée Lauder's board in Manhattan federal court over the cosmetics company's alleged use of gray-market resellers in Asia. The case was reported by Protos on September 24, 2026.
The complaint says the company's retail sales in Asia relied on what it calls "a pervasive, prohibited gray market resale industry" and on duty-free resellers known as daigou. The suit names 13 current and former directors and officers, including Chairman William P. Lauder.
This is a derivative lawsuit. In this type of case, a shareholder sues on behalf of the company itself, rather than seeking money for themselves.
What the lawsuit asks for
- McCollum wants to force the directors to repay Estée Lauder for the alleged misconduct.
- For herself, she is seeking only attorney's fees and legal costs tied to bringing the case, not a traditional monetary judgment.
- The complaint pleads seven counts and asks for an accounting of salaries, bonuses, stock awards, and sale proceeds.
- It also asks for governance changes, including stronger board oversight, better disclosure controls, and a requirement to seek shareholder input.
- The suit claims the company spent about $880 million buying back 3.5 million shares at inflated prices, overpaying by roughly $515.5 million.
Who the daigou are
Daigou is a Chinese term meaning "buying on behalf of." Daigou buyers purchase duty-free stock and resell those items for a profit in mainland China.
They typically deal in cosmetics, liquor, and luxury goods. They sell authentic products above their duty-free cost but below official Chinese retail prices, keeping a small margin. The article notes that daigou activity can be lawful or unlawful depending on how it is carried out.
What the complaint alleges about Hainan sales
The core claim centers on sales of Estée Lauder products on Hainan, a vacation island in China. According to the complaint, the company knowingly supplied daigou with products to boost sales in its Asia travel retail segment, while concealing how much it depended on those resellers.
The filing says that after Hainan trade lockdowns during COVID restricted Estée Lauder's sales in early 2022, revenue stalled and inventory built up. On a May 3, 2022 earnings call, then-CEO Fabrizio Freda focused on restoring the sales channel and expressed "confidence in Hainan's future," the complaint states.
McCollum alleges board members then hid the truth about the daigou operations for months. The complaint points to a Bernstein investment conference where Freda highlighted "incredible results in travel retail." According to the filing, daigou resale rather than travelers was the real source of that recovery.
The earlier $210 million settlement
Estée Lauder previously agreed to pay $210 million to settle a securities class action over the same broad subject, while denying any wrongdoing. Reuters reported that insurance covered part of that settlement.
McCollum is not satisfied that the settlement will stop the board from repeating similar behavior, and has therefore sued the directors personally.
A second stockholder filed a similar case
Another stockholder, Michael Muskopf, filed a similar derivative complaint against the same 13 defendants on August 14, 39 days before McCollum's filing, according to the article. McCollum has asked that her case be treated as related to his.
The company has not commented
Estée Lauder's newsroom showed no statement about the lawsuit at the time of the report.
What is confirmed
- Both lawsuits were filed in court and are listed on the public docket referenced by the source.
- McCollum's suit names 13 current and former directors and officers, including William P. Lauder.
- Estée Lauder previously agreed to pay $210 million to settle a securities class action while denying wrongdoing, and Reuters reported that insurance paid part of it.
- Estée Lauder's newsroom showed no statement on the new suit.
What is still unclear
The allegations in the complaint are claims made by a stockholder. They have not been proven, and the company has not responded publicly. It is also not yet clear whether the court will link McCollum's case to Muskopf's.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.