A new Southern District of New York lawsuit alleges Estée Lauder retail sales in Asia relied on “a pervasive, prohibited gray market resale industry” and prohibited, duty-free resellers called daigou.

One stockholder has sued Estée Lauder’s board in Manhattan federal court on Tuesday over the company’s practices in this market.

The plaintiff, Portia McCollum, wants to force the directors to repay Estée Lauder for their alleged misconduct.

She’s merely seeking to recoup attorney’s fees and legal costs associated with bringing the action, not a traditional monetary judgment in her favor.

The complaint alleges the company’s Asian travel-retail sales channel, a critical growth market for the makeup and perfume house, exploited duty-free tax exemptions.

McCollum names 13 current and former directors and officers, including Chairman William P. Lauder of the eponymous family dynasty.

The action pleads seven counts, seeking an accounting of salaries, bonuses, stock awards, and sale proceeds. McCollum also demands governance reforms at the company, including stronger board oversight, disclosure controls, and requirements to solicit shareholder input.

Read more: Retirees sue fund linked to public Dogecoin miner Z Squared

Daigou — a Chinese word meaning “buying on behalf of” — are buyers of duty-free stock who flip those items for a profit in mainland China.

Typically trafficking cosmetics, liquor, and luxury items, they resell authentic merchandise above their duty-free cost basis yet below official Chinese retail prices, retaining a slight margin.

Daigou activity can be lawful or unlawful, depending on how it’s conducted.

The core claim of this week’s new lawsuit centers on sales of Estée Lauder products on the vacation island Hainan.

Source link