Shares of Estée Lauder (NYSE: EL) were falling again this week, according to data from S&P Global Market Intelligence. The beauty company focused on makeup and skincare is down 23% after reporting weak earnings for the first quarter of fiscal year 2025. It is seeing demand pressure for many of its products, especially in China, and decided to slash its quarterly dividend payment.

Here's why Estée Lauder stock is down big this week.

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Weak demand in Asia

The Asia Pacific region is huge for beauty companies such as Estée Lauder. However, in the last few years, the Chinese economy has gone through a major recession in consumer spending, likely due to the collapse of its real estate market. Last quarter, Estée Lauder's Asia Pacific revenue declined 11% year over year to $944 million.

It has been a multiyear struggle for the region. Q1 revenue for Asia Pacific in the last four years has successively gone from $1.33 billion to $1.13 billion to $1.058 billion to $944 million.

These are troubling trends that are bringing down Estée Lauder's profits. After growing steadily for years, Estée Lauder's operating earnings are now off 57% from all-time highs, which is why the stock has collapsed 82% in the last few years. It is a shocking development for what was once one of the investing world's most trusted blue chip companies.

Slashing the dividend

Making matters worse, Estée Lauder management decided to slash its dividend payout from $0.66 to $0.35 effective next quarter. This is a huge drop that cuts the dividend almost in half. The stock currently pays a dividend yield of around 2% based on this new quarterly payout ratio.

Investors hate it when a dividend gets cut, especially when a business is struggling so much, like Estée Lauder. It is a sign that management does not think a turnaround is imminent. For Estée Lauder, investors should be fairly concerned that it has started to cut the dividend after so many years of growth.

Is the stock a buy-the-dip candidate, though? It has a lot of top brands, such as its namesake, Tom Ford Beauty, and Clinique. Many of these brands have stood the test of time and are loved by consumers around the world. If the company can recover its Chinese business and start growing sales again, profits will show up. Don't buy the dip without doing any research, but now may be a good time to sharpen your pencil and do some more work on Estée Lauder stock.