Trillion-dollar retail giant selling counterfeit goods? Estée Lauder sues Walmart

Billion-dollar retail giant Walmart allegedly selling counterfeit products?

On February 9th, U.S. time, Estée Lauder filed a lawsuit in the United States Federal Court in California against retail giant Walmart, accusing it of selling counterfeit perfumes and skincare products on its official website, involving multiple well-known brands such as Aveda, Clinique, La Mer, Le Labo, and Tom Ford. Many Chinese consumers also took to social media to complain about purchasing suspected fake skincare products on Walmart’s platform and Sam’s Global.

In the complaint, Estée Lauder alleges that Walmart engaged in trademark infringement, sale of counterfeit goods, and false origin labeling, using Estée Lauder trademarks to optimize search engine results to attract traffic and profit. The lawsuit states that some products sold on Walmart’s website bear brand logos identical or nearly identical to those of Estée Lauder’s genuine products, which could easily confuse consumers. Specifically, these include Aveda hairbrushes, Clinique face creams, La Mer lotions and moisturizers, and perfumes from Le Labo and Tom Ford.

Estée Lauder stated that it has purchased and tested some suspected counterfeit products, confirming that these products were not produced by its company. It also accused Walmart of severely lacking oversight over the authenticity of products sold on its website, knowingly allowing counterfeit goods to circulate without taking sufficient measures to verify their authenticity. The company is demanding Walmart pay unspecified monetary damages and has requested a court injunction to prohibit Walmart from selling the aforementioned suspected counterfeit products.

In response to the lawsuit, a Walmart spokesperson said the company has a zero-tolerance policy toward counterfeit products and will respond appropriately according to law after receiving the court summons. As of press time, Estée Lauder has not responded to inquiries from the press.

Chinese Consumers Complain About Suspected Fake Goods

Headquartered in New York, Estée Lauder’s perfume business is popular among Generation Z consumers, with brands like Le Labo and Tom Ford experiencing continuous growth—these are the main brands mentioned in the lawsuit. In the second quarter of fiscal year 2026, Estée Lauder reported strong overall performance, with net sales increasing by 6% to $4.2 billion, and a profit of $162 million for the quarter, turning a profit after a loss the previous year. Behind this growth are core skincare and fragrance businesses. Skincare accounts for the largest share of total sales, driven by brands like La Mer, Estée Lauder, and The Ordinary, with organic net sales up 6%. The fragrance segment also grew by a similar 6%, mainly supported by Le Labo and Tom Ford.

All these brands are high-end, light-luxury, or premium beauty and fragrance brands, relying on genuine product quality, ingredients, and experience to justify their prices. However, counterfeit products circulating at lower prices through other channels can directly divert target customers and cut into genuine sales. If quality issues arise, they can quickly erode the brand’s established premium value. Some consumers shared their previous purchase experiences, such as “I bought La Mer from Sam’s Global once, and the packaging was very loose,” or “I bought a small bottle of the Brown Bottle (the iconic serum), and it caused facial itching and allergic reactions.”

At the same time, some consumers mentioned purchasing the same products at Walmart at prices lower than official counters or flagship stores. “I bought Estée Lauder eye cream at Walmart, and I thought, why is it so cheap? Turns out it was fake.” Generally, large retailers can obtain brand products at “wholesale prices” through global direct sourcing and bulk purchasing, then reduce operating costs via warehouse-style logistics.

Walmart, as the world’s largest retail chain, offers high cost-performance and convenient one-stop shopping with its “Everyday Low Prices” philosophy. Its e-commerce platform expansion recently made Walmart the first retail company globally to surpass a market value of $1 trillion. Another core retail format under Walmart is Sam’s Club, which requires an annual membership fee to shop—similar to Walmart’s “premium flagship” version—and its global shopping service is more like a high-end beauty membership channel.

Many Chinese consumers say they trust Walmart and Sam’s Club’s reliability, which is why they choose to buy through these “global shopping” channels. When this news broke, many exclaimed, “This is shocking! Walmart sells fake products?”

The risk of counterfeit goods at such retail giants also raises consumer caution about other unofficial channels. “Are there fake products on Taobao, Tmall, or JD.com?” “From now on, I’ll only buy big brands at official counters.”

Counterfeit Flooding Impacts Estée Lauder’s Performance

As a major beauty conglomerate, Estée Lauder’s sales rely on diversified channels, including platforms like Walmart. Now, with this lawsuit directly targeting Walmart, Estée Lauder appears to be “fed up” with the rampant counterfeit products online.

Since Walmart’s strong retail performance overlaps with Estée Lauder’s growth regions, counterfeit products sold by Walmart could significantly drag down Estée Lauder’s performance.

Estée Lauder’s financial report indicates that in the U.S. market, the overall share of high-end beauty sales has increased, especially in skincare and haircare. The company pointed out that “Clinique and The Ordinary have driven growth in our skincare segment, ranking first and second in that category.” In mainland China, Estée Lauder achieved double-digit organic net sales growth for the second consecutive quarter, outperforming the overall high-end beauty industry with a 13% increase. In fiscal year 2025, the company expanded its market share across all categories, both online and offline, with La Mer, Tom Ford, and Le Labo performing particularly well.

Walmart’s full-year 2025 performance report shows that the U.S. market is Walmart’s largest segment, with retail revenue of $462.4 billion, accounting for 67.9% of total revenue. Walmart, which has long been China’s top supermarket chain, reported a net sales of approximately $20.3 billion in China for fiscal year 2025, up from about $17.9 billion in 2024, reaching new highs, with Sam’s Club contributing significantly. The potential sale of counterfeit products in Walmart’s most rapidly growing and most dependent market—China—could undoubtedly harm Estée Lauder’s performance, prompting the company to take legal action.

In fact, Estée Lauder does not oppose boosting sales through e-commerce. Its latest financial report states that the group continues to expand consumer reach through multiple platforms and retail formats. From October 2025 to January 2026, Amazon’s channels expanded to 10 markets and 12 brands; during the same period, TikTok’s e-commerce brand matrix grew to 7 markets with a total of 12 brands.

(Source: 21st Century Business Herald)