Clarins in Deal With Swarovski

Groupe Clarins said Wednesday it has added Swarovski to its portfolio of beauty licenses.

PARIS — Groupe Clarins said Wednesday it has added Swarovski to its portfolio of beauty licenses.

This story first appeared in the March 20, 2008 issue of WWD.  Subscribe Today.

Clarins’ Thierry Mugler Parfums division will have responsibility for developing the worldwide beauty license for the Austrian crystal giant. It will develop fragrance, cosmetics and beauty accessories under the name Swarovski Beauty, with the first products slated to hit shelves in 2010. Financial terms of the 10-year deal were not disclosed.

The announcement confirms a report that appeared in these pages earlier this month.

News of the deal, however, was overshadowed somewhat by the report that 2007 net profits fell 59.4 percent versus 2006, to 90.7 million euros, or $124 million at average exchange. Clarins explained the drop is due to a tough comparison with 2006, when profits were bolstered by a one-off gain involving L’Occitane. Excluding that operation, 2007 net profits declined 1.7 percent year-on-year.

At 11.1 percent, the firm’s operating margin, meanwhile, came in under the 13.2 percent reported at the end of 2006. The firm stated this is a result of unfavorable foreign exchange trends, which impacted sales and manufacturing costs; the increased share of its new makeup collections in its product mix, which incurred higher production costs, as well as significant marketing investments to support its brands.

Clarins’ 2007 operating profit declined 12.5 percent to 111.4 million euros, or $153 million. As reported, Clarins’ 2007 sales grew 4.2 percent year-on-year to reach 1.01 billion euros, or $1.38 billion at average exchange.

The financial news underscored the importance of the deal with Swarovski, a global luxury brand, which posted 2007 sales of 2.56 billion euros, or $3.5 billion at average exchange. The agreement is part of Clarins’ move to bolster its fragrance business, following another licensing deal with New York-based jewelry brand David Yurman in fall 2006.

“There are not many major brands still on the market [for beauty licenses],” said Joel Palix, president of Thierry Mugler Parfums, adding Swarovski is a fast-moving, dynamic business with multiple store openings and brand expansion plans in the works. “Swarovski is a new kind of brand [for Clarins], not inspired by fashion but from another origin, cut crystal.”

“We share the same values of respect, tradition, expertise, innovation and independence as Swarovski,” stated Christian Courtin-Clarins, Clarins’ chief executive officer.

Beauty isn’t Swarovski’s first departure from its cut-crystal origins. In recent years, executives have been pushing the brand into other activities, which now include jewelry, home decor and accessories.

“Swarovski’s position in the luxury market today is the result of the company following the philosophy of our founder, who was also my great-great-grandfather: to continuously engage in new market challenges and in products that express the poetry of precision and create joy and emotion,” stated Markus Langes-Swarovski, executive board member of Swarovski.

Swarovski Beauty products will be sold in Swarovski’s 1,150 stores and concessions worldwide, as well as on its e-commerce sites and through selective distribution channels. “It will not be just another fragrance or makeup collection,” said Langes-Swarovski, adding he admires Clarins’ Thierry Mugler business. “Both markets are saturated, only interesting concepts are really successful.”

“Our vision for Swarovski Beauty is to create an original luxury brand in a very crowded market,” continued Palix, noting Thierry Mugler Parfums aims to tap Swarovski’s notoriety in Asia, Central Europe, Italy and the U.K., as well as its strength in travel retail. He added that Thierry Mugler is especially strong in France and in the U.S.