Dior Pursues Plan For U.S. Turnaround

Executives running Dior's U.S. business, Pamela Baxter and Terry Darland, are reporting strong sales growth after trimming the door count.

View Slideshow

NEW YORK — A little more than a year ago, LVMH Moët Hennessy Louis Vuitton executives drew up a new plan for the conglomerate’s U.S. beauty operations, with goals including a reining-in of Dior’s U.S. distribution and leveraging more strongly the connection between Dior’s beauty and fashion businesses.

The intent: to ratchet up the brand’s image in the eyes of U.S. consumers, and to excise lower-grossing doors from the mix.

A year later, the executives running Dior’s U.S. business, Pamela Baxter and Terry Darland, are reporting nearly 19 percent growth across the board for Dior’s beauty business — with some segments and retailers nearly doubling that figure.

Baxter, who is now president and chief executive officer of the Perfumes and Cosmetics Group, was hired away from the Estée Lauder Cos. in December 2003. She had been president of Lauder’s Specialty Brands Group. A few months later, Baxter tapped Darland, another longtime Lauder executive, as senior vice president of sales and marketing for Dior’s U.S. business.

Over the last year, the pair have slashed Dior’s door count in the U.S. from 800 beauty (skin care and color cosmetics) doors to 575, and its fragrance door count from 2,000 to 1,450.

Now, said Baxter, all of the pieces of the puzzle are in place. “Dior is strongly positioned for growth in 2005 with all of our retail partners,” she said.“In 2004, we spent much time focusing on brand positioning. Moving forward, a strong link to fashion will help to achieve our high expectations for Dior Beauty.”

Added Darland: “We’re building the business on three prongs. There’s a specialty store prong, a department store prong and a Sephora prong. While some initiatives reach across all of these channels, we also want to match the Dior brand with the locales where the customer is looking for it. Skin care drives many trends in specialty store doors — that consumer tends to be more educated [about skin care needs] and she has more money to spend.”

In fact, a chief goal is to rebuild the brand’s stronghold in upscale specialty store doors, particularly in Neiman Marcus, Saks Fifth Avenue and Nordstrom, said Darland.

This story first appeared in the January 21, 2005 issue of WWD.  Subscribe Today.

Dior has just reestablished its skin care and color cosmetics in Neiman Marcus’ Newport Beach, Calif., door, and will reopen five additional Neiman’s beauty doors this spring: Las Vegas, Houston, NorthPark Center in Dallas, King of Prussia, Pa., and Beverly Hills. These doors are among the first to get a new tester unit, which Darland said will be in all Dior doors by the end of May. “The new tester has a lower profile with a lot of mirrored surfaces — it’s a little more user-friendly and it’s very easy to update,” she said. 

Since the customers most willing to make avant-garde color statements seem to be shopping at Sephora, said Darland, Dior decided to create a “January animation” called the Backstage Beauty Collection — a compilation of offbeat color cosmetics. “We grew 67 percent [in retail sales] in Sephora last year, and we’ll probably grow another 50 percent this year,” said Darland. “Sephora’s consumer base is predominantly young, fashion-forward customers who buy edgy, trendy color statements, which made them the perfect partner for this business.” The line comprises six Dior Addict Ultra-Gloss lip shades, $23 each; six Dior Addict Vernis nail shades, $17 each, and three Dior Show Backstage Mascara shades, $23 each, in colors ranging from bright, sparkling oranges and yellows to mauves and fuchsias.

Dior’s spring launch schedule focuses heavily on skin care, traditionally a global strength for the brand. “Since we’ve gotten here, we’ve found that editing is best — building on one or two key drivers for a line, rather than having huge collections,” said Darland. So Baxter and Darland have implemented a few U.S.-only features into the program, including more lightly scented skin care and a tightly edited assortment of products within each line.

Dior will launch Capture Sculpt 10, which it calls a “sculpting skin care” product, in March. It is based upon the theory that only collagen in the shape of a trihelix is springy enough to support the skin, explained Darland. “It provides support which allows cells to link to collagen fibers,” she explained. Key ingredients are Astressyl, a white willow extract said to increase skin’s “spring”; madecassoside, an Indian plant that is said to boost collagen synthesis and contraction, and potentilla extract, which is said to help in the collagen synthesis process. The product will be available in cream and fluid formulations, each $80 for 1.7 oz., in Dior’s full U.S. beauty distribution, and sources estimate that it could do $2 million or more at retail in its first year.

“Many customers in the U.S. simply don’t want strongly scented skin care products,” said Darland. “Sculpt is the first [skin care product] not to be heavily fragranced — but when you have a lot of active ingredients, sometimes an unscented version would be off-putting, so there’s still a bit of scent.”

Dior also is repackaging its Capture R60/80 skin care line. The first stockkeeping units in the Capture line launched in 1986, packaged in pink and white bottles. The new silver and white packaging “better speaks to the brand’s high-tech offerings,” said Darland. The new packaging will hit Saks Fifth Avenue and Neiman Marcus doors in March and all other Dior beauty counters a few months later.

A new cleansing range, infused with white tea extract and vitamins E and C, will hit Dior counters nationwide in July. The collection consists of 10 sku’s that are divided into products for oily, normal and dry skin, as well as a range that is suitable for all skin types. Products include Rinse-Off Cleansing Foam and Matifying Toner for oily skin, each $27; Energizing Toner and Rinse-Off Cleansing Gel for normal skin, each $27; Cleansing Milk and Soothing Toner for dry skin, each $27, and Cleansing Water, Exfoliating Face Scrub and Duo-Phase Eye Makeup Remover, which are $27, $29 and $23, respectively, and are suitable for all skin types. A 10th sku, Cleansing Gelee, is $32 and will be available in Sephora doors only. Sources estimate that the line could do 15 percent of Dior’s total beauty business, estimated at $125 million at retail in the U.S.

Products that make the skin appear to be flawless are also in the wings.

The brand is launching a spray-on foundation called DiorSkin AirFlash Mist Makeup. The formula, said Darland, is enriched with light-diffusing pigments and has a fine-mist texture that makes blending with fingers or a brush unnecessary. AirFlash will be available in four shades, each $60, and will be available at Bloomingdale’s, Saks Fifth Avenue, Nordstrom, Neiman Marcus and Sephora. Darland noted that four additional shades are under consideration. Sources estimate that it will do at least $2 million at retail in the U.S. in its first year.

Ultra-Mat Compact Foundation, an antishine powder formula, will be available in five shades, each $39.50. Ingredients include ramie cellulose and titanium, both said to absorb oil, and perflourated talc, said to offer long-lasting oil absorption. It will be available in Dior’s full U.S. beauty distribution in April.

For summer, Dior will offer a limited-edition version of J’Adore. The latest twist on the mix of champaca flower, mandarin, orchid, jasmine and blackberry notes is an alcohol-free, moisturizing formula. It will be available in a 100-ml. size for $45, in Dior’s U.S. department store distribution in April.

Also for summer: Dior Bronze, a four-sku line that will be on counter in March. Three of the sku’s are self-tanners: one for the face, $26; one for a natural effect for the body, $27, and one for a shimmering effect for the body, $27. A fourth sku is Sweet Sun, a limited-edition, alcohol-free “mood fragrance” that will retail for $40.

Advertising and promotional efforts for Dior this spring will focus chiefly on fragrance, as is typical of the brand’s past spending in this area. However, noted Darland, the company does plan an advertorial campaign this spring focusing on skin care, which will run in the March issue of W (which, like WWD, is a part of Fairchild Publications, which is owned by Advance Publications Inc.).

While Darland wouldn’t comment, Dior is said to be planning two U.S. fragrance launches for fall 2005: one intended for specialty stores and one intended for department store distribution.

View Slideshow