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Escada’s Palatin Has Eye on U.S.

PARIS -- Claude Palatin, who became president of Escada Beaute's worldwide operations this week in a management shakeup, said he planned to quickly review the firm's U.S. operations with an eye to making them profitable.<BR><BR>Directors of Escada AG,...

PARIS — Claude Palatin, who became president of Escada Beaute’s worldwide operations this week in a management shakeup, said he planned to quickly review the firm’s U.S. operations with an eye to making them profitable.

Directors of Escada AG, the Munich-based German fashion house and the parent of the fragrance company, decided on April 1 to restructure beauty operations by expanding Palatin’s responsibilities. Before the shakeup, Palatin was president of Escada Beaute SARL, based in Paris and responsible for Europe and Asia.

Lawrence Appel, president of Escada Beaute’s U.S. division, resigned after the meeting. “The board thought it best to streamline the organization,” Palatin said.

At Escada’s annual meeting in Munich Wednesday, Wolfgang Ley, chairman and chief executive officer, said Appel’s post will not be filled in the near future. Although the power structure appears to be shifting to Europe — product development also will be centered in Paris — Ley said the company will pay particular attention to the U.S. market.

Escada officials say the French and U.S. beauty companies have never made a profit. But during Wednesday’s annual meeting, Ley predicted that the worldwide Beaute business would be in the black by the end of this year.

During the last year, Palatin has aggressively recruited a handful of prestige fragrance brands with limited distribution, including Tiffany, Giorgio Beverly Hills and Romeo Gigli, and signed them to distribution contracts for France. The distribution business has improved Escada Beaute’s profit position, Palatin said.

The U.S. unit followed suit in February, signing a distribution deal for Gigli. According to Escada, the combined beauty business generated worldwide sales of $30.2 million (52 million Deutsche marks) last year.

Palatin plans to remain in Paris, said Betsy Olum, the U.S. vice president of marketing and creative worldwide, and would continue in New York in that position. Palatin said he plans to travel to the U.S. soon to “reassure employees there” and to review what could be done to improve profitability.

One way, he said, might be to take a close look at the agreement with Proteo for the U.S. distribution of the Gigli fragrances: “I think there are other markets than France where we could undertake a successful distribution business provided that the brands are carefully chosen and that the sales force can successfully take on more business.”

Appel could not be reached for comment.