NEW YORK -- Ultima II has suffered another severe blow.
The Revlon cosmetics and fragrance division had been reeling from a decision made a month ago by May Department Stores to drop the brand. Now Federated Department Stores says it will phase out the business from all seven of its divisions.
Bloomingdale's chairman Michael Gould, who is also the head of parent Federated's cosmetics merchandising team, said Thursday that the decision was "based on the fact that we don't feel our long-term objectives mesh with their distribution policy."
May Co. also had said Ultima's distribution is too broad for its taste.
Without discussing specifics, Gould described the scope of Ultima's distribution as "a major rollout."
A Revlon spokeswoman said, "The growth of Ultima in other prestige stores will negate any long-range downside associated with Federated's decision. Revlon and Federated will continue their partnership on other Revlon brands," she said, referring to Alexandra de Markoff, among others.
Gould stressed that there has been no disagreement between the parties.
"They have been good and honest partners and I respect them," he said, referring specifically to Revlon president Jerry Levin and Geoffrey Donaldson, president of Revlon's department store group.
Neither was there a problem with the business, Gould added.
"The business over the past few years hasn't seen high growth, but it is not a business that's in the tank," he said. "The growth has been nominal. The issue is not sales increase -- it's what right for us."
Gould declined to break out Ultima's volume at Federated. But industry sources estimate that the brand does $15 million to $20 million at retail within the corporation. Ultima's May Co. volume had been estimated in the same range.
The phaseout will be delayed until May to avoid disrupting the important Mother's Day business.
Gould said the Ultima decision grew out of a normal process in which the cosmetics team evaluates each vendor to see "what marriages are worth building and what operations are worth investing money in."
Prior to the May Co. action, Ultima listed its distribution at 2,000 department stores doors. The New York-based R.H. Macy's dropped the brand in 1991, reportedly in response to Ultima's decision to enter J.C. Penney Co., although executives denied that was the reason.Dillard Department Stores of Little Rock, Ark., pulled Ultima out of a small fraction of its stores.
In early March, the St. Louis-based May Co. asserted that "Ultima's interest in broadening its channels of distribution beyond department stores has diluted its cachet." The company also said the Ultima business had been "sluggish." Revlon's Levin strongly rejected both charges.
The May Co. move had ignited widespread speculation within the cosmetics industry that it was an indirect response to the growing competitiveness of Penney's, where Revlon has a high profile. May Co. dismissed those reports.
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