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NEW YORK — Lancaster’s prestige fragrance business in the U.S. has gone from a quiet, steady player to a growth engine for the category — and retailers are taking notice.

The company has marketed Davidoff Cool Water in the U.S. since 1991, and for many years the successful scent represented a lion’s share of Lancaster’s American business. But since his arrival at the company in May 2001, Coty chief executive officer Bernd Beetz has been consistently introducing new initiatives, to positive reviews from top retailers.

One of Beetz’s first moves was to sign songstress Jennifer Lopez to a beauty deal, quickly bringing out Glow by J.Lo, Lopez’s first scent. While much of the industry — retailers and vendors alike — was skeptical that a celebrity fragrance would have any juice at retail, Glow by J.Lo quickly proved them wrong. Next, Lancaster acquired the beauty licenses of designers Marc Jacobs and Kenneth Cole in May 2003, purchasing them from LVMH Moët Hennessy Louis Vuitton for an estimated $45 million.

The result: a powerhouse prestige fragrance division that is racking up impressive business in department stores.

“Lancaster is a big growth company for us,” said Thia Breen, executive vice president of cosmetics for the Federated Merchandising Division, adding that a number of the division’s franchises are doing “very strong” business in Federated doors.

Federated’s Macy’s East division was one of the first retailers to take a chance on Glow by J.Lo; it has gone on to do big business with both Glow and Lopez’s second scent, Still Jennifer Lopez. Breen is eagerly awaiting the third Lopez fragrance, which is expected to reach the market in spring 2005. “The Jennifer Lopez fragrances have been huge for us — they started strong and have continued to be strong,” Breen said. “We’re really looking forward to the third fragrance.”

Breen is also enthusiastic about several other Lancaster licenses. She noted that in her stores, Kenneth Cole was “the only new brand to crack the top 10” at Father’s Day this year and called it “a tremendous entry.” Marc Jacobs is doing strong business at Bloomingdale’s, she said.

This story first appeared in the September 3, 2004 issue of WWD.  Subscribe Today.

And she’s not one to take the basic Davidoff business for granted, either. “Davidoff has huge brands in our stores — Cool Water continues to be very big, and Cool Water Deep [Lancaster’s new flanker] is performing very well,” said Breen.

And across the board, Breen emphasized, “Lancaster has been a great partner to us.”

That sentiment was echoed by Howard Kreitzman, vice president and divisional merchandise manager for beauty at Bloomingdale’s. “My hat is off to Coty as a company,” said Kreitzman. “They do strong business across the spectrum, from high-end limited distribution scents like Marc Jacobs Blush, which we are rolling out now, to more mass-oriented fragrances. It’s not easy to be equally effective in all channels of distribution, and they are doing very well in all of them.”

Rod McFadden, vice president of merchandising, who oversees fragrance and skin care at Sephora, added that Lancaster is “in the sweet spot in terms of importance for us. Their growth has been good for us.”

McFadden said that Sephora does business with over 100 vendors, and Coty has risen into the top 10. “They have acquired a number of great brands,” he said, referring partly to Kenneth Cole, which he described as “very strong,” with “Black doing quite well.” The Marc Jacobs business, another acquisition, “has been strong all year,” and McFadden is looking forward to the launch of Blush. “We think it will be a very strong fragrance,” he said. McFadden acknowledged that the Jennifer Lopez franchise has lost some momentum, but he pointed out that Coty has some impressive rejuvenation plans in the works for next spring. They include the introduction of ancillaries and color cosmetics tie-ins, as well as the widely rumored third fragrance.

The Davidoff brand has always been strong at Sephora, McFadden said, adding that Echo has made incremental gains.

— With contributions from Pete Born

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