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Freeman Beauty Labs, battered by previous owners, is on the rebound.
This story first appeared in the April 9, 2010 issue of WWD. Subscribe Today.
The nearly 45-year-old hair and skin care company was left a shell of its former self with below $20 million in sales when Freeman family members salvaged it out of bankruptcy court in 2003. It had arguably lost luster under the control of Dial Corp. and private equity firm The Hathi Group. But Freeman Beauty Labs has been reinvigorated lately with executive hires, rising distribution and fresh brands, including four bought last year from Woodridge Labs, bringing recognition and revenues that recall the Nineties, when the company was in the Freemans’ hands and soared to more than $70 million in sales.
“In the first quarter, with having new brands and our existing brands, we were up 37 percent in a down market. We are projecting over a 40 percent increase in sales in 2010 and over 100 percent from 2009 to 2011,” said Freeman Beauty Labs chairman Larry Freeman. “Our dramatic years of growth were from 1988 to 1997, and 2010 will be as good as any of those years.”
The foundation for Freeman Beauty Labs’ renaissance began to be laid five years ago when Freeman Beauty received an investment of $8.5 million from private equity firm Champlain Capital Partners, currently a minority owner. Following the investment, the company brought on board Steven Dickstein as president in 2007 and, last year, added Ted Paul as controller and Douglas Hosking, a veteran of the consumer packaged goods industry and Freeman Beauty Labs board member, as chief executive officer.
Along with Freeman; his son, Mark Freeman, a consultant to the company, and daughter, Jill Freeman Bucksbaum, vice president of marketing, the new management has been working to reestablish Freeman Beauty Labs as a go-to resource for infusing the mass market with value-priced products tapping into the latest crazes. “What is happening now that we need to capitalize on?” Freeman said the company asks when developing products. “We want to see trends [and] buzzwords that translate into either skin or hair products.”
Freeman Beauty Labs has seized upon the clamoring for nutrient- and antioxidant-rich ingredients with the recent introduction of Superfruits, a skin care line with five initial products retailing for $3.99 that contain a complex of goji, açaí, mango, pomegranate, mangosteen, cranberry, noni and blueberry with nourishing and antiaging benefits. The company also is updating the packaging of Feeling Beautiful, a line of masks, scrubs, lotions, moisturizers and body washes, and launched Feeling Beautiful single-use mask sachets for $1.99.
Freeman Beauty Labs has high expectations for immediate results from two brands purchased from Woodridge Labs: dry shampoo specialist Psssssst and skin care brand Vita K Solution. Psssssst has come into Freeman Beauty Lab’s portfolio, as interest in dry shampoo is mounting, evidenced by Wal-Mart’s decision to carry the brand starting next month. Freeman Beauty Labs is creating large sizes of Psssssst for the salon segment, as well. To put a charge in Vita K Solution, Freeman Beauty Labs will augment the formula with wrinkle-reducer Matrixyl in products hitting the shelves for summer.
Driven by Psssssst and Vita K Solution, Freeman projected that distribution of the brands purchased from Woodridge Labs’ will double this year from 2009. The other two brands picked up by Freeman Beauty Labs from the acquisition are Ellin LaVar Textures, a five-stockkeeping-unit celebrity hairstylist-inspired line with a tightly controlled distribution, and Perfect C, a skin care brand available at drugstores that Freeman touted as having “a great future.”
At the moment, three brands — foot care brand Bare Foot, hair care brand Papaya and Feeling Beautiful — are duking it out to be the number-one brand in Freeman Beauty Lab’s arsenal. However, Freeman anticipates Superfruits will overtake those brands this year, and that Psssssst will be Freeman Beauty Labs’ leading brand in 2011, unless upcoming brands don’t outshine them. The company is unveiling a new skin care brand and a new hair care brand at the National Association of Chain Drug Stores’ marketplace conference in June, and is scouring brands with revenues ranging from $5 million to $50 million for possible acquisitions.
“Our acquisitions probably won’t go too far afield from what our existing product lines are,” said Hosking. “We are looking for brands that bring something to the party, [that are] potentially underperforming for whatever reason in their current shape, and bringing those brands in and taking advantage of what Freeman has to offer from our strong relationships with the trade.”
With Freeman Beauty Labs changing from a company hurt by acquirers to being an acquirer, its turnaround is well under way. “We have still not regained the credibility that we had in 1997, and it may be another year or two before we have it totally back,” said Freeman. “But we now have successful launches and relaunches of products, which [other owners] never had. The management level [at retailers] is looking at us and saying the Freemans are doing it right again. We get rid of that word ‘again,’ and we will have our credibility back.”