Most Recent Articles In Financial
Latest Financial Articles
- L’Oréal Stock Declines After Releasing Q2 Results <span class='article-title-premium-container' style='color:red;font-size:.5em;display:none;vertical-align:middle;padding:.25em;margin: 0 0 0 .25em;'>[Premium]</span>
- Revlon Sales Increase Amid Weak GDP Reading <span class='article-title-premium-container' style='color:red;font-size:.5em;display:none;vertical-align:middle;padding:.25em;margin: 0 0 0 .25em;'>[Premium]</span>
- Revlon Sales Inch Up, Income Dips From FX on Loans <span class='article-title-premium-container' style='color:red;font-size:.5em;display:none;vertical-align:middle;padding:.25em;margin: 0 0 0 .25em;'>[Premium]</span>
More Articles By
With its purchase Tuesday of the fragrance licenses of Justin Bieber and Nicki Minaj from Give Back Brands LLC, Elizabeth Arden Inc. is giving Coty Inc. a run for its money.
This story first appeared in the June 13, 2012 issue of WWD. Subscribe Today.
The news follows Arden’s May 31 announcement that it had acquired the global fragrance licenses of Ed Hardy, True Religion and BCBG Max Azria from New Wave Fragrances LLC.
Bieber’s first fragrance, Someday, was launched in spring 2011 and became the number-one women’s fragrance launch in U.S. department stores, with annual sales of $39 million according to NPD Group figures cited by Give Back Brands. A second fragrance, Girlfriend, will be launched in Macy’s on Monday and in other national retailers on June 25, Kathy Widmer, executive vice president and chief marketing officer of Elizabeth Arden, told WWD Tuesday afternoon.
Minaj’s first fragrance is set for a September launch. These moves will meet head on with Coty as it prepares to launch its first Lady Gaga fragrance in the fall, following the debut of Madonna’s blockbuster Truth or Dare scent in late March. Terms of the acquisition were not disclosed.
In a memo to employees dated Tuesday, E. Scott Beattie, chairman and chief executive officer of Elizabeth Arden, said: “We are pleased to announce that today we signed an agreement to acquire the licenses for the Justin Bieber and Nicki Minaj fragrance brands from Give Back Brands.…The marketing and creative activities for these fragrance brands will continue to be managed externally by their existing team. Sales, finance and operational activities will be absorbed by the respective Elizabeth Arden functions. These brands represent another opportunity to grow our extensive fragrance portfolio through both new licenses and fragrance acquisitions.”
“We’ve been keen observers of Justin Bieber’s fragrance and his participation in it,” said Widmer. “When you look at the combination of Justin Bieber and Taylor Swift’s Wonderstruck, together they accounted for half of the U.S. growth in fragrance last season. Our growth agenda allowed for a certain amount of acquisitions and when this became available we recognized it was a great opportunity. It made sense to us given the size and breadth of our celebrity portfolio.” Arden is building a celebrity portfolio which rivals Coty’s: in addition to Bieber and Minaj, Arden now holds the fragrance licenses of Elizabeth Taylor, Britney Spears, Mariah Carey and Usher, as well as Swift.
Karen Grant, vice president and global beauty industry analyst at The NPD Group Inc., pointed out that when the Bieber and Minaj franchises are added to the Swift business, the resultant lineup will allow Arden’s marketing effort to resonate with the young, diverse consumers that are now driving the celebrity fragrance category.
Give Back Brands was founded by Paul West and Robert Hollander as a vehicle to raise money for charity. Hollander, the president, said Wednesday that Arden will continue to donate a portion of the proceeds to the Give Back Brands Foundation, which will be run by West. Noreen Dodge, who has been Give Back Brands’ executive vice president of global marketing, will continue to spearhead marketing of the Bieber and Minaj brands with her own independent organization, including a half-dozen staff members, Hollander said. West is a former chief operating officer at Arden, and Dodge is a former senior vice president of fragrance and global brand development for Elizabeth Arden.
Give Back Brands grew so quickly, fueled by the supernova stardom of Bieber, that the fledgling organization was challenged to keep up. “We didn’t have the infrastructure to take the business to the next level at such a speed,” Hollander said.
One analyst, SunTrust Robinson Humphrey analyst Bill Chappell, had speculated that Give Back Brands would choose to give a percentage of the purchase price to Bieber and Minaj, and that going forward Arden would simply pay the two celebrities royalties. “Give Back incubated the [concept] and it proved to be successful,” catching Arden’s eye, he said. Chappell added that, prior to the acquisition, Give Back had tapped Arden to distribute Bieber’s Someday scent to the mass market this fall.
Beattie is also in the process of overhauling the company’s flagship brand. In May, he told WWD that his ambitions for the 101-year-old brand, which currently generates about $850 million in retail sales a year, included doubling its size. “We doubled the brand size in a little over 10 years and we want to double it again in five,” said Beattie. “We also want to be in the top 10 in every market we’re in.” Beginning in September, a flagship system will be instituted globally to maximize business, said Beattie, noting that 50 flagship doors globally are planned. As well, the Arden-branded portfolio is being trimmed from 488 stockkeeping units to 355, focusing on key pillars. Rebecca Restrepo has been signed as the Arden brand’s global makeup artist, a new post.
RBC Capital analyst Jason Gere said, “Arden is looking to round out its portfolio: Ed Hardy and BCBG could have a big presence in Europe, and Bieber and Minaj come on top of [Arden’s fragrance license] Taylor Swift. Arden is trying to bring out newness and innovation.” The move also diversifies the portfolio, said Gere, which includes a number of brands tailored for the mass fragrance market, which has been soft, and the Elizabeth Arden flagship brand, which is undergoing a bold revamp. Referring to Arden’s recent spate of fragrance license acquisitions, Gere said, “This is Arden’s bread and butter.”
One major department store retailer, speaking not for attribution, confirmed that Arden is already a major player in the celebrity fragrance field and this move will only bolster its market competitiveness. “They are doing a good job,” the retailer said, “and this will just make them stronger.” In addition, Arden’s well-developed infrastructure and highly organized back-office operation seems certain to make the acquired business run more efficiently.