Elizabeth Arden Inc. has acquired the global licensing rights for Liz Claiborne Inc.'s fragrance brand portfolio, which includes scents under the Juicy Couture, Usher, Lucky Brand and Claiborne banners.
The deal confirms a report in WWD last month that Liz Claiborne was seeking a buyer for its fragrance business, which industry sources estimate is roughly $270 million in size.
In lieu of an up-front fee, the fragrance firm will pay royalties to Liz Claiborne, said several financial analysts.
E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, told WWD, "This allows Arden to acquire these brands and leverage them with our existing infrastructure, and at the same time we'll provide an ongoing royalty earnings stream to Claiborne." He added that the Liz Claiborne scent brands, which were run as a stand-alone division, also will "find a home in a fragrance beauty firm" like Elizabeth Arden.
"The biggest opportunities are that it almost doubles the size of our U.S. department store unit and strengthens our men's business" with scents like Curve and Juicy Couture's Dirty English. He added that it also presents an opportunity to expand the brands' international reach.
In a statement released Wednesday, Beattie said, "This is a very strategic transaction for both companies. We have worked closely together through our existing distribution relationship and are very familiar with the Liz Claiborne fragrance portfolio." He continued that, in his view, the deal would result in improved market share and productivity in North America; a larger and more efficient fragrance business, particularly in the areas of the supply chain, logistics and sales, and higher gross margins as Elizabeth Arden converts its existing mass customer sales from a distribution margin to an owned or licensed margin. He also believes it would provide additional sales to fuel its international business.
Elizabeth Arden's star-studded fragrance business includes, but is not limited to, Elizabeth Taylor, Mariah Carey, Britney Spears and Hilary Duff.
Prior to the deal, Elizabeth Arden said it handled an estimated $70 million-plus of Liz Claiborne's fragrance sales in the food, drug and mass channel as the distributor for the apparel company, said SunTrust Robinson Humphrey analyst William Chappell.The fragrance portfolio — which, in addition to Juicy Couture, Usher and Lucky Brand, includes Curve by Liz Claiborne, Realities, Bora Bora and Mambo scents — marks the latest sale by Liz Claiborne, as it continues to shed underperforming and noncore businesses.
William L. McComb, ceo of Liz Claiborne, stated, "Fragrance is an important equity-enhancing category for our brands. For us to maximize profitability in this business going forward, however, we would have to make significant changes to how it is operated. Doing that right now would distract us from other initiatives currently under way that are core to our strategy. Through this partnership with Elizabeth Arden, we can continue to successfully develop and market brand-enhancing fragrances in a more capital-efficient manner, leveraging our strength in brand building with Arden's expertise in developing and growing fragrance business." — Molly Prior
Jo Malone Goes to Hong Kong
HONG KONG — Fragrance brand Jo Malone plans to open its first shop-in-shop in Hong Kong at Lane Crawford's IFC flagship in Central, Hong Kong, in early July as part of a major push in the Far East.
In a deal with Lane Crawford Joyce Group, plans are to open 18 stores over the next five years, including locations in China, Taiwan, Malaysia and Indonesia. The company already has a shop in Bangkok at the Siam Paragon department store, but Thailand, South Korea and Japan are not included in this agreement.
Debbie Wild, fragrance and lifestyle director for Jo Malone, said the 450-square-foot shop in Hong Kong will be modeled after the company's Sloane Street flagship in London, with library-style shelves, linear glass boxes and displays of the brand's iconic gift boxes. The shop will also feature Jo Malone's trademark Tasting Bar, at which customers can sample fragrances and receive a complimentary hand and arm massage.
"Service is the key," said Wild. "It's important that when our customer leaves the store, whether they buy something or not, we want them to feel like they have never been served so well," she said, noting that 50 percent of the company's U.K. business is in gifts. "The art of gift-giving is another key point," said Wild, pointing out the company's black-ribbon-wrapped boxes and pale yellow shopping bags.The shopping bags will be put to good use even before the store opens in a tradition the company calls "walking the dogs." "We don't do any advertising, so when we open a new shop, we walk the dogs," said Wild, explaining a practice that began with the company's namesake founder. "We each carry lots of shopping bags and go for a walk around the neighborhood where the shop is — when people see the bags, they always stop us to ask where the store is."
The brand, now owned by the Estée Lauder Cos. Inc., is more than 20 years old, but is growing rapidly, increasing its turnover sevenfold over the last six years. Last year, U.K. sales for Jo Malone reached 30 million pounds, or $59.4 million at current exchange, although the company has only 19 doors in the country, including e-tailing. "Our number-one door is the Internet, followed by the Sloane Street store," Wild said.
The brand was launched in the U.S. in 1995 at Bergdorf Goodman; it's carried in 120 doors in the U.S., which are mostly Saks Fifth Avenue locations.
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