By and  on August 18, 2011

The Estée Lauder Cos. Inc. is stepping into a new world.

Barely a year after its acquisition of Smashbox Beauty, Lauder is restaging the brand with new products and packaging, a new national advertising campaign and a revamped Web site, which went live Thursday. All this is a prelude to a global master plan: Smashbox was the first acquisition done by Fabrizio Freda, president and chief executive officer of the Estée Lauder Cos., who joined the company in March 2008.

In an interview Wednesday evening, Freda noted that the brand’s distribution — primarily in nondemonstrated specialty channels, including Sephora, Ulta, QVC and Macy’s Impulse — and its Hollywood studio positioning makes it a prime vehicle for the corporation’s future expansion. Some observers think Smashbox could one day rival the size of its behemoth sibling, MAC Cosmetics (which sources estimate is a billion-dollar-plus business), and lessons gleaned from the Hollywood brand could present additional distribution opportunities for Lauder’s other brands.

“Specifically, we were attracted to the Hollywood photo studio positioning, which we feel has a lot of global potential and is unique, and the brand itself offers a global expansion opportunity,” said Freda. “Also, Smashbox’s distribution is chiefly in open-sell, assisted open-sell, digital and online marketing channels, such as Sephora and QVC. That gives us an advantage not only in the U.S., but in Europe, where perfumeries are the major distribution opportunity, and in Latin America, where open-sell is a major part of the market. We are taking the various learnings from Smashbox to other brands in the Lauder portfolio, and could take other brands into this type of space. We also, as a corporation, bring key learnings to Smashbox.

Department stores are and will remain our largest channel, and they remain a core priority. However, these new channels contribute added and important growth and visibility.”

Integrating Smashbox into the Estée Lauder Cos. has been the brand’s first priority. John Demsey, group president of the Estée Lauder Cos. Inc., has been a major part of that process, along with longtime Lauder executives Beth DiNardo, now global general manager of Smashbox Beauty, and Caroline Geerlings, global president of Tom Ford Beauty and New Business.

Lauder executives continually underscore the positioning of Smashbox as a 21st century child of Hollywood with a huge global potential. Brothers Davis and Dean Factor, the great-grandsons of legendary makeup artist Max Factor, opened their Smashbox photography studios in 1990 before founding the cosmetics brand in 1996. In 2006, private-equity firm TSG Consumer Partners acquired a minority, noncontrolling stake in Smashbox; they are no longer involved. The brand emerged from the photo studio and the Hollywood backdrop, driven by the image of “the art of the close-up.” A preoccupation with the flawless look of skin gave rise to the beauty business.

The makeup line grew organically from the studio and his photography work, said Davis Factor, chief creative officer of Smashbox. “I found that models had to be powdered every few minutes to preserve that perfect skin look, and it really interrupted the flow of my shoots,” he said. “We wanted to avoid the necessity for extensive retouching. Dean and I decided to do our own makeup line because we needed certain things that didn’t exist, we were trying to mix them up ourselves, and wanted to bring them to retail.” Foundation primers — which are said to still comprise about 20 percent of the brand’s overall business revenues — were among the first products, as were anti-shine products for the face, Photo Finish Foundation and cream eyeliners.”

Then the turning point came, said Davis Factor. “Dean and I were able to grow the company to the point where we had to make a decision: We needed to pass it on to take the brand to the next level,” he said. “We could have done it, but it would have taken another 20 years. We were approached by many different companies, but we felt that the Estée Lauder Cos. were the best stewards for the brand. John [Demsey] and I have been friends for years and he has always given us great advice. He is a very strong advocate for the brand. As well, [chairman emeritus] Leonard Lauder has incredible vision. He knows that every brand has to have its own heart and story, and every brand has to be different and luxurious in its own way.”

Demsey clearly delineates Smashbox’s distinct place in the Lauder family of brands. MAC is global, multiethnic fast-fashion backstage beauty; Bobbi Brown is real life natural beauty; the Estée Lauder brand was founded with the proposition that every woman is beautiful; Clinique is allergy tested, and Tom Ford is the style arbiter of luxury. Smashbox is Hollywood and “products that work,” Demsey added. He then put it into showbiz terms: MAC is MTV and VH-1, Bobbi Brown is the Golden Globes and Smashbox is Sundance.

“The first year [of ownership] has been integrating the company, solidifying the positioning, understanding the drivers and setting the stage for international growth,” he continued. “We’ll be going into Europe next year, and Asia-Pacific the following year. This brand is returning to its iconic roots with the marketing capability, product development and international network of the Estée Lauder Cos., and as an added benefit, it’s a diverse distribution for the company in North America.”

Demsey also pointed out that Smashbox’s evolution also was unusual. “It established its voice as a hybrid,” he said. “It was one of the first brands to use QVC to tell its story and to embrace Ulta and Sephora.” He added, “the owners of Smashbox found a way to demonstrate without beauty advisers, using QVC, videos and a Web site.

Lauder acquired the brand in July 2010; while the purchase price was not disclosed, sources estimated that it was between $200 million and $300 million. At that time, Smashbox was said to generate about $80 million in wholesale revenue and $140 million in retail sales. While all executives declined comment on current revenues, industry sources estimated that the brand’s new launches, repackaged primers and other fall activity could generate more than $100 million at retail in their first 12 months on counter.

Currently, the brand’s distribution is concentrated chiefly in North America. Smashbox’s first door was Nordstrom, in 1997, and then the brand expanded to QVC in 1998. In 2000, it entered Sephora. In 2006, Ulta joined the distribution roster. Smashbox is currently in about 1,600 doors in the U.S., including Ulta and Macy’s Impulse, and in about 800 doors overseas, said DiNardo. International distribution will continue to grow, said DiNardo. “We’ll be putting our toe in the water in expanding in Europe in 2012,” she said, adding that Asia — Taiwan in particular — is on the docket next, possibly in 2013. “We’ve looked at how we can quickly telegraph the message, incorporating our high-touch service model.”

“We have big plans for Smashbox,” said Demsey. “We wouldn’t have bought it if we didn’t feel it had huge potential. The company isn’t looking for base hits.” He added that Lauder demands that potential acquisitions “must be able to play in at least two of the four regions of the world [North America, South America, Asia-Pacific and Europe]. “This business has potential in all four of them,” he added.

“There’s a trailblazing attitude I found when I got here,” said DiNardo, who formerly was senior vice president and general manager of the Lauder-owned Darphin North America. “We aren’t afraid to do things first — whether that’s digital, products or anything else. We were one of the first brands to sell on QVC, while people were still keeping it quiet. We are always where the consumer is and speaking to her with a voice that makes sense.”

The rebranding, DiNardo noted, is about refocusing on the legendary studio from which the cosmetics brand gets its name. “Life is your set; every moment is a photo opportunity,” said DiNardo. “We have some great digital that will speak to that, because it really is one of the only brands with a studio heritage.”

The brand also has a new tag line: “Created. Tested. Photographed. At Smashbox Studios LA.” In the acquisition, Lauder gained a minority share in the studios.

DiNardo noted that about 50 percent of the line’s packaging had been updated with upgraded, more efficient options — for instance, moving its primers from pumps into tubes — effectively replacing half of its nine-foot gondolas with freshened product (sources estimated that another 25 percent of the line will also be repackaged). Eye shadow trios and palettes come with fold-out instructions outlining optimal usage, as well as a QR code for proprietary content, and outer boxes bear a picture of the products inside. “This allows us to tell our story without a beauty adviser,” said DiNardo. “In a way, the kit is our beauty adviser. We don’t have to go to Ulta and say, ‘This is our model, how should we tweak it for you.’ Everything is already completely attuned to these partners and the open-sell environment.”

The brand’s fall 2011 advertising campaign, “Click, You’re It,” was shot by Terry Richardson and features Amber Le Bon, Atlanta de Cadenet and Laura Love. It is currently breaking in September fashion, beauty and lifestyle magazines and will continue to run throughout the fall. Outdoor advertising, including a billboard on Sunset near L.A.’s storied Chateau Marmont Hotel going up on Aug. 29 and one in New York’s SoHo neighborhood on Sept. 5. Davis Factor will also do a personal appearance at Sephora’s Fifth Avenue store in Manhattan for Fashion’s Night Out on Sept. 8.

Digital efforts are also a strong component of Smashbox’s plans. “We spend as much in digital as we do in traditional print, because our customers are there,” said DiNardo. A completely revamped Web site went live on Thursday; new features include Studio Buzz, a section which gives consumers a behind-the-scenes glimpse of the brand and the new ad campaign shoot. A mobile commerce function will follow in November, said DiNardo. For fashion week, in partnership with style-setting Web site Refinery 29, the brand will introduce a program called Primp Your Ride. Four “It” girls from New York demonstrate on Taxi TV how to put on makeup in the backseat of a cab; the content will also run on Refinery 29’s site. Another new program, Click You’re It, is a Facebook application which allows Smashbox’s Facebook fans to put themselves center stage in a virtual magazine layout with their own unique headline and story. “They use their Facebook photos and we supply the cool photography effects and layouts,” said DiNardo. “They can then share them on their Facebook walls. We will pick our favorite submission and fly the winner and a friend to Los Angeles to star in our next photo shoot, and then run that as an ad.”

Several new products are also making fall debuts. This month, the brand is launching Photo Finish Hydrating Foundation Primer. “This is one of our big launches and a big gap in our portfolio,” said DiNardo. Concocted with Hydraplex, a potent desert plant extract, this lightweight, oil-free formula quenches parched skin then locks in moisture with a protective barrier that fills in fine lines and pores for flawless, photogenic makeup application, and retails for $42.

Smashbox is also putting a big emphasis on eyes for fall with three new groups: Photo Op Eye Shadow Trios, Photo Op Eye Shadow Palettes and Photo Op Eye Enhancing Palettes. The $28 Trios (in 16 color options) consist of both new and best-selling Smashbox shades. The $42 Eye Shadow Palette is available in two options: Softbox, inspired by the Smashbox Studios set that lets in a flood of natural light for daytime shots, has six shades intended for day wear, while Smokebox offers dramatic color options. A third option is Photo Op Eye Enhancing Palette, a $42 product exclusive to Sephora, which includes six shades — three for daytime, three for smoky eyes — in three palettes, one each for blue, brown and hazel eyes.

The brand’s fall color collection reinforces the new branding concept, Girls on Film. The focus of the collection is skin-perfecting makeup, with the premise that photogenic beauty starts with perfect skin. Products include Halo High Highlighting Wand, $32, which is a click-through pen available in two shades, pearl and gold, for highlighting and a dewy finish. The existing Halo Hydrating Powder adds two new shades, Light/Medium and Medium/Dark, each $59. Studio Skin 15 Hour Wear Hydrating Foundation SPF 10, $42, is an oil-free, lightweight formula that protects and refines with UVA/UVB SPF 10 and advanced light diffusing spheres for undetectable coverage of blemishes and imperfections. It will be available in 12 shades and is said to visibly improve skin health with continued use. Photo Set Pressed Powder, $30, is formulated with micronized pigments and Vitamins C and E for long-lasting coverage and available in fair, light, light/medium, medium and dark tones.

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