For the first time in memory, prestige beauty retailers seem to be breathing easy as their businesses head into the holiday crunch. And the numbers, for once, justify a bit of optimism.
According to Karen Grant, vice president and global industry analyst at The NPD Group, sales of total prestige beauty in U.S. department stores are now 3 percent ahead of where they were at this time last year. If the trend continues, that percentage could climb higher by yearend. Last year at this time, prestige beauty was floundering at 7 percent down, meaning that there has been a 10 percent positive swing.
Grant noted that skin care sales have been growing by high-single digits, and sometimes double, every month for virtually the last year. Across the board, treatment launches have been strong, led by the Clinique division of the Estée Lauder Cos. Inc. “The manufacturers and retailers took a lesson from what happened in the past, and pulled out all the stops,” she said.
Makeup, which was in the hole, has been on a roll since Mother’s Day, spurred by artistry brands like MAC Cosmetics, which “has been on fire,” and also the designer labels. “Chanel is having an awesome year,” she added. Color cosmetics suffered declines in 2008 and 2009, while skin care was still in the plus column in 2008.
Now the entire portfolio of color brands has turned up. The lipstick category is on its way to enjoying its first positive year in nearly a decade. The fragrance category is now flat for the first time in three or four years, after starting the year with negative numbers. She cited the sparkplug launches of Chance Eau Tendre and Gucci Guilty on the women’s side and Ralph Lauren’s Big Pony, Marc Jacobs’ Bang and Bleu de Chanel on the men’s. Since December traditionally generates 30 percent of the fragrance year in sales, “if it continues the trend, it could be up even higher.”
Grant had previously said during an Oct. 14 Cosmetic Executive Women panel discussion that department stores were the hardest hit in the recession and “have recovered the most, and fastest,” While Internet and specialty beauty sales are also doing well, chain stores, which did relatively well during the recession, are now facing more of a challenge, Grant added. “Consumers are going to where they can get the greatest newness and excitement in the category, she said.
“We’re firing on multiple cylinders,” said Howard Kreitzman, vice president and divisional manager of cosmetics and fragrances at Bloomingdale’s. “We expect to achieve or exceed plan for the year 2010.” He refrained from making a prediction, saying only “we are on solider ground than we have been in a while.”
Kreitzman noted the most strength of this fall’s business has been in high-end skin care and color cosmetics, “but the fragrance business has also been performing well — on the plus side.” Chanel has performed well, particularly its new men’s launch Bleu de Chanel. Another standout has been Bulgari Man. “In women’s fragrances, there has not been abundance of newness,” he noted, but there are hot spots, such as Gucci Guilty, which Kreitzman described as “very well done.”
Saks Fifth Avenue has made gains this fall by playing to its strength — high-end skin care — as well as its lifestyle fragrance brands, such as Bond, Creed and By Kilian. “The fragrance business has been very strong,” said Wendy Gottfried, vice president and divisional merchandise manager of fragrances and intimate apparel. “We are meeting our expectations and are optimistic for the holidays,” she said. She declined to specify the details of the fourth-quarter plan, saying only that the stores expects to achieve a sales increase. Moreover, there has been a rebound in regular business. “The launches continue to be strong,” she said, “in addition to a more consistent development of day-to-day business.”
Saks has had strong skin care launches this fall, among them La Prairie Antiaging Neck Cream, LaMer Eye Balm Intense and Chanel Sublimage Concentrate. On the fragrance side, the store scored with exclusives like Bond’s Washington Square Park and Love Chloé. Like at other retailers, Bleu de Chanel and Gucci Guilty were outstanding, and Jo Malone’s English Pear & Freesia did well. Gottfried added that “the whole lash and brow category is very strong.”
Another bright spot for Saks has been the continuing strength in fragrance gift sets, with a slight increase in unit sales. Gottfried said Saks is making a stronger presentation, such as putting up clearer signage announcing gift items under a certain dollar amount, for key items among the holiday gift sets.
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