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EL SEGUNDO, Calif. — Murad Inc. is keeping it all in the family — for now.
This story first appeared in the May 16, 2008 issue of WWD. Subscribe Today.
With many of its dermatologist brand competitors settling into new multinational homes, speculation has recently mounted that the independent El Segundo, Calif.-based company is a prime pickup for a large beauty player with a gap in its skin care portfolio. But Murad has rebuffed all acquisition courtships to date, said its founder, Howard Murad. The Estée Lauder Cos. Inc. has shown an interest, he said, and Coty Inc. has been named a possible suitor, said industry sources.
“We have people every day calling on us and wanting to talk to us, and we talk to them, but my real interest is a little bit different,” said Murad, who serves as chief executive officer, outfitted in his customary white coat and colorful Leonard tie during a recent visit to the Murad Inclusive Health Center. “It is not just about selling for more money or making a lot of money. I don’t have anything against money, but it is not my primary goal in life.”
Speaking specifically of Lauder, Murad explained that not selling was a matter of timing and affirming the beauty-through-health mission of the company he started nearly 20 years ago. “At this point, we are happy to be where we are. We see a huge opportunity for us to go forward. We believe in this multichannel concept,” he said. However, he didn’t rule out a future deal, stressing, “There is no reason not to talk to people. It is helpful, you can learn, but it has to make sense.”
Members of Murad’s family who work at the company are cheerleaders for keeping the company in family hands. Murad owns the heftiest share of his namesake company, with his nephew and chief operating officer, Richard Murad, and children Jeff Murad, vice president of product development; Hilarie Murad, president of the Murad Inclusive Health Center, and Liz Waters, manager of channel marketing, holding smaller shares.
Ownership status quo, though, does not mean developmental status quo. This year, the company is concentrating on extending its spread overseas, building its direct-response audience and bettering the Murad Inclusive Health Center. Only about 5 percent of Murad’s sales are from the roughly 33 countries the brand is available in outside the U.S., but Murad hopes to quadruple the company’s international business in three to four years.
Richard Murad pointed to the United Kingdom, where Murad in the past year has set up a joint venture to replace a distributor, and hired its own employees to fuel growth.
Domestically, Murad’s revenues are 40 percent from direct channels, including the Internet, catalogue and infomercials, 30 percent from professional channels such as spas and beauty supply stores, and 30 percent from national chains, the two biggest being Sephora and Ulta. Murad won’t discuss revenue totals, but industry sources estimate the company generates $100 million in manufacturer sales. Richard Murad added that Murad is the top clinical skin care brand in Sephora.
“In the last three years, we doubled our business,” said Richard Murad. In the near future, he said, steady growth would primarily be the order of business.
The direct business got a boost this year from the introduction of an infomercial centered on Murad’s Resurgence line for hormonally aging skin. Murad’s direct-response history got off to an atrocious start in 1992 when an antioxidant-related infomercial was a flop, but since then Murad has had 10 or so successful infomercials and ones for its acne line have been showing for several years. The newest offering features actresses Joan Lunden and Josie Bissett, cost more than $1 million to produce, and airs on 20 to 30 channels on any given day, according to Murad.
Murad speaks passionately about his Inclusive Health Center, which is the physical embodiment of his Cellular Water Principal, which focuses on water depletion in cells and connective tissue as the body ages. The facility provides a range of services to address skin issues from a full body approach, but Murad acknowledged it is “not operating at a profit,” although he said it is “not a drain.”
Additionally, Murad has begun to require international distributors to put centers abroad, and there could be as many as 15 around the world in the upcoming years.
Product-wise, his latest ahead-of-the-curve ingredient of choice is Durian, an herbal remedy that’s been a staple in the Asian diet. Durian Cell Reform, a complex of Durian extract and glycolic acid that is intended to encourage cell proliferation, is in two products launched last month: Intensive Wrinkle Reducer for Eyes is priced at $90 for 0.5 ounces, and Intensive Resurfacing Peel is priced at $165 for a box of a dozen 0.17-oz. ampoules.
“Different foods can make a difference and help with cellular water. That is the biggest overriding trend and everything stems from that,” said Murad.