By and  on January 6, 2012

This is one holiday season that department store beauty retailers will want to remember.

After languishing for much of this decade, the fragrance business came roaring back, driven by a balance of new and old, designer and celebrity scents. Skin care, particularly the high-priced high-tech variety, and makeup came driving though. Gift sets sold out and the tried-and-true blockbusters — a perennial question mark — sold as well. As one major vendor said, “It’s a beauty year.”

One strong indicator of market health — or lack of it — in the prestige arena is Macy’s Inc., which is estimated by industry sources to do about 40 percent of the upscale business in the U.S. And Macy’s was all smiles this week.

“We had a very strong increase in November and December, across all categories and across all brands,” said Muriel Gonzalez, executive vice president and general merchandise manager of cosmetics, fragrances, shoes and accessories. She declined to break out numbers, saying only that the department beat plan. As for the various categories, makeup and skin care did a solid business coming into the holidays, “then got even stronger,” she said, adding that fragrance business performed “like I have not seen in a long time.”

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She marveled at the balance in the fragrance growth — classic brands contributed and some of this year’s celebrity launches showed a lot of muscle. “Out of our top 20 fragrance brands, almost all had an increase,” she noted. Like other stores, Macy’s did a brisk business in gift sets. Gonzalez agreed that “our customers responded to value offerings.” But she added, “Our basic business accelerated faster than our gift set business.”

One industry source said that Macy’s fragrance business soared by 16 to 19 percent for the holiday season, with skin care up 19 percent and makeup climbing by 15 percent. Another source said the beauty division had a gain in December that doubled the entire store average of 6.2 percent, or around 12 percent for beauty.

With the holidays gone, attention turns to spring. “We have been very aggressive about driving the business all year,” Gonzalez said. “We are continuing to drive it.”

Neiman Marcus Inc. came out of December with double-digit sales gains, both for fragrance and cosmetics and skin care. “It was one of the best months we have had in a long, long time,” declared Hazel Wyatt, vice president and divisional merchandise manager of beauty and fragrance at Neiman Marcus. She added that the gains piled up across the board from fragrance to luxury skin care to color cosmetics.

Over the years, the fragrance business had been running strongly, due to the store’s narrow assortment of limited distribution brands. The streak was snapped by the recession, Wyatt noted, but is coming back, accompanied by an energized treatment and color business. “The fact that beauty is trending in the same manner is exciting,” she added.

Among the standout brands were Chanel with its Exclusifs collection and No. 19 Poudre, Tom Ford’s new beauty line, Le Metier de Beauté, La Mer, Sisley, Laura Mercier, Kate Somerville, Estée Lauder with its gift promotion (“the Lauder blockbuster was a blowout”), Clinique, Shiseido’s Clé de Peau, Lancôme, Guerlain, Bobbi Brown, Amore Pacific, Natura Bisse, Sylvie Chantecaille, Creed, Giorgio Armani, Guerlain, Elie Saab, Cartier Les Heures de Parfum Il L’Heure Convoitee, Jo Malone with its Wild Bluebell fragrance and Francis Kurkdjian’s Aqua Universalis scent. The launch of Prada Candy was “awesome,” according to Wyatt, and the new Bottega Veneta scent did well.

Wyatt noted that a number of fragrance gift sets sold out, and candles also moved briskly. She emphasized that sales strength was seen across all the product categories, including high-tech upscale skin care. Chanel merchandised its Parfum Les Grands Extraits products as part of its Exclusifs franchise. Neiman’s offered the products for $1,800 a bottle, and sold 45 pieces.

Saks Inc. beat its stretch plan for December with its fragrance business. “We are very pleased with our fragrance business,” said Deborah Walters, Saks’ senior vice president and gmm for cosmetics, fragrance and intimates. “We had a very solid performance.”

She emphasized that the gift set business was “phenomenal,” and the candle assortment, including Nest, sold well. Launches such as Prada Candy, Bottega Veneta and Jimmy Choo performed well. Walters cited brands throughout the store’s lifestyle category of fragrances, which includes Killian, Bond, Tom Ford’s Private Blend, Creed and Clive Christian. Chanel, Guerlain and Dior were “outstanding,” Walters said, and Cartier was “fantastic.”

“[Skin care] was a solid performer all year, but it really picked up in December,” she added, singling out Cellcosmet, Erno Laszlo, La Prairie, La Mer, Clé de Peau, Sk-II, Sylvie Chantecaille and Nars.

Saks took advantage of the postholiday traffic by mounting a promotion with Dior featuring the brand’s limited edition collection of beauty and accessories products created in collaboration with German artist Anselm Reyle. The store devoted six of its Fifth Avenue windows to dramatize a series of in-store events, which began Thursday and will end Wednesday. Activities will include manicures, as well as makeovers, along with a lecture by makeup artist Ricky Wilson and a photo shoot by fashion photographer Roxanne Lowit.

“Fragrances were the gift of the season,” said Barbara Zinn-Moore, svp and gmm of cosmetics, gifts and gourmet at Lord & Taylor. While Zinn-Moore declined to give any numbers, including point gains, she noted, “It was a terrific holiday, especially in women’s fragrances. It was the best season I’ve seen since I started in the business.”

Calling a convergence of factors “a perfect storm,” Zinn-Moore said she believes a combination of classics, strong launches and what she calls “future classics” — launches of the last few years that have performed well — helped drive the numbers, as did a remerchandising of the retailer’s cosmetics floor and vendor partnerships, which included blockbuster advertising campaigns. Zinn-Moore credited several high-profile ad campaigns — including those of Angel, Chanel’s Coco Mademoiselle, Dior’s J’adore and Dolce & Gabbana Light Blue — with helping to drive traffic. In-store events, especially those of Prada Candy, Marc Jacobs Daisy, Viktor & Rolf Flowerbomb and Chanel across its brands, also proved to be winners for both the retailer and its vendors, said Zinn-Moore.

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Of the classics in women’s fragrances, Zinn-Moore said Thierry Mugler’s Angel, Estée Lauder Cos. Inc.’s Beautiful, Donna Karan’s Cashmere Mist, Chanel No.5, Chanel’s Coco Mademoiselle, Viktor & Rolf’s Flowerbomb, Gucci Guilty, Dior’s J’adore, Dolce & Gabbana Light Blue and Versace Bright Crystal were all standouts.

On the launch side, Bottega Veneta, Burberry Body, Elie Saab, Hanae Mori, Jimmy Choo, Someday by Justin Bieber, Oscar de la Renta’s Live in Love, Prada Candy, Tom Ford Beauty and Fan di Fendi sold strongly for Lord & Taylor. “Very often in a season, you’ll see some launches that do well, others not so well — but we had an unusual number of very strong launches this season, more so than is normal in past seasons,” she said.

Of the “future classics,” Zinn-Moore pointed to Chloé, Marc Jacobs Daisy, Prada Infusion d’Iris and Juicy Couture’s Viva La Juicy as blockbuster sellers.

“Men’s fragrance launches were up against a very strong launch season, but they proved to be even stronger for the fall,” said Zinn-Moore, pointing to Gucci Guilty for men and Eau de Lacoste as standouts. Men’s classic stars included Armani’s Acqua di Giò, Bleu de Chanel, Dolce & Gabbana The One, Dolce & Gabbana Light Blue, Armani Code, Ralph Lauren’s Polo Blue and Big Pony scents, Versace Pour Homme and Jean-Paul Gaultier, said Zinn-Moore.

Zinn-Moore noted the retailer experienced its best-ever sell-through record with gift sets this season. “When the brands got it right, they had innovative and cute packaging — but they also remembered to make it easy to easily see what is included in the sets, which is huge,” she said. “We also had a very strong container program this year, both with our own containers and vendor containers.”

“The Christmas business was pretty good, but it was late,” said Gary Borofsky, vice president and gmm of The Edge, a growing chain of 62 beauty shops built into Dillard’s stores. “The interesting thing is that it was a mix of brands doing the business,” he said, referring to the combination of celebrity fragrances and classics. Both men’s and women’s scents sold well and women’s performed better.

On the celebrity front, “Justin Bieber and Taylor Swift did very well. They brought in new consumers,” he said. Among the classics with stellar track records were Chanel and Dior.

Borofsky asserted that treatment was a power category — embodied by the big three of Estée Lauder, Clinique and Lancôme as well as Clarins — with the higher-priced items selling through briskly. “We didn’t see a lot price resistance,” Borofsky said, noting if consumers perceive value, they will invest their money. “If you give a customer a reason to buy, they will,” he declared. One development this year was the emergence of skin care kits — usually put out by brands that had launched high-powered products — which “sold out so quickly.” Borofsky figures that the sets are mostly bought as self purchases since skin care normally doesn’t pack the glamour of a gift item.

Borofsky also noted that a hot seller this season has been one of the most tried and true, the holiday blockbuster. The Lauder, Lancôme and Elizabeth Arden blockbusters all sold well. “We saw strong performance across the board from our brands this holiday season, especially among those that offered some sort of exclusive or value set,” said Margarita Arriagada, svp of merchandising for Sephora. “The cosmetics and fragrance categories did exceptionally well, and standout items included our Sephora Collection Makeup Studio Blockbuster and the Sephora Favorites Deluxe Fragrance Samplers for Her and Him.”

Ulta Beauty busted through all expectations with sales results for the seven-week holiday period from Nov. 13 to Dec. 31, rising 24.4 percent to net sales of $386 million. Comparable-store sales for the holiday rose 12.6 percent, as compared with 9.5 percent during the same period in the prior year. That outpaces most retailers, who pegged sales gains for the 2011 holiday as between 4 and 6 percent over the 2010 holiday.

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