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Beauty Beat: Perry Ellis International Sells Fragrance Portfolio for $63M… Apothia Scents on International Push… Boots Partners With University of Swansea

Perry Ellis International said Monday that it reached a $63 million deal to sell its fragrance inventory and related assets to Falic Fashion Group LLC.

NEW YORK — Perry Ellis International said Monday that it reached a $63 million deal to sell its fragrance inventory and related assets to Falic Fashion Group LLC. Falic has also taken over the worldwide license to manufacture perfumes, fragrances, lotions, toiletries and cosmetics under the Perry Ellis brand.

Expecting the sale of its fragrance business to be accretive to earnings, Perry Ellis raised its 2008 profit guidance by 9 cents per share, and expects earnings to be within the $1.80 to $1.84 range, per fully diluted share. Initial guidance was between $1.71 and $1.75 per share.

Falic has been in acquisition mode in the last five years. In 2002, the firm bought Hard Candy and Urban Decay, two color cosmetics brands, from LVMH Moët Hennessy Louis Vuitton for what was estimated to be less than $10 million.

Then, in 2005, Falic, which is wholly owned by Duty Free Americas Inc., reached a deal with LVMH to buy the Christian Lacroix fashion house, including couture, ready-to-wear, footwear, accessories and fragrances operations. The asking price in that sale was said to be between $40 million and $80 million.

“We are very excited about this new direction for our fragrance business given Falic Fashion Group’s keen understanding of the high-end and luxury markets,” George Feldenkreis, chairman and chief executive officer of Perry Ellis International, said in a statement. “They are strongly committed to positioning our Perry Ellis fragrances in channels that complement our apparel distribution.”

He added, “These agreements will allow Perry Ellis International not only to recoup significantly all of the invested capital utilized for the purchase of assets from Parlux Fragrances Inc., but also to maximize our royalty income from this key product category.”

Apothia Scents on International Push
LOS ANGELES — As the founder of the store Apothia at Fred Segal, Ron Robinson has introduced countless niche fragrance brands to the world. Now he is busy introducing his own.

After reaching nearly 70 U.S. stores in slightly over a year, Apothia is ramping up its international distribution. The brand is expected to enter all Harvey Nichols stores in February with three eau de parfums, the citrus-topped IF, unisex Velvet Rope and earthy L, as well as 10 candle varieties.

“We want to become a significant brand,” said Robinson. “We are in the ‘who’s who’ stores. We are going to capitalize on that and let them capitalize on us.”

In Japan, Robinson has set up a separate company, Apothia Japan, that is run by Ruki Matsumoto Jr., whose father created the retail and clothing brand Ba-tsu, to extend Apothia’s reach. Apothia items — there are around 20 stockkeeping units in all — are already sold in 10 Japanese stores, including Estnation and the private shopping club Celux.

“I thought Japan was going to be adverse to the bigger fragrances that we have, but it is not so,” said Robinson. “I think the younger, contemporary crowd is finding that they have something in common with other young contemporary buyers worldwide.”

Domestically, Robinson is not in a rush to add more stores, but is instead concentrating on deepening his relationships with the retailers he currently distributes to. In 2006, Apothia generated revenues in excess of $2 million at stores such as Barneys New York, Bergdorf Goodman and the shops at Wynn Las Vegas.

Tanya Killeen, the beauty and intimates buyer at the Wynn, said Apothia’s candles have surpassed Jo Malone to become the number-one seller in the category at the Drugstore, a perfume and body products outlet at the hotel, and Apothia is among the top five fragrance resources. Candles retail for $46, 50-ml. eau de parfums for $75, and 15-ml. roll-ons for $30. Through Smoke Creative crafted Apothia’s packaging.

“It really is my favorite line that I carry,” said Killeen. “I am happy to be able to grow his [Robinson’s] brand. As people start to experience how amazing the fragrances are, people will be able to find it available more.”— Rachel Brown

Boots Partners With University of Swansea
LONDON — Boots the Chemists plans to give entrepreneurs a boost.

The health-and-beauty retailer, which is owned by Alliance Boots, has unveiled the Boots Centre for Innovation at the University of Swansea, in Wales. Starting in April, the center will invite researchers and small businesses to develop new products, including skin care items, at its facilities and give them access to investment funding. The center is a partnership between Boots, Swansea University and venture capitalist firm Longbow Capital.

“The Centre can contribute to both Boots and the broader economy,” said Sir Nigel Rudd, chairman of Alliance Boots, in a statement. “The opportunities for the products that come out of this hotbed are vast. Not only do they have the potential to be seen in over 2,400 stores in the U.K., but with our international wholesale and retail operations they could become worldwide household names.”

The selection process for projects will be based on 10 consumer demands identified for Boots products, which include the improvement and maintenance of the look, feel and health of skin; offsetting the effects of aging on the body, brain and hair; improving the ease of use and convenience of medicines, and minimizing the severity and duration of pain.

In other company news, Alliance Boots said Monday it plans to enter the Chinese pharmaceuticals market through a 50-50 joint venture in Guangzhou Pharmaceuticals Corp., China’s third-largest pharmaceuticals wholesaler. Alliance Boots will partner with Guangzhou Pharmaceutical Company Ltd, a majority state-owned firm listed on Hong Kong and Shanghai exchanges, which currently owns 90 percent of GP Corp.

GP Corp, which reported 2005 sales of about 425 million pounds, or $832.6 million at current exchange, will have 29 retail pharmacies upon completion of the deal. A spokesman for Alliance Boots said they will not be rebranded as Boots stores or sell Boots beauty products. Pending shareholder, government and regulatory approval, the deal is expected to be completed in the second half.
— Brid Costello