NEW YORK —?Following a bearish March, a belated Easter injected enough buoyancy for the beleaguered prestige fragrance business to reclaim some lost ground, while color cosmetics and skin care continued to perform slightly better. The outlook for Mother’s Day, however, remains guarded.
According to retail sources, April generated enough traffic to push fragrance sales even with last year, or close to it, in many major department stores. This follows a stronger-than-expected Valentine’s Day. Color cosmetics and skin care are running 1 percent or more ahead, according to sources.
Beauty appears to be outperforming other parts of the store, particularly apparel, which reportedly is lagging an estimated 5 percent behind. At least one retailer has detected a subtle nuance in sales velocity in the last few weeks, with American brands perking up and French brands decelerating. This retailer has speculated that the shift may have something to do with the Iraq war and Washington’s feud with Paris.
"What helped the fragrance business is the introduction of flankers," said one top department store executive, speaking anonymously. The concept of limited-edition fashion fragrances was pioneered a decade ago by Escada. Since then, other major houses, primarily Calvin Klein, but also Estée Lauder and Ralph Lauren Fragrances, have all attempted to tease some interest out of consumers with spin-off and limited-edition scents.
"It helps the parent brand," said the retailer, who estimated that the flankers do 20 to 40 percent of the volume done by the originals that inspired the offshoots. "Right now, it’s plus business. It brings new people to the counter. The big companies have focused on their large-performing classic brands and they are trying to breathe new life into them."
A number of major fragrance players are banking on blockbuster September launches. Some retailers have been impressed, so far, by the new Ralph Lauren women’s fragrance and Estée Lauder’s Beyond Paradise. Reportedly, there are fewer value sets per brand in an apparent attempt to aid profitability. However, there is more inventory depth.
"So far in 2003, consumer confidence levels have been decreasing by even greater levels than those of 2002 and have been at their lowest levels since the early Nineties," said Timra Carlson, president of NPD Beauty, a division of The NPD Group. "Consequently, I expect that Mother’s Day will not significantly impact women’s fragrance sales; sales will remain in decline, or may increase to flat levels, as they did in May 2002.What will alleviate steeper declines will be Mother’s Day gift sets."Carlson continued, "I anticipate that flanker-type products will continue to help generate interest in fragrances and leverage the brand name in 2003. In 2002, Tommy Girl Summer was the top newly launched seasonal flanker. A continuation of this trend into 2003 seems likely as many of the summer fragrances are making a comeback. Just as the fashion industry understands the importance of seasons and the shorter life cycles of products, the fragrance industry is realizing this through seasonal fragrances."
"The Easter shift affected our business," said Jon Pollack, executive vice president and general merchandise manager of Belk’s. He added that while fragrance took a hit in March, color and treatment were unaffected. "We will get most of that back in April and be back to where we had planned to be," said Pollack. He said that he believes that business will continue to be challenging — and is not optimistic that Mother’s Day will boost sales.
One bright spot at Belk’s: new treatment products from Lauder and Clinique. As well, Pollack said, MAC, BeneFit and Origins overall "are picking up new customers." Pollack added that Glow by JLo, Clinique’s Happy Heart, Donna Karan’s Cashmere Mist and the Chanel fragrance franchise have been strong performers in the women’s fragrance category, and Ralph Lauren Polo Blue and Estée Lauder’s Intuition for Men are leading the way in men’s fragrances. Pollack noted that he expects to "see a strong launch season in the fall."
At Rich’s, Gary Borofsky, vice president and divisional merchandise manager of cosmetics, noted that although a later Easter this year threatened to stifle pre-Mother’s Day sales, that’s not necessarily how the chips fell. "We were concerned with the calendar because with Easter later [this year], the impact on Mother’s Day could have been a negative," Borofsky said. "But it wasn’t."
Nevertheless, "We saw a pop pre-Easter week in fragrance and we’re seeing a nice pop right now in [value] set selling above last year," said Borofsky. Rich’s fragrance sales were reportedly up in the mid-single digits last week as compared with the week before Easter last year. And, for the month of April overall, the business is seen finishing with high-single-digit increases as compared with last April.So far for the month of April, value sets are understood to be running low-double-digit increases. "It’s the Mother’s Day gift sets that are [performing]," said Borofsky, "which we haven’t seen in a while.
"The industry has done a good job of creating excitement without newness," Borofsky observed. "There’s not a lot of spring launches but there have been an interesting mix of gift sets, so customers who are shopping for fragrance will find good things at the fragrance bar. Limited distribution brands are doing very well," Borofsky noted. These include Issey Miyake offerings and Thierry Mugler’s Angel. "We just launched Imagine by Ellen Tracy," he noted, "which is limited distribution for the moment." Additionally, Cashmere Mist has been "extraordinary" during the month of April.
"Tremendous growth has come from Escada’s Ibiza Hippie," said Borofsky, "and some flanker brands are revitalizing core brands." He cited Estée Lauder’s Beautiful Sheer and Pleasures Intense, specifically, as well as Clinique’s Happy Heart. "[Glow by] JLo continues to perform well from the newness standpoint," said Borofsky, "as do the Chanel fragrances. Also ranking well for us is Liz Claiborne’s Bora Bora."
All this translates to the fragrance department running "a little ahead of plan" now. "The next two weeks are key," Borofsky added. "But we’re optimistic based on what we saw last week."
Designer fragrance offerings still drive significant traffic, even for brands that aren’t new to the market this year — and several designers — including Kate Spade and Vera Wang — are hitting the road to continue driving traffic for their fragrance brands.
Nootsie McNabb, dmm for cosmetics for the Northwest region at Nordstrom, was especially enthusiastic about a personal appearance that designer Kate Spade made at the Portland, Ore., Nordstrom late last week. "Kate is so personable and gracious," said McNabb, adding that Spade’s visit drew several hundred customers and ran more than an hour past its scheduled time. "We finally had to cut off the line. People love her —?they were even bringing her gifts because they feel that personal connection to her." McNabb wouldn’t cite numbers, although industry sources estimated that the event did upward of $25,000 at retail that day.In February, as reported, Wang’s anniversary personal appearance at Saks Fifth Avenue in New York City rang up $26,000 at retail, breaking the chain’s previous fragrance retail sales record of $25,000 — which Wang herself set at the launch of her fragrance last year. More recently, in a monthlong promotion at Harrods in London, Wang racked up sales of $235,000 for the period.
"The fragrance market has been challenging overall, but our exclusives continue to do well," said Bettina O’Neill, dmm for cosmetics and fragrances at Barneys New York. "We’re excited about Frederic Malle’s newest fragrance, which we will begin stocking in June — it’s already doing very well in preselling. L’Artisan Parfumeur is also always a strong business, and we’re doing well with Hermès and other classic fragrance lines."
In other categories, O’Neill added, "We’re seeing a strong Prada business We’re excited about adding Tracie Martyn’s new skin care line, and we’re doing well with an airbrush makeup line called Uslu Airlines. Natura Bisse’s skin care is also doing well, as is Prada’s."
Color has proven to be a strong business at Barneys this spring, said O’Neill, with color stories from Nars, Cle de Peau, Bobbi Brown, Yves Saint Laurent and Sue Devitt doing well.
"Our cosmetics business right now is very good," said Muriel Gonzalez, senior vice president and general merchandise manager of nonapparel for Bergdorf Goodman. Bergdorf’s Beauty sales were essentially flat in March, according to industry estimates, and they are currently running up double digits for April.
According to Gonzalez, a major bright spot this spring has been skin care. "I think [positive performance] is partly because the strength of our business is in treatment," she said. "And the Easter shift affects us less, perhaps, than other stores."
Fragrance has been holding its own as well. "Our fragrance business is good," Gonzalez remarked. "We have particular strength in Jo Malone. The new Orange Blossom fragrance really has taken off like a rocket. And we also have particularly good business in Clive Christian."
"Business in general has picked up considerably in March and that trend has continued throughout April," noted Robin Coe-Hutshing, owner and creative director of the Studio at Fred Segal. She attributes this to a sense of resolution regarding the war — coinciding with Easter vacation — and feels this may have given consumers "a wave of relief which generated healthy business." Coe-Hutshing said that the store typically enjoys a strong Mother’s Day business and expects this year to be the same.Color brands such as Stila and Laura Mercier "have been showing impressive growth." The fragrance, treatment and candle and home fragrance categories are also strong performers. New launches will include Darphin and Aqua della Elba fragrance, as well as a relaunch of Ligne de St. Bart. "After months of feeling lucky to just trend flat, we are finally seeing healthy increases," Coe-Hutshing said, adding that she expects this will continue.
Ed Burstell, vice president and general manager of Henri Bendel, noted that the calendar shifts between Easter of last year and this year also affected his business. "We saw there was going to be a shift and added a few things," said Burstell. One such was a MAC event "that was the most well attended and helped us beat last year." Burstell is taking the same approach in May, extending a Laura Mercier personal appearance to run over a two-week period, leading up to Mother’s Day.
Bendel’s has seen strong business this spring with exclusive brands such as Giella, Pout and Mary Quant, as well as from Trish McEvoy’s new foundations, MAC’s spring color story and new products from BeneFit. John La Port and Santa Maria Novella were bright spots in the fragrance category. As well, Kevyn Aucoin’s long-awaited color cosmetics collection is expected to make its debut this fall and Burstell noted that "it could be explosive when it does hit." Existing stockkeeping units in Aucoin’s collection, he said, have already been very strong.
Retailers on the mass side were slightly less optimistic.
Front-end sales were tough for drugstores in March. Most retailers attributed the sales falloff to the late Easter and thus, unfavorable comparisons to last year when the holiday was in March. For the record, Rite Aid front end was off 3.7 percent, while its pharmacy was up 5.8 percent; CVS front end was down 5.8 percent while pharmacy was up 6.2 percent; Walgreens front-end sales fell 4.6 percent with pharmacy sales up 12.8 percent andEckerd, which did not break out figures, reported that its total store comps were down 3 percent.
Still, aside from the bleak March, cosmetics sales at drugstore chains had been on the upswing, according to Information Resources Inc. For the 52 weeks through February, cosmetics increased 4 percent to $1.7 billion with a 3 percent increase in units."Business is challenging — [it] appears a lot of things are on people’s minds other than shopping at most retailers these days," said Kathy Steirly, vice president, cosmetics, at Eckerd. "Weather is finally really nice again — hope that lasts a while." Steirly added that she expects people will want some new shades for spring now that weather is better and she’s also expecting skin care to do well.
Bill Baxley, vice president, merchandise and marketing for Kerr Drug Stores, believes there will be a lot of effort at the NACDS Annual Meeting to try to improve profitability as the industry continues to be faced with declining pharmacy margins. One of Kerr’s front-of-store initiatives is to update each of the chain’s 114 stores’ cosmetics walls. "We have taken the stores and more accurately fit the cosmetics for the demographics of that store’s area," Baxley said. Kerr has several ethnic-stocked stores and Baxley said cosmetics repositioning will be affected there, too. While discussions with cosmetics manufacturers such as Revlon, Procter & Gamble and L’Oréal have already taken place, Baxley is meeting with the big three at Annual to update them on the new cosmetics mix and to lay the groundwork of how Kerr will be moving forward during the estimated six-week cosmetics wall transition.
The retail environment was difficult at Bath & Body Works, which saw its March comps fall 10 percent. The retailer, under new leadership, has recently started to offer more branded merchandise as a test in its flagships, which number about 25. Earlier this month it introduced Botanical Nutrients, an organic hair care collection, which has been allocated wall space along with a tabletop display. The company also is experimenting with several lines for men including Anthony Logistics, Brave Soldier, Stephen hair care and Burt’s Bees for Men and for women, a maternity collection from Mustela and the Kneipp Herbal bath line.
Mass-oriented department stores like Sears and J.C. Penney have been reworking their beauty departments with an emphasis on fragrance and bath.
Sears, after discontinuing its Circle of Beauty cosmetics and skin care line last year, now has gotten more intensely behind its fragrance business. Six months ago it shifted to an open sell format with prestige scents packaged in clamshells and its sales for holiday were strong, according to Andrea Goldner, dmm at Sears. Now the retailer is launching its biggest fragrance event ever with the introduction of Celine Dion from Coty Beauty. For the first time, fragrance signage has been placed at the main entrance of its stores — even if it isn’t on the beauty floor — as a means to draw traffic to the department. Sears also beefed up its proprietary Time Out line with an aromatherapy collection called Naturals this month. Available in four scents — lemongrass, honeysuckle, lime basil and lavender, like the original fruity scents — items are priced at three for $18.Like Sears, J.C. Penney is reporting that early sales results of the Celine Dion fragrance are strong. "We expect it to be our best-selling scent for spring, said Ann Gravseth, dmm for fragrance.
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