NEW YORK — Last year, Frédéric Fekkai’s salon and hair care business was showing signs of mortality. First there was the discontinuation of Fekkai’s accessories and color cosmetics business. Then in April, the brand’s prominent spot in Manhattan’s Saks Fifth Avenue’s atrium disappeared. This past fall, Fekkai took over its back-office responsibilities, which had previously been handled by seven-year joint venture partner, Chanel Inc. Add to that the challenge of running a $200-per-cut salon in a receding economy, and industry observers were speculating on an exit date.

But what appears to be an unraveling, said Lori Perella, senior vice president and general manager of Frédéric Fekkai & Co., are actually signs that the business’s balance sheet has gone from red to black, and 2003’s earnings before interest, tax, depreciation and amortization will increase by as much as 5 percent of company sales. While Perella would not comment on overall revenue, industry sources estimate that Fekkai’s two salons and hair care product line generate as much as $36 million a year.

Perella maintains that the canceling of non-core businesses, such as handbags, scarves, eyeglasses and color cosmetics, was first on her list to return the company to a hair care focus when she took the helm in August 2000. Perella joined the company as chief financial officer in May 1999.

And, when asked what’s behind the company’s new-found profitability, she replied: "products."

Sales of Fekkai’s eponymous hair care and styling line, which is sold in 300 Sephora, Saks Fifth Avenue, Neiman Marcus and beauty boutiques, were up 51 percent for 2002, according to Perella. Comp-store sales of products in stores open at least a year, were up 36 percent, she added. The product line, which Perella said comprises 40 percent of the business, or $16 million in sales annually, is poised for growth in 2003. Already, January comp-store sales results show 30 percent gains. Part of her strategy is to focus on sell-through, not sell-in. "We’re not going beyond these 300 doors," Perella said.

Instead, in-store stylist events — what makeovers are to the cosmetics industry — will begin in stores this spring. Most of the store-in-store formats that launched Fekkai into department stores seven years ago have been converted to open-sell areas, complete with promotional tools and cards designed to push sales. Lantz-A-Lot, a retail management group that has handled La Prairie and Dr. Perricone, is now designing Fekkai programs to further in-store sales. These efforts, Perella said, would put salespeople in stores (except in Sephora units) and could grow product sales at least 20 percent in 2003.

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