NEW YORK — Many prestige beauty retailers got a lump of coal in their stockings this Christmas.
While a few retailers — including Nordstrom, Sephora and Victoria’s Secret Beauty — provided bright spots, as did the Internet, the season for prestige beauty retailers in general appeared to be the worst in a decade. Much of the business that was done happened in the last four days before Christmas and many retailers also reported "disappointing" post-Christmas sales.
"The last 10 days didn’t happen," complained a highly disappointed department store retailer, speaking not for attribution. She blamed the shortfall on in-store markdown competition plus the lack of innovation in the fragrance offering, adding that "somebody has to break out and make [beauty] a special-gift category again."
Although NPD Group is still processing the holiday results, Timra Carlson, president of the beauty division of the NPD Group, said sales were at least as bad as expected. Referring to her previous prediction of the department store fragrance category finishing the year 3 percent down, with women’s dropping 5 percent, she said this week that the results were "around that level and could have been off slightly more."
Federated Department Stores reported a total sales decline of 2.6 percent for the combined November-December selling period, with sales on a same-store basis declining 4.4 percent in that period. Nordstrom wouldn’t break out beauty-specific numbers, but overall, sales for the five-week period ending Jan. 5 were up 9.2 percent. As well, same-store sales for the chain rose 3.4 percent. By merchandise division, same-store sales increased in several categories, including beauty.
"Traffic was brisk," said Pamela Perret, a spokeswoman for Nordstrom, of the holiday beauty business. Women’s fragrance was "key," she noted. Kenzo Flowers and Hervé Léger starred. Moreover, men’s grooming and men’s fragrances are "more important than ever," she added. In the color cosmetics category, Nordstrom saw strong business with compacts and palettes. "The Estée Lauder Fairy Compact and the MAC exclusive Face Palette for $38.50 were standouts," she said, adding that glitter products and colored mascara were strong.
Dave Steiner, divisional merchandise manager for cosmetics for Marshall Field’s, noted that cosmetics had "a very strong November, and our December business was up slightly, as well." Driving those increases were new fragrances, such as Ralph Lauren Polo Blue, Kenneth Cole and Armani Mania, along with existing men’s fragrances, such as Acqua di Gio, Issey Miyake, Jean Paul Gaultier and Tommy Hilfiger.Among the new women’s scents, Vera Wang, Chanel’s Chance, Dior Addict and Lancaster’s Glow by JLo were hits, said Steiner. "Among existing brands, we were very pleased with the performances of Donna Karan’s Cashmere Mist fragrance, as well as Chanel No.5, Angel and Romance."
Origins’ A Perfect World Body was a key item at Field’s and Shiseido’s luxury skin care stockkeeping units were also "key and outstanding items," said Steiner, who also saw strong sales in color cosmetics. "We were very pleased with the performances of our makeup artist lines," he said. Color palettes "sold out right away — they are a big hit." Those from MAC and Bobbi Brown were standouts, he noted. And the chain saw, in November and December, "a nice increase in the Estée Lauder business," he said.
"[The holidays] were a little more difficult than we expected," said Jon Pollack, executive vice president and general merchandise manager of Belk’s. An ice storm in week two of December set things back "and it took the rest of the month to catch up." But by then, according to sources, it was too late to make plan, despite a low-single-digit increase on the season. Pointing to "price compression" in women’s apparel, he said: "There’s a lot of competition for [fragrance] purchase dollars from other categories." Men’s, however, reportedly had a high-single-digit increase.
One true bright spot was the Monday before Christmas, which was reportedly the highest volume day on record for Belk’s beauty department.
Nancy Feldman, vice president and dmm for beauty at Bloomingdale’s, said that her business was up over last year’s, and that the chain did "better than plan" for beauty. The business was "pretty evenly distributed" between fragrances, color cosmetics and skin care. In fragrances, newness drove business, especially Kate Spade, Vera Wang and Chanel’s Chance. On the men’s side, Ralph Lauren’s Polo Blue, Armani’s Mania and Marc Jacobs for Men were standouts, she said. Existing fragrance brands posting strong holiday sales were Hanae Mori and L’Eau d’Issey on the women’s side, and Acqua di Gio, as well as scents from Dolce and Gabbana and Cartier, on the men’s side.For color cosmetics, brands in "more selective distribution" were top sellers at Bloomingdale’s, said Feldman. The Bobbi Brown and Yves Saint Laurent color ranges posted "outstanding" sales for December, and other top sellers in the category included MAC, Trish McEvoy, Laura Mercier and Stila, she said. No matter what the cosmetics brand, palettes were the standout item, proving to be both a gift and self-purchase item, she said. Still, those brands in larger distribution — including Lancôme, Estée Lauder, Clinique and Chanel —?also did very well, Feldman said. For skin care, standouts included La Prairie, Clarins, Shiseido and Orlane, she noted.
"The last five days [before Christmas] are more important than ever before," said Marti Moore, fragrance buyer for Macy’s East, "and [this year] the last three days were bigger than ever as a percentage of the total business." In fragrance, "new men’s brands really performed better than expected, [while] women’s was a mixed bag of new and classics," she said. Sources indicated that fragrance sales at Macy’s East were up in the low-single digits.
In women’s, Glow by JLo "exceeded all expectations" as did Chanel’s Chance, with other standouts including Chanel No.5, Donna Karan Cashmere Mist, Shalimar, L’Eau d’Issey and Dolce & Gabbana Light Blue. Polo Blue was "outstanding" in the men’s category, said Moore. Other top sellers included Acqua di Gio, Curve, Jean Paul Gaultier Le Male, Calvin Klein’s Crave and Kenneth Cole.
"The bright spots were the [makeup] artistry lines," said Cindy Harper, vice president and dmm of cosmetics for Macy’s West. That includes MAC, Stila and Paula Dorf. "More classic lines like Shiseido and Biotherm were [also] very successful. I saw improvement in all these lines. Also, serious skin care — treatment that has technology and science behind it — was important." Top sellers included Shiseido Future Solution and Estée Lauder’s Perfectionist.
Macy’s West was above its color cosmetics business plan for the holiday period, an uptick driven by the many lines that launched initiatives prior to the holidays. Compared with last year, growth within cosmetics reportedly broke the double-digit barrier."I’m pleased to say we kept the pace," said Deborah Walters, senior vice president and gmm for Saks Fifth Avenue. Overall, the retailer’s beauty business finished ahead of plan for the season, according to Walters. Leaders on the list of best-selling brands included a Jay Strongwater solid perfume from Estée Lauder. She also saw a "very strong trend in lifestyle collections, including the Jo Malone, Laura Mercier and Trish McEvoy brands. And we saw a lot of growth come from the treatment body spa category with leaders [like] Crème de la Mer, Bliss, Kiehl’s, Cle de Peau, La Prairie and Kanebo."
Also leading the way were "classic boutique fragrances," along with Chanel No.5. Additionally, "we had continued strong performance with Vera Wang and Chance." In cosmetics, mini was the operative word, especially "innovative mini color palettes," said Walters, including those from Giorgio Armani, Bobbi Brown, Chanel, Trish McEvoy and Christian Dior.
Bettina O’Neill, vice president and dmm for cosmetics and fragrances for Barneys New York, noted that sales were up high-single digits for December overall, and up double digits in the New York market. Still, she noted, "traffic was softer as compared to last year, and while Christmas was good, the last week of December was disappointing."
Candles were a standout category for the chain for the holidays, especially those from Kiehl’s, Diptyque and Red Flower. Home scents, including Alora’s Ambiance, L’Artisan Parfumeur’s sachets and amber balls, and products from Acqua di Parma, also were strong sellers for the holiday selling period, said O’Neill. Several kits, including a lip kit from Prada Beauty, a $95 fragrance sampler from Frederic Malle and a number of kits from Bobbi Brown, also stood out, as did a number of items from Cle de Peau, Prescriptives, Shiseido, Fresh and Matthew Williamson, O’Neill added.
"Even though we came out in the plus column," said Ed Burstell, vice president and general manager of Henri Bendel, "it was a season where we had to work twice as hard for half as much." Bendel’s, which reportedly bought more deeply into more popular areas like color, treatment and giftables, experienced a flat fragrance business, according to industry sources. Cosmetics and treatment, though, were up in the high-single digits.He noted that "the new Laura Mercier Face on Fifth section gave [that brand’s] total numbers a nice boost, and Trish McEvoy had an outstanding December in both color and fragrance, he said. Other brands with brisk sales included Prescriptives, Kevyn Aucoin, NV Perricone and Awake.
Industry consultant Allan Mottus said for the first time he noticed a dramatic shift in business from department stores to freestanding specialty chains, like Sephora and Victoria’s Secret, which benefited from their inherently tighter focus. He noted that prior to Christmas, many department stores were running 5 percent behind. That includes new as well as old fragrances, meaning that existing fragrances were 15 to 20 percent down. A lot of designer fragrances were sold in mass merchandisers like Kohl’s, Mottus continued.
His specialty store thesis was correct, at least as far as Sephora and Victoria’s Secret Beauty are concerned. Shashi Batra, senior vice president of merchandising at Sephora USA, said Sephora’s comp-store fragrance sales generated a percentage gain in the low teens, which was below the company’s comp-store trend in the mid-20s. He ticked off a number of reasons, including increased consumer awareness now that the chain has 75 stores; the fruits of heavy investment in internal staff training; a reduction of turnover and the momentum of having put its stocking problems behind itself two years ago. Sephora’s Web site proved "a runaway success," Batra added, and the store’s merchandising approach, combined with a number of hip new products like Chanel’s Chance and Urban Decay’s edible body products, appealed to Sephora’s youthful clientele.
Victoria’s Secret Beauty aggressively reached out to a dwindling number of consumers visiting most major malls in December with eye-catching displays, like marabou-trimmed Christmas trees, and the strategy paid off with a more than 10 percent increase for all beauty locations in November and December combined. Robin Burns, president and chief executive officer of Intimate Beauty, said the gain was a result of the company’s efforts to enrich its assortment with a combination of newness and value, particularly the Sexy for Her fragrance, the broadened variety of fragrance miniature coffrets and a selection of gift sets under $50, which produced a more than 90 percent sell-through.Origins and MAC Cosmetics did not notice a shift in business from their department store to their retail store businesses, but both divisions of The Estée Lauder Cos. experienced a dramatic increase in their Internet sales. Lynne Greene, global president of Origins, reported double-digit increases in all channels, with the Internet business doubling, making it the biggest door for Origins. Greene did say that she had noticed business shifting into specialty stores in general during the fall, but her department store business was up double digits for December, largely spurred by bath-and-body product sales. The star was A Perfect World Body Cream, which had been plugged by Oprah Winfrey in her holiday TV show.
John Demsey, president of MAC Cosmetics, said his Internet business zoomed ahead, while his retail stores were on pace with the season and there was a "dramatic increase" in the specialty department store segment, like Nordstrom, in November and December. The post-Christmas period led the season, he noted, and it was a strong period for makeup. "MAC in totality had an outstanding holiday season," Demsey said, echoing Greene at Origins.
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