PARIS — Despite a dreary economic climate, L’Oréal executives are optimistic about the prospects of the firm’s Prestige and Collections International (PCI) division, driven by surges in its key brands. The beauty giant also is buoyant about plans for its new Viktor & Rolf project.

In a worldwide market where fine fragrance sales were flat —at best — and down in many cases, PCI ended 2002 up 8 percent year-on-year. The division oversees beauty brands Giorgio Armani, Cacharel, Guy Laroche, Paloma Picasso and Viktor & Rolf out of Paris. The Ralph Lauren brand is overseen by executives at L’Oréal USA in New York.

L’Oréal executives refused to talk numbers, but industry sources estimate PCI generated sales of $1.3 billion in 2002 — about one-third of L’Oréal’s Luxury Products division’s overall business.

The Lauren, Armani and Cacharel brands generate the lion’s share of PCI’s sales, together ringing up some 90 percent.

"Each brand [in the group] has had significant success," said Patricia Turck-Paquelier, PCI’s international brand president. She also was upbeat about what’s to come: the launch of Viktor & Rolf. Noting that the fashion duo had turned out a notably strong ready-to-wear collection during the recent shows and that they will be featured in an upcomingexhibition at the Louvre, Turck-Paquelier said Viktor & Rolf "has been hard at work" on their first fragrance, due out probably next year. When asked if she sees this as a niche fashion brand, Turck-Paquelier laughed and replied: "We don’t know what a niche is." She asserted that within a decade, Viktor & Rolf is expected to be "a major brand."

She said Giorgio Armani clocked the most significant growth in the division last year, with sales up 18 percent. Turck-Paquelier said the business was driven in part by the launches of Armani Mania for men in the U.S. and Europe, plus Sensi in Europe.

As for other Armani products, Turck-Paquelier said Aqua di Gio fragrance maintained its top rank in the U.S. men’s market. And this year, an Emporio Armani scent is slated to be introduced by yearend.As for the Armani color cosmetics business, which is generated through about 25 doors worldwide, it grew between 15 and 40 percent depending on the door in 2002. "We’ll probably double the makeup’s distribution this year," said Turck-Paquelier, who explained new doors could include Italian perfumeries, following successful tests of merchandising units in that distribution channel.

Armani makeup is considered an important tool for women to get to know better the brand whose beauty sales are 69 percent rung up by men and 31 percent by women.

As for Ralph Lauren Fragrances, Andrea Robinson, its president, worldwide, said: "We were extremely pleased with the launches of Polo Ralph Lauren Blue in the U.S. and Ralph Lauren Glamourous in Europe. While current economic conditions present challenges, we will continue to launch new brand concepts and at the same time support our existing brands with unique marketing initiatives."

Cacharel’s primary market is Europe, where its sales rose about 6 percent last year. The brand will launch a new women’s scent this fall.

"The total luxury division has room for growth," she said. "It’s a very profitable category when it works."

"I think that the future of luxury depends on the sector’s ability as a whole to turn up the volume with breakthrough concepts," added Robinson from New York. "We must offer the sophisticated consumer novelty with a connection and subtle nod to that which takes her/him to a more desirable emotional plane….Business as usual is an obsolete thought."

So what’s in store for PCI this year? Turck-Paquelier said the division’s sales in the first months of 2003 were good. However, "we’re cautious like everyone else," she said. "We hope that for 2003, PCI will have more or less the same growth as in 2002."

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