By and  on March 16, 2007

AnnTaylor Stores Corp. is developing an exclusive beauty business and has partnered with a heavy hitter for the project — Robin Burns.

Fragrance and bath and body products are expected to be launched for holiday selling at the Ann Taylor division. Beauty products will be introduced at the Ann Taylor Loft division in the first half of 2008.

"We're entering the beauty business and have selected Robin and her company, Venustas International, as our partner," Kay Krill, president and chief executive officer of AnnTaylor Stores Corp., told WWD in an exclusive interview Thursday.

The beauty strategy, along with other growth initiatives and the specialty retailer's fourth-quarter and year-end results, are being unveiled today. Ann Taylor Stores also will discuss a new concept — a separate, stand-alone business and not an extension of the Ann Taylor brand — to be rolled out in fall 2008, but few details at this early juncture were available.

"We'll be talking about several strategic growth initiatives, but we feel beauty is really an exciting and big one for us," Krill said. "This is absolutely a natural brand extension for us. We've been in the fragrance business in a little way, with Destination and Ann, but now we are taking [the beauty business] to a whole new level with fragrance and bath and body.

"In the past, we've dipped our baby toes in, and have not done it justice. Now we are trying to find meaningful ways to grow the business."

The company is expected to post record earnings that fall within past guidance of $1.96 to $1.98 a share for the year. The Ann Taylor division has recently been strong, and is ready to take on growth initiatives sooner than the Ann Taylor Loft division, which has been slumping lately. A big part of Krill's agenda has been to sharpen the identities of Loft and Ann Taylor and get both divisions simultaneously on track. Before taking the reins of the corporation two years ago, Krill ran Loft and built it into a national specialty force.

Still, Krill acknowledged the beauty strategy will evolve rapidly at Ann Taylor, considering the agreement with Venustas was signed only a few days ago, and the objective is to have products in the Ann Taylor stores in about seven or eight months. "This will be a full rollout across the chain from Day One. We think it's a natural brand extension that doesn't really cannibalize anything."Krill sees beauty becoming "a meaningful business in the next four to five years," though she declined to quantify how meaningful it will become for the $2.34 billion retailer.

Today's announcement is also a coming out of sorts for Burns and her new business, Venustas. The company was founded six months ago and its mission is to design, develop and deliver private label beauty products. Venustas is based in New York City, in the Chrysler Building, and in Princeton, N.J.

Burns serves as chairman and Sam Ghusson is president, chief executive officer, and co-founder with Burns. The two have a long history of working together in the beauty business, including at Limited Brands and Calvin Klein Cosmetics, with Ghusson more on the operations side.

Burns said Venustas has one other retail client, which she declined to identify. She said the objective is to partner with companies characterized by "great branding, visionary leadership and clearly defined growth strategies." In terms of companies that would meet those criteria, "it's a short list," Burns said.

Under the agreement with Ann Taylor, Venustas will develop, source and produce the beauty products, while Ann Taylor Stores will market and sell the products. There won't be any third-party brands included in the strategy, Krill said, and the new products will have their own names, accompanying the Ann Taylor logo on the labels.

According to Burns, specialty stores represent the fastest-growing channel for the beauty business, growing at a 9.1 percent rate from 2001 to 2006. But department stores, with just 3.2 percent growth in the beauty category, still represent the biggest channel for selling beauty products with a 25 percent market share. Specialty retailers have a 10 percent share. Over the next five years, beauty at specialty stores is expected to grow 5.7 percent annually, which Burns said is clearly reflective of consumer purchasing behavior. "Consumers are looking for private label proprietary brands that they find aspirational," she said.

Burns defined Ann Taylor as a "clearly defined brand," adding, "That makes it easy for our people here to interpret and make sure that what we deliver is aligned with that branding. We have been given all that we need from a branding perspective."Krill said the Ann Taylor division was chosen first to launch, as opposed to Loft, because it's in better shape. "Ann Taylor is ready to focus on product extensions to continue to improve store productivity," she said. "Ann Taylor has turned around and is poised for growth."

Loft, which in January fired its president and continues to search for a new one, has been suffering from some fashion misses, including a lack of color and updated classics. "We're aggressively working to get Loft fixed and expect it to be back on track for fall," said Maria Sceppaguercio, senior vice president of communications and investor relations.

Like the apparel and accessory offerings at Ann Taylor and Loft, the upcoming beauty offerings will be differentiated, Sceppaguercio said. She described beauty as "a natural growth category" with margins that are better than those in apparel. The Destination and Ann fragrances will be phased out before the new product arrives.

Burns, a 23-year veteran of beauty, got her start at Bloomingdale's, where she rose from executive trainee to head of cosmetics. She has built a career of launching brands and building companies, starting with the launch of Calvin Klein's Obsession fragrance in 1985, which put the designer back on the beauty map and rewrote the book on how fragrances should be launched in department stores.

After building Calvin Klein Cosmetics into one of the most successful operations in the industry, Burns took the helm of the Estée Lauder brand at Estée Lauder Cos., where she stayed for eight years before moving to Limited Brands in 1998. There she led the Intimate Beauty Corp. and Victoria's Secret Beauty for six years.

She rebuilt the old Victoria's Secret beauty business by taking the product assortment upscale and introducing prestige-priced fragrances hooked to the Dream Angels brand concept. Burns resigned as president and ceo of Limited's Intimate Beauty Corp. and Victoria's Secret Beauty in August 2004, and since then, had laid low.

Ghusson was previously an executive vice president of operations at Victoria's Secret Beauty and a senior vice president of operations at Calvin Klein Cosmetics.

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