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Wella Melds U.S. Cosmetics Divisions, Picks Loftus as President

NEW YORK — Wella AG has decided two heads aren’t betterthan one in the U.S.<br><br>The German beauty and hair care giant fused its two American cosmetics and fragrance divisions into a new company — complete with a $120 million...

NEW YORK — Wella AG has decided two heads aren’t betterthan one in the U.S.

The German beauty and hair care giant fused its two American cosmetics and fragrance divisions into a new company — complete with a $120 million combined wholesale volume and new management.

The newly formed U.S. division, called Cosmopolitan Cosmetics Inc., will be headed by Donald Loftus as president and chief executive officer. He won the top spot over Martha Brady, the former president and ceo of Intercosmetics, which had been Wella’s U.S. beauty subsidiary. In April, Wella had purchased the beauty division of Escada AG, which included a license to the Escada name plus the Adipar Ltd./Escada Beauté business in New York, which Loftus headed.

Wella’s worldwide beauty subsidiary, also called Cosmopolitan Cosmetics GmbH based in Cologne, Germany, put out a statement, saying that “the group extends appreciation to Martha Brady for her past support and leadership. Ms. Brady has left the company to pursue other interests.”

Loftus will report to Werner Hofmann, senior vice president of Cosmopolitan Cosmetics worldwide. Hofmann explained that when Adipar was acquired, Wella had decided to run it and Intercosmetics “side-by-side,” particularly since Adipar has a well-developed distribution business centered mostly in specialty stores and much of Intercosmetics distribution is in department stores.

However, “the business got tougher,” Hofmann said, and the decision was made to combine the two, leaving Wella with two ceos on its hands. Hofmann admitted that it was a difficult decision since “both are excellent managers.” Loftus got the nod, he said, partly because of his broader experience running Sanofi Beauté, which had once amounted to a $200 million business. Loftus was at Sanofi for 12 years, leaving in April 2001, after it had been acquired by Gucci Group and turned into YSL Beauté.

His experience with color cosmetics at YSL was also a plus, Hofmann noted, since one of the future plans calls for creating a color line for the Escada brand, with the help of Wella’s recently acquired joint venture partners, Cristina Bornstein and Anthony Gill.

“We had to make a decision,” Hofmann observed. “We didn’t think Martha wanted to work under him.”

The Cosmopolitan division brings with it a dense thicket of brands, including Gucci, Escada, Burberry, Ellen Tracy, Montblanc, Dunhill, Anna Sui, Bobby Jones, Floris of London, Lalique, Rochas and Parfums Gres.

In addition to the appointment of Loftus, three other Adipar executives were named to the new subsidiary. Peter Meagher was made senior vice president of sales; Nicholas Munafo is now senior vice president of marketing, public relations and training, and Paul Smith is senior vice president of finance, operations and chief financial officer.

When Wella acquired Escada Beauté, it also picked up a 40 percent interest in a joint venture of Escada cosmetics in Korea with a company called Hanbul. Hofmann said that Wella is thinking about increasing its stake to a majority.

He was far less talkative, however, on a matter of industry speculation. A report has been circulating in the market lately that Wella is talking to Unilever about possibly buying at least some of the Anglo-Dutch conglomerate’s fragrance business, not including Calvin Klein. Unilever is said to be eager to divest at least some of the brands. To all of this, Hofmann issued a quick “no comment.”