NEW YORK — Elizabeth Arden, Inc. said Wednesday that it has entered into a co-marketing agreement with specialty pharmaceutical firm Allergan, that it will do a second Britney Spears scent, and released third-quarter earnings.
Allergan, which also manufactures Botox, introduced Prevage — a skin care product with 1 percent idebenone, a benzoquinone compound that is said to be a powerful topical antioxidant — in January to physicians. Under the agreement, Arden will market a version containing 0.5 percent, or half the original potency, in prestige department and specialty stores beginning in early 2006, said E. Scott Beattie, chairman and chief executive officer of Elizabeth Arden Inc. A repackaged version of the original-strength product, to be dubbed Prevage MD, will bow in physicians’ offices this fall.
Arden’s research and development staff and Allergan’s scientists will work together on the new formulation. Beattie said marketing, promotion and manufacturing all will be done jointly. The two also will jointly develop additional Prevage products, though Beattie declined to give further details.
All of the products developed under this deal will be marketed under the Prevage brand name at retail, rather than the Elizabeth Arden name, and the two will have separate retail counters. “Allergan has a long history in the dermatology channel of skin care and a leading market share,” said Beattie. “We believe it makes sense to combine the tremendous attributes of both of our companies to deliver a blockbuster product to the market.”
While Beattie emphasized that such details as final prices and door counts are still being worked out, he did say the Prevage products in prestige distribution will be “premium-priced.” While he wouldn’t quantify that, sources said price tags on the products likely would be north of $150. Prevage’s largest group of users likely will fall in the 35- to 60-year-old age range.
Beattie hopes to take the products into “upscale distribution” globally, including both specialty stores in the U.S. and in European pharmacies.
Elizabeth Park, senior vice president of global marketing, skin care and color cosmetics for Elizabeth Arden, noted that there is still “tremendous opportunity” in the derm segment of the business, which sources said generated $50 million overall in the U.S. in 2004. The skin care market in the U.S. is estimated at upward of $1.6 billion in retail sales yearly. “Consumers are getting far more sophisticated in terms of skin care,” she said. “They want maximum efficacy.” Both men and women will be targeted as users, she added.
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Additionally, in September, Elizabeth Arden will follow up its best-selling Curious Britney Spears fragrance with a new women’s scent. While Beattie refused to give further details except to say that a commercial featuring the pregnant pop princess is already in the can, he did say that he expects it to do “as well or better” than the first scent. According to Timra Carlson, president of NPD Beauty, a division of the NPD Group, Curious, launched last September, did $36 million in its first four months on counter and ranked in the top 10 in women’s fragrances overall last year. “I have been very impressed with the deals and the products which have come out of the Arden organization, and I have no doubt that this will be another winner,” said Carlson.
Meanwhile, Arden’s expansion of Curious overseas and into the travel retail segment along with its ongoing strength in the U.S. propelled top-line growth for the beauty company, which swung to a profit in its third quarter.
For the period ended March 31, the company posted a profit of $5.6 million, or 19 cents a diluted share, which compares with a loss of $10.5 million, or 46 cents a share, in the prior year. Net sales swelled 9 percent in the quarter to $198.3 million from $182.2 million in the year prior.
Arden’s gross margin rate also improved, climbing to 48.3 percent in the most recent quarter from 45.8 percent in the prior-year period.
The rollout of Curious to international and travel retail markets guided the sales growth in the third quarter, the company said.
Beattie said he was pleased with results and told investors that Curious “was the number one launch in U.S. department stores during the 2004 holiday season and remains a top 10 fragrance.”
For the nine-month period, net income came in at $42.1 million, or $1.41 a share, which compares with a loss of $8.9 million, or 41 cents a share, in the prior period. Sales for the first three quarters rose 8 percent to $733.4 million from $677.4 million.