FEW BRIGHT SPOTS SHINE FOR FRAGRANCE AS YULE RUSH FINISHES
Byline: Pete Born
NEW YORK — Ignored by cash-strapped consumers and buried in snow, the wobbly holiday fragrance business is limping into its final weekend — but with hopes for a last-minute celebration still flickering.
The objective for most department stores is to top last year’s numbers, even by a slim margin of a few points. A few chains — among them Saks Fifth Avenue and Bloomingdale’s — are reporting sales increases running well ahead of the pack, while others hope to come from behind and finish December even with last year.
Still, for some stores, the results are so meager that they declined to be interviewed.
The heavy snowstorms that blanketed the Northeast and Midwest on Tuesday and Wednesday made merchants’ grip on the season’s final push slipperier than ever.
“It’s a day-by-day thing,” said Rita Burke Mangan, senior vice president of cosmetics at Macy’s East.
Each day represents such a huge chunk of business that the season could theoretically shift direction at a moment’s notice, leaving the final outcome in doubt.
“It’s getting more difficult to make predictions at this time of year,” said Michelle Williams, vice president and merchandise manager of cosmetics at the Federated Merchandising division of Federated Department Stores Inc.
In addition to the weather, other factors include a relatively quiet launch season, which consisted of only a handful of major debuts, compared to past years when introductions numbered in the dozens.
“It would be nice to have a little more launch activity,” said Howard Koch, divisional merchandise manager of the Parisian in Birmingham, Ala.
Moreover, the biggest-volume women’s fragrance launch of the fall, Estee Lauder’s Pleasures, was merchandised at the Lauder counter, not the fragrance bar. For that reason, it was not a help in aiding retailers, who were struggling to increase their fragrance bar numbers.
One notable development of the season was how a number of department store were able to deal with the anniversary of last year’s record sales of Calvin Klein’s CK One unisex fragrance.
Although that task loomed as a large question mark earlier this season, several stores reported this week that CK One was showing an increase. The business was boosted this season by the introduction of body products as well as improved stock levels.
Retailers also received a boost from the renewed popularity of classic women’s fragrances, led by the nearly 75-year-old Chanel No. 5, which Mangan described as “on fire.”
At Federated, Chanel is up more than 30 percent for December, and the brand’s Coco fragrance is showing a double-digit increase. Givenchy’s Amarige is “going wild — up double digits,” Williams said.
One of past years’ hottest Christmas items — sets of miniature fragrances — flamed out this season as retailers pared down their orders. “It’s dead,” said Mangan.
However, gift sets were stronger than ever. “They’re fantastic,” Williams said at Federated.
Stinginess on the part of the consumer is not a new trend, but its realization seems particularly painful this year.
“I’m looking down Third Avenue,” said Robin Bartosh, chairman and chief executive officer of the Manhattan-based Cosmetics Plus specialty store chain, who was sitting in his midtown office. “The only shopping bags I see are mine.”
Bartosh had launched what he described as a $1.2 million advertising campaign — print, electronic and outdoor — that began a month ago and is scheduled to continue through next year. While the effort seems to be making a difference, Bartosh admits it is a struggle. “We were looking for a 12 percent increase,” he said. “I’ll be happy with 7 or 8 percent.”
A number of department store retailers noted that diversion remains a rampant problem, eating into the basic business of the prestige market.
In addition, some department store retailers were feeling the heat of competition from steep markdowns of apparel and accessories in their own stores. “People are coming to grips with the fact that they have to tighten their belts,” said Joanne P. Hickey, merchandise manager of Mercantile Stores Company Inc. of Fairfield, Ohio. “What do they want to buy — sweaters that won’t be there after Christmas or a bottle of perfume that will?”
“We’ve always been competitors in the past,” Hickey said of the apparel and accessories departments in her stores. “But people are taking bigger markdowns.”
One of the standouts of the season has been Federated’s Bloomingdale’s division, which is running a mid-single-digit increase for December, despite this week’s snowstorm.
Jane Scott, vice president of cosmetics at Bloomingdale’s, said the opening of a new branch at Roosevelt Field on Long Island gave the chain a boost. But strong performances also came from the store’s key brands — Estee Lauder, Lancome, Clinique and Chanel Beaute.
Other vendors — Origins, Yves Saint Laurent and La Prairie — also are doing well. Even though Estee Lauder Pleasures and LancOme’s Tresor have come on strong, Calvin Klein’s CK One has retained its number-one ranking.
At Federated, Williams estimated that Tuesday’s snowfall — which primarily affected Bloomingdale’s and Macy’s East in New York, Stern’s in New Jersey, Jordan Marsh in Boston, and Lazarus in Ohio — clipped only about 5 percentage points off the projected cosmetics and fragrance volume for the day. She had been projecting modest gains for December. “We’re probably looking at single digits,” Williams said, adding, “it might spill into the [mid-single] digits.”
Like other retailers, Williams said the business turned around last weekend, gaining by single digits each day, sparked apparently by the beginning of Chanukah on Sunday.
On the plus side, Lauder’s Pleasures is doing “extremely well” at Federated, and Tommy from Tommy Hilfiger in Lauder’s Aramis division has gone “through the roof.”
Federated — and other retailers — also got a boost from the fall launches of Jess by Jessica McClintock, Forever by Alfred Sung, Hugo from Hugo Boss and Design for Men from Paul Sebastian.
And when it comes to the classics, not only Chanel has perked up. Tiffany is also doing well and Guerlain’s Shalimar is showing single-digit gains, as is Nina Ricci, said Williams, who noted that all these brands had done well at Mother’s Day in May.
“The classics have done a nice job of reinventing themselves,” she said, noting that the older brands have stepped up their advertising and made more aggressive use of scented strips. “Consumers are looking for a name brand that they can get their money out of.”
She speculated that the renewed consumer interest in the classics is symbiotic with the resurgence of the better fashion business.
She suggested that Federated also has connected with smaller, limited distribution brands, like Issey Miyake’s L’Eau D’issey and Jean Paul Gaultier.
But on the minus side of the ledger, Elizabeth Taylor’s White Diamonds, a department store mainstay since its 1991 launch, has had a bumpy year since the parent company, Elizabeth Arden, scaled back advertising support on White Diamonds and other brands early this year. Arden’s new president, Peter W. England, restored the support recently, but momentum had been lost.
“White Diamonds has been struggling all season,” Williams said, echoing other retailers. The fragrance’s sales improved Monday, suggesting that the reappearance of the White Diamonds TV commercial was having an impact.
“We are not seeing as much gift-giving as far as fragrance purchases go,” said Nancy Schmidt, divisional merchandise manager of Carson Pirie Scott in Chicago. The 51-store Carson’s is now running “a little below” plan, but Schmidt said she is confident the holiday stocks will sell through by Christmas Eve and the store will end December on plan. “We’re looking at being 1 or 2 points ahead of last year,” she said.
CK One is running 8 or 9 percent ahead for December, she added, noting that Carson’s has done a strong men’s fragrance business with Calvin Klein’s Obsession, Ralph Lauren’s Polo Sport, Hugo, Paul Sebastian and Drakkar Noir.
On the women’s side, in addition to Pleasures, Carson’s has done well with Yves Saint Laurent’s Opium, the Calvin Klein brands and classics like Chanel and Shalimar.
Schmidt singled out Tresor as turning in a “very strong” double-digit performance. Jess has had a strong launch and Aromatics from Clinique has done well.
At Mercantile, Hickey said her figures are running “a little ahead” of last year following a strong weekend, with hopes of ending the season in the plus column.
In addition to Pleasures, Chanel and Jess, Mercantile has had a strong season in men’s fragrance, which has had more launch activity than the women’s category. Hickey called Tommy “an absolute blessing.” She also gave high marks to Paul Sebastian’s Design for Men and Hugo.
Mangan at Macy’s East said the division had such a strong third quarter that the chain entered the season with a head start. The store remains “just slightly” ahead of plan for the season, and Mangan is aiming to finish ahead of last year.
In addition to Lauder’s Pleasures, Hilfiger’s Tommy and Chanel No. 5, Mangan cited strong performances by Tresor, Hugo, Amarige and Jessica McClintock. Far from being an albatross, CK One is running ahead by a single-digit margin.
At the Parisian, in Birmingham, Ala., Koch is shooting for an increase in the high single digits. “We will have a good increase when its all over,” he said. “But it’ll be close.”
At Federated’s Burdines division in Miami, Carey Watson, senior vice president and director of marketing, said the entire chain came out the weekend slightly below plan. While he declined to discuss the fragrance business specifically, he said the individual categories were “pretty consistent across the board.” He expects the chain to make plan this week.
As in years past, the specialty chains are having a strong Christmas, particularly Saks. Steve Bock, executive vice president and general merchandise manager, said the entire cosmetics division is running increases in the mid-teens, with the prospect of finishing the month nearly 20 percent ahead. The biggest push is coming from Lauder, Lancome, Chanel, Christian Dior, Clarins, Givenchy, Sisley and Carita. “Cosmetics has been on fire in our store,” Bock said.
He also cited newer makeup artist brands — Trish McEvoy, Bobbi Brown and MAC — and praised older brands, like Guerlain. He noted that Bulgari, L’Eau d’Issey, Boucheron, Cartier, Paco Rabanne and Tiffany are strong, and said Comme des Garcons, which entered the store in November, is a good niche business. It is distributed in 12 doors.
On a lone down note, Bock said he expects CK One to finish slightly below last year’s level.
In Dallas, John Stabenau, vice president of cosmetics, predicted that his fragrance business will exceed plan, with strong showings from Quelques Fleurs, Gaultier, Chanel, Lalique, Boucheron, Cartier, Miyake and Hermes.