LVMH TO LICENSE COLE SCENT
Byline: Kerry Diamond
NEW YORK — LVMH Moet Hennessy Louis Vuitton has added another American name to its ever-growing stable of designer brands — Kenneth Cole.
The deal, however, isn’t an acquisition. Rather, it’s a fragrance license that will be handled by the newly named American Designer Fragrances division of U.S.-based Parfums Givenchy Inc., which also includes Michael Kors and Marc Jacobs.
The long-term licensing agreement, which covers fragrance and body products, but not color cosmetics, was signed Thursday at Cole’s headquarters here. It includes all three of Cole’s brands: Kenneth Cole New York, Reaction and Unlisted.
According to Camille McDonald, president and chief executive officer of Parfum Givenchy, the first Kenneth Cole fragrances will launch globally in fall 2002, just in time for Cole’s 20th anniversary. The distribution will mostly likely encompass department and specialty stores (including LVMH-owned Sephora), plus Cole’s stores, catalogs and Web sites.
According to industry sources, Cole’s fragrance franchise could do $100 million at retail in the first four years.
Industry analyst Allan Mottus praised the partnership. “It’s a great move for Kenneth Cole and for LVMH,” he said. “Camille is one of the most creative marketers in the business and she’s a good business person. Kenneth Cole really understands the American consumer.”
The beauty industry has wondered for years why Cole never branched into fragrance. It wasn’t a reluctance to enter into licensing agreements. After all, his company has more than a dozen licenses for products ranging from watches to sun glasses, and it was rumored that he had discussions with a number of companies, from Estee Lauder to L’Oreal to Liz Claiborne, about a fragrance project. He even spoke to LVMH a few years ago.
Cole said the reason is that he was waiting until his company branched into women’s wear, which it did last fall with the introduction of the Kenneth Cole New York women’s collection.
“It’s very important to us that everything be done in the appropriate progression,” he explained during a joint interview with McDonald at his headquarters. “At the end of the day, anything we do serves everything we’ve done. Fragrance is something we’ve always felt ultimately, pardon the pun, defines the essence of the brand. I’m inflicted with the pun disease. Someone once asked if I was going to do fragrance and I said it makes sense.
“We’ve been talking about fragrance for years, but it was never the right person or the right time,” he continued. “It became clear for a lot of reasons that Camille and everyone at LVMH were perfect for us.”
Part of the reason is that Cole feels LVMH understands his attitude about consumers and branding. “Right now, the whole branding world has changed. The way business is conducted and the way the consumer is served has changed,” he said. “It’s ultimately about serving the consumers on their terms and this is what LVMH does very well. It’s what the traditional retail world has lost sight of.”
McDonald said that LVMH was interested in working with Cole for several reasons. “I believe Kenneth is on a short list of designers who have brand equity as their real anchor,” she said.
McDonald was personally interested in the project because Cole has already established an emotional link with his customers through a marketing approach that highlights social causes more than product. “That is built-in emotional equity with the brand and that’s such a strength for fragrance,” she noted. “Fragrance is really about emotion. It’s like he’s already given us our mantra for the fragrance business.”
Mottus said it was smart of Cole not to rush into a fragrance license just because almost every other designer did so. “Look how he controls his name and how meticulous he is. Other people just want the royalties,” he said.
Although Cole and McDonald don’t know each other well, Cole felt comfortable enough with the beauty executive to joke with her throughout the interview. One particular target was her spiky animal print boots. “It’s the Camille heel,” he said. The shoes weren’t a Kenneth Cole creation, although McDonald insisted there are a few pairs of his in her closet. Later, when asked about his vision for his fragrance, Cole replied that “it’s not about the money. But for Camille, it’s about the money.”
Actually, for McDonald, it’s a chance to round out Parfums Givenchy’s designer fragrance division. Michael Kors, its first licensor, launched his signature scent in the fall and will launch a men’s fragrance later this year. He represents uptown, over-the-top luxury, while Marc Jacobs, the other licensor, is all about luxury with a downtown, alternative sensibility. Jacob’s first fragrance will launch this fall. Cole, meanwhile, is a more approachable brand that appeals to a wide, diverse customer base, from teens to baby boomers.
Cole has been around since 1982, when he introduced a collection of footwear for women. Since then, his empire has expanded to include multiple categories plus retail stores in the U.S. and abroad, in places like Amsterdam, Hong Kong and Singapore. His catalog reaches more than three million consumers annually. He took his company public in mid-1994, with the initial public offering priced at $12 a share.
Last month, Cole’s company, Kenneth Cole Productions, reported a 31.8 percent increase in income for the fourth quarter ended Dec. 31 and a 54 percent jump in income for the year. In the fourth quarter, income was $11.3 million, or 52 cents a diluted share, compared with $8.6 million, or 39 cents, in the comparable 1999 quarter. Revenue was up 17.4 percent to $110 million from $94 million. However, because of an anticipated difficult first quarter, the company reassessed its guidance for fiscal 2001 to $1.85. As of press time, the stock was trading at $25.30 a share.
Along the way, Cole has been honored by a number of organizations like Amnesty International and AmFar, for proving that philanthropy doesn’t have to take a back seat to profits.
Since he’s been thinking about fragrance for so long, Cole already has some distinct ideas about what he wants and what his likes and dislikes are regarding existing fragrances. He admitted that he already wears fragrance, but he wouldn’t reveal the brand. “Just say it’s Kenneth Cole,” he suggested. “Truthfully, the other day, my wife went through my cabinets and pulled out 20 different fragrances. I’ve tried everything knowing that, one day, I was going to have to deal with this.”
He’s visited fragrance counters and found the experience “confusing.” “We need to simplify. We need to have a distinct, specific point of view,” he said.
McDonald nodded in agreement. “There is so much sameness out there. This partnership is about making magical products. There aren’t enough of them out there.”