MIDWOOD TACKLES ARDEN REVAMP
Byline: Pete Born
BOCA RATON, Fla. — Peter Midwood has his work cut out for him in restructuring Elizabeth Arden.
The Arden president discussed the challenge during a break from the networking and cabana sessions at the Cosmetic Toiletry and Fragrance Association Meeting here this week.
Arden has the “schizophrenic” task of running two operations — “a great fragrance business” and a color cosmetics and treatment segment, whose financial condition, particularly in U.S. department stores, is the source of most of the company’s woes.
In making the key decision recently that it would not put Arden up for sale, parent Unilever gave the green light to investing in the fragrance side of the company, while reducing the costs and improving the viability of the cosmetics side.
“We want to get the color and skin business back on track,” said Midwood, the former head of international, who took Arden’s helm in January following the retirement of Peter England.
The cost structure had to be downsized sharply, resulting in the departure of 30 or 40 staffers from a group that numbered 400 before the cutbacks, according to sources. Also, one of two floors at the New York headquarters was eliminated and some functions were moved to Arden’s Stamford, Conn., facility.
Among those who departed were Joseph Spellman, executive vice president of product marketing and creative services, and John McCook, senior vice president of research and development. Ron Latham was never replaced after retiring last fall; much of the resultant void has been filled by Geoffrey Peasland, senior vice president of brand development and creative services.
Midwood said the principal problem was that Arden’s infrastructure was twice as large as volume could justify. That means it is a $780 million company with the cost structure of a $1.5 billion giant.
Within the larger framework, the old Parfums International Ltd. division, or Arden’s fragrance unit,”will have to grow,” he said. “We haven’t got enough people on the PIL side.”
In contrast to the troubled cosmetics and skin care business, the fragrance side is flourishing. In October, Arden will stage its first global fragrance launch with the women’s version of Cerruti Image, and the company is preparing to bring Very Valentino to the U.S. following its successful European launch.
“What we have to do is talk to our major [retail] customers,” Midwood said, underscoring his intent to carefully consider the opinions of those affected. He ruled out any move into the mass market. “We need to address it in a prestigious way,” he added. “We are moving at absolutely top speed, but it will take two or three months.”
The company is basically sound, he said, adding that the trick was to “flip Arden from being not profitable enough to being a good contributor.”