NEW YORK — DLI Holdings Corp.’s acquisition last week of Del Laboratories came at a crucial point for the cosmetics and health and beauty care manufacturer.

This story first appeared in the July 9, 2004 issue of WWD. Subscribe Today.

DLI purchased Del, best known for Sally Hansen nail products in beauty and Orajel in health care, for $465 million. DLI is a company jointly owned by affiliates of Kelso & Company and Church & Dwight Co.

What makes the timing so vital is that retailers are looking for Del to kick into overdrive and assume its place among the big players in cosmetics.

Del has always been a major factor in cosmetics, especially in nail care, where Sally Hansen is the market leader. However, retailers have viewed the company as a midtier player with niche brands putting it well behind the Procter & Gambles and L’Oréals of the world.

But with Revlon struggling, retailers are looking for other manufacturers to step up to the plate. Many chains are revamping planograms for 2005 and are looking for vibrant products to lure shoppers back to beauty.

Although niche brands will be important, most buyers said they want to put support behind nationally advertised brands. They are looking for Del to extend its beauty franchise.

The appointment of William McMenemy as the new president and chief executive officer, replacing Dan K. Wassong, who will retire, is viewed by the trade as a positive move. Wassong has been the architect of Del’s success to this point and has strong relationships with major retailers. However, buyers welcome the appointment of McMenemy, a lifelong Del employee, to the post. His 38 years of experience are expected to help him understand the improvements that need to be made.

One brand McMenemy won’t need to tinker with is Sally Hansen. Sally Hansen unseated Revlon as the nail category leader two years ago. Sally Hansen products occupy the number one, three, five and eight top-selling spots in nail polish, according to Information Resources Inc. statistics for the 52-week period ended Jan. 25.

To further boost sales, the company is launching a collection of upscale implements, as well as salon-inspired nail treatments. The Sally Hansen name is also being used on lip products and proprietary items, such as Fast and Flawless Airbrush Makeup.

NYC is another promising property. The value brand debuted at a time when Wet ’n’ Wild was undergoing challenges under new management. For some chains, NYC has been a hit. “NYC is a very good brand for us,” said a buyer with a major supermarket retailer. Others think the brand could use an update.

Many are watching a battle play out at CVS between NYC and Wet ’n’ Wild. CVS is currently pitting the two brands against each other in tests for bragging rights for getting space as the chain’s budget offering.

A handful of other brands need a bit more attention, and buyers think the sale kicks that into gear. “They were quiet at Marketplace and not talking that much about new products,” said Valerie Cheyney, buyer for Happy Harry’s. “Now we’ll see more action.”

Retailers hope part of the attack will include burnishing the image of Healing Beauty. “We have three feet and could probably do with only two,” said one buyer. To date, Healing Beauty has become only an item line versus a success across the board. In an interview, McMenemy said an effort is being made to fine-tune the brand. Actions must come quickly for Healing Beauty to maintain its shelf space.

Of equal importance, buyers said, is the need to rebuild Corn Silk, a powder foundation with a cult following. Del had tinkered with the packaging and is now retrenching. Retailers welcome the return of Corn Silk’s trademark blue package. “It was a mistake when they moved away from that, and they see it and are changing back,” said one source.

The international portion of Del’s business also holds potential. Harvey Alstodt, the current executive vice president of sales, is maintaining that role and adding the title of president of Global Business. One of his goals will be to forge into more foreign markets.

The over-the-counter side of Del is led by Orajel, the number two oral relief brand, with sales of $27 million, just behind Anbesol. For Church & Dwight, Orajel adds to a growing portfolio, including other acquired products such as Pepsodent and Mentadent.

Although Orajel is the most visible, Del also manufactures health care items, including Pronto, a lice remedy, and Arthricare. In fact, the roots of Del are in the health care side of the business and date back to the early 1960s, when Martin Revson, Charles Revson’s brother, acquired a health care manufacturer. That grew into Del Laboratories and the cosmetics items.

Today, with its new ownership and a commitment to growth, Del Laboratories could be starting its next chapter. “Bill McMenemy is the mastermind to take the company to the next level,” said industry consultant Allan Mottus. Retailers, in need of ways to boost sagging cosmetics sales, hope he is right.