NEW YORK — Elizabeth Arden Salon Holdings, the largest branded spa company in the U.S., is set to open between 30 and 40 new freestanding spas over the next five years in cities such as Ft. Lauderdale, Fla., and Cross Keys, Md. And, in an effort to appeal to a younger, more affluent demographic, the new units, as well as existing spas, will sport a new modern design based on the recently revamped flagship in Manhattan.
The growth spurt comes four years after Greenwich, Conn.-based North Castle Partners LLC, a private equity firm specializing in the healthy living sector, acquired a controlling interest of the privately held company. Salon Holdings operates 116 spas, salons and day spas nationwide, which generate between $180 million and $200 million in sales per year, according to industry sources. An additional 30 to 40 salons could double the company’s revenues in the next four to five years, these sources added, accelerating the group’s estimated 5 to 10 percent annual sales and earnings growth to nearly 20 percent.
The cosmetics and fragrance arm of Elizabeth Arden is a completely separate business from the spa and salon group, and is owned and operated by Elizabeth Arden Inc. in Miami Lakes, Fla.
This year’s freestanding locations include Garden City, N.Y.; Darien, Conn.; Cross Keys and Ft. Lauderdale. A Red Door spa is planned for a resort in Providence, R.I., as well.
“The strategy is to build a reputation by creating these new experiences in freestanding locations in key areas,” said John Richards, Salon Holdings’ chief executive officer. “Then, we attract [hotels and resorts] who feel they need to have a good spa in their location. We are [still] in the process of locating and developing a large number of day spas over the next five years. No one is coming anywhere near that.”
Richards, who hails from the Four Seasons Hotels and Resorts, where he was executive vice president of operations, and Starbucks Corp., where he was president of North American operations, joined Salon Holdings a year following North Castle’s partnership with the group, which has headquarters in Stamford, Conn.
The new locations look to captivate a new, younger audience, Richards added. “I think we have to understand the [Elizabeth Arden] brand goes back decades, and it’s an established, mature brand. But a younger group will likely take hold as new locations in affluent suburban areas arrive.”
The average age of an Elizabeth Arden customer is 42 years old, but Richards said the perception is that she is much older. However, it’s not unusual to have three generations in the spa at one time.
Arden’s presence in the high-end retail-service business arena is as diverse as the company’s history. After Elizabeth Arden died in 1966, the company was bought by the pharmaceutical group Eli Lilly and Co. In the Eighties, L’Oréal Group bought it, but quickly flipped it to Unilever. Now, under the financial backing of North Castle, the privately owned company operates 26 Mario Tricoci Hair Salons & Day Spas, mainly in Chicago; 28 freestanding Red Door spas; Elizabeth Arden spas in Marshall Field’s and Saks Fifth Avenue department stores; Arden salons in prestige department stores, which focus only on hair, and unbranded salons in prestige department stores.
There are no plans to advertise the company’s growth, as what attracts consumers to Arden is word of mouth and gift certificates, Richards said.
The new locations — and existing ones ready for a revamp — will use the Fifth Avenue salon as a prototype for its new look. According to Teresa McKee, vice president of operations, the new salon, now located on the sixth floor, has a whole new look, complete with subtle retail displays, pedicure thrones and private VIP rooms for hair and makeup services. Formerly on the second floor, the new hair, nail and makeup area encompasses different rooms here and takes a huge step away from Arden’s traditional earth tones and sounds-of-nature background music. Instead, oak meets splashes of red in the reception area, with steel and white walls in the salon area and celery-colored stone tile floors in the pedicure room. Different types of music — from mellow to pop — enhance each room’s atmosphere.
“No expense was spared” on the 12-week renovation, which was unveiled last month, McKee said. “Our primary goal was to create a luxurious experience, raising the bar of our service levels.”
The second floor is now being leased to another company in the Elizabeth Arden building located at 91 Fifth Ave. But other changes at Arden’s flagship have taken place. The ninth-floor nail service area, convenient for clients also receiving massages, has changed to a relaxation room, which will receive further upgrades next year. The reception area on the first floor will have its aggressive retail approach tweaked, as will the eighth floor, taking a cue from the sixth floor, which utilizes displays built into the walls, accented by subtle lighting.
The new look of the flagship, as well as the new Arden locations throughout the U.S., should help clear up any confusion consumers have regarding what a spa is.
According to Daisy Chin-Lor, executive vice president and chief marketing officer for Arden, the definition has been blurred by salons adding nail services to their menu and then calling themselves a spa.
“The credibility of a spa has come into question. Arden, however, is personalized and customized, and offers services such as custom color foundation. We regard ourselves as being the standard in luxury,” Chin-Lor said.