The pros of the Revlon/Arden deal, new pillar fragrances from leading players, L'Oréal revs up NYX Cosmetics, and Zara beats profit estimates.
Analysis: The Pros of the Revlon/Arden deal
There's no need to be too forensic about the financial details of Revlon's acquisition of Elizabeth Arden. Yes, both historic brands have been battling challenging conditions, but joining forces has many advantages. The major upshot will be the forging of a $US3 billion-plus company better able to compete against the major multinationals such as and L'Oréal.
Revlon has been trying hard to turn its fortunes around. Not only via the 'Love is On' campaign, but through a series of buyouts of which this is only the latest. The company bought The Colomer Group for $US660 million in 2013, a move which not only accessed the professional beauty market, but also ushered the and American Crew men's haircare brands into the fold. Last year, Revlon bought CBBeauty, the UK-based distributor and maker of One Direction fragrances. In early June, the acquisition of from Coty was finalised, further extending Revlon's already considerable clout in the nail category.
The Arden buyout opens up yet another new channel - prestige beauty. The global and US prestige beauty market is surging strongly, and Arden's strengths centre on premium make-up, skincare and prestige fragrance brands such as and . A portfolio which not only widens Revlon's footprint in department stores worldwide but also in travel retail - one of the fastest growing sectors for prestige beauty sales. The Chinese are the number one buyers of luxury beauty products in global travel retail and an increased presence in duty-free could springboard major growth in the Asia-Pacific region - the runaway growth region in skincare and makeup.
According to analysts, if the strategy pays off, Revlon's global share of the colour cosmetics market will increase to 5.5 per cent. The company's fragrance and skincare market shares could also reach 0.7 per cent and 0.5 per cent, respectively. Strong drivers will be the John Varvatos men's fragrance brand, which is experiencing strong growth in Japan, and innovative product launches from Prevage.
New pillar fragrances from leading players
Flanker fever has been the norm for new fragrance releases for some years. A sure sign of a major hit has long been a succession of different strength versions from light to absolu. This year is different. In August and September, several leading brands are launching a select number of new juices.
Following the success of Yves Saint Laurent's Black Opium, 's La Petite Robe Noire and Dior's Poison Girl with Millennials, Zadig & Voltaire will kickstart its license with Shiseido-owned Beaute Prestige International (BPI) with a rock chic duo - This is Her and This is Him. The feminine scent is a woody floral and its male counterpart is a woody oriental. BPI is keen to point out that youth is a state of mind, not a question of age. In spite of the fact that the fashion brand's heartland is Europe and France, BPI are hoping that both fragrances will rank as top 15 scents worldwide.
Louis Vuitton is a big name in the fragrance business through brands such as Dior and . But the world's largest luxury goods group is launching its first "own brand" scent since Eau de Voyage in 1946. Rolling out from September, Les Parfums Louis Vuitton is the first release from the Les Fontaines Parfumees studio founded four years ago under the guidance of master nose, Jacques Cavallier-Belletrud. Details are being kept under wraps, but the major theme will be pure florals heightened by a new CO2 extraction method.
Prada Candy and Prada Luna Rossa have fuelled 's fragrance revenues over the past three years. The Italian fashion house is releasing its first master brand of scents - La Femme for women and L'Homme for men over the next few months. According to licensee Puig, the two fragrances are expected to reach sales of $US120 million in the first 12 months.
Inter Parfums is heralding a new chapter for with the launch of Modern Princess, clearly targeting Millennials. From the same stable comes Coach - the Fragrance. The name may be same as the juice launched when the US leathergoods and accessories brand partnered with Estée Lauder in 2007, but the bottle and its contents will be completely different. As we reported recently, YSL is also keen to cement its booming success with younger consumers with the launch of Mon Paris.
L'Oréal revs up NYX Cosmetics
The French multinational bought NYX Professional Makeup two years ago for a reported $US500 million. The affordable, cutting edge US make-up brand has expanded its reach in Australia; first through Target and then with the recent roll-out in Priceline. At the beginning of June, NYX opened its 11th bricks-and-mortar store in the US in a mere seven months. The new standalone is in Brooklyn and US real estate site, The Real Deal, reports that the brand recently signed its first Manhattan lease in Union Square within throwing distance of the and Sephora stores.
The brand offers 2000 SKUs - a third of which are lip products. The new strategy in the US is significant because only a curated segment of the NYX range is available in leading US retailers such as Ulta, Target and CVS drugstores. L'Oréal has been closely tracking the expansion of Kiko Milano, the inexpensive Italian brand gaining strong traction in the US, and Inglot, the highly pigmented professional makeup brand from Poland, which is expanding strongly in Europe, the US, Australia and the Middle East.
The US concept stores look - well - very Sephora in terms of testing, sophistication and digital gadgetry. The main difference is that NYX is banking on customers buying multiples of products they like because of the much lower price tags.
Zara beats profit estimates
The world's hunger for fast fashion shows no sign of abating. H&M (4000 stores worldwide) posted healthy results recently. Tadashi Yanai, the founder of Uniqlo (1734 stores), is Japan's richest man with a net worth of $US21.5 billion, and has big plans to knock off Inditex, the parent company of Zara, as the world's largest apparel maker.
Uniqlo may rank as Japan's most valuable retail brand, but the company still has a long way to go to rival Inditex, which operates 7000 Zara and other fashion stores worldwide. An unseasonally warm northern hemisphere winter crimped sales at H&M and Uniqlo, but didn't affect the fashion giant.
Operating profits for the first three months of the year rose six per cent to US$790 million, cruising past analysts' expectations. To further stimulate sales, Inditex plans to sell all its brands online in every European market and Turkey by the end of the year. Online sales now account for 6 per cent of global sales - double the percentage of 2013.
Snippets from the wires
- Venture captalists are shying away from the subscription beauty market. The category has become over-saturated with the launch of Sephora's Play subscription boxes and the continued success of Michelle Phan's Ipsy in the US. After hiring JPMorgan Chase to raise funding, Birchbox has failed to ignite further interest from investors for its planned expansion. Plans for bricks-and-mortar stores and expansion into China have been put on the back burner.
- Estée Lauder has been ramping up its men's portfolio - Lab Series, , Aveda Man, Clinique for Men and Zegna over the past few years. In the UK, the multinational trialed a pop-up store called The Grooming Station in London's Covent Garden and recently rolled out another in its HQ in the British capital. Offering barber shop services, clients can also peruse all the leading Lauder men's brands.
- Small brands don't always prosper when they are bought out by an industry giant. Eighteen months ago, Walgreens Boots Alliance acquired indie personal care brand, Soap & Glory, from founder Marcia Kilgour in a deal worth between $80 and $100 million. Sales have dipped to $25 million - a drop of $5.2 million - over the previous year when the brand recorded a $2.8 million pre-tax profit.
- The Queen looks fabulous for a woman celebrating her 90th birthday. It's easy to forget that in her youth she was a "babe", as one commentator accurately put it in a recent documentary. She still keeps up with fashion trends, according to the International Business Times. Her Majesty prefers to wear one nail polish shade - Ballet Slippers from essie.
Newsletter image: Instagram.com/hm
