BW Confidential - Issue #10 - May/June 2012 - (Page 10)
What’s next for Avon?
Speculation over the future of troubled direct-sales company Avon shows no signs of dissipating. Just before going to press, there were reports that a former Avon shareholder John Rochon, who is also a previous ceo of direct seller Mary Kay was preparing a takeover bid for the group through his company Richmont Holdings. Rochon had tried to take over Avon in the late 1980s. This news emerged just one week after Coty made public that it had submitted a bid to buy Avon for $10bn. Avon rejected the bid saying it under-valued the company and that Coty was interested in a “free look” at its books. After shunning the offer, Avon swiftly appointed former Johnson & Johnson executive Sherilyn McCoy as ceo, a position that had been left vacant for four months after Andrea Jung stepped down following criticism over her management. While McCoy has no direct-sales experience, she has been called a “turnaround expert”. The appointment of a ceo was seen as a direct rebuke to Coty, which had said that Avon should hold off naming a new leader while it was interested in holding talks over the acquisition. Analysts still say that Coty may raise its bid for Avon. Avon has been mired in problems over the past year. It has been criticized for a series of earnings misses and is being investigated on allegations that it had bribed officials in China and other markets and also on how it shared information with analysts. Coty’s bid has been seen as a way of exploiting Avon’s weakness and trying to buy an ‘iconic company’ at a good price. If the deal materialized, Coty would be buying a company more than twice its size (Coty does sales of $4.5bn) and one that would significantly change its portfolio split in terms of geography and product mix. Fragrance still weighs heavily in Coty’s sales at 57% of its business, and it does only 26% in emerging markets, compared with 68% for Avon. A deal would give Coty a firm foothold in these countries and a door-to-door distribution model through which it could peddle its brands in places like Brazil.
Japan-based Kanebo Cosmetics has named Masumi Natsusaka as its new president. Natsusaka replaces Tadashi Uematsu who will retire. Natsusaka joined Kanebo in 1979 and was most recently president of Kao Corp’s Beauty Care Business Unit. He assumes his new position on June 20. German drugstore chain Schlecker, which filed for bankruptcy in January, hopes to find an investor by the end of May. The company is to shut more than 2,000 of its 5,400 stores, which is to leave a gap in distribution for beauty brands. Schlecker is also said to owe its suppliers hundreds of millions of euros. According to press reports, more than 20 parties are interested in investing in the chain. French fragrance manufacturer Parfums Parour has signed a license to develop a fragrance under the Fouquet’s restaurant brand. The range, to launch this summer, will include fragrance, home scents and candles. US-based luxury departmentstore group Neiman Marcus has taken a stake in Asian flash-sale site company Glamour Sales Holding, which marks the retailer’s first move into China. Glamour Sales, founded in 2009, operates flash-sale sites in China and Japan. Neiman Marcus Group will invest $28m in Glamour Sales Holding to both help fuel the growth of Glamour Sales’ flash-sales business in Asia and build a new branded e-commerce business. Neiman Marcus aims to launch an e-commerce site at the end of 2012 featuring full-price and current-season merchandise.
Puig sees strong 2011 results
Spanish group Puig saw 2011 net profit rise 19% to €155m, while sales were up 12% to €1.3bn for the year. The group said fragrance sales were driven by the new launches 212 VIP Men, and CH L’Eau from Carolina Herrera, as well as continued growth of Paco Rabanne’s 1 Million scent for men, which Puig claims is now near to a number-one ranking on a global level. Puig said it saw its market share in the selective fragrance market in 2011 rise to 7.6%, which places it seventh in the global prestige fragrance ranking. The group’s goal is reach a market share of 10% or a number-five ranking by 2014. The group, which took a majority stake in the Jean Paul Gaultier brand in 2011, underlined that it has healthy cash flow to ensure future growth, leading analysts to believe it will make further acquisitions. Puig now does 80% of its business internationally and said that it has made a good start to 2012 with sales in the first quarter up 20%. It expects sales of more than €1.4bn in 2012.
More Brazil launches
More brands continue to test the Brazilian market, even at the difficult high-end of the market. Fragrance brand Bond No.9 has just launched in Brazil with distributor RR Perfumes and Cosmetics, which is part of the Bright Star Group. The line will be available in only 15 doors in the country. Brand founder Laurice Rahmé said that despite the high price of the brand there (between US$273 and US$656), there is an opportunity in Brazil for high-end perfumes with a strong concept. Meanwhile, on a different tack, L’Occitane has launched its Le Couvent des Minimes brand in Brazil exclusively in the 159 stores of Brazilian supermarket chain Pão de Açucar. The brand has more than 30 products in eight lines (body, hair and fragrances). The L´Occitane brand launched in Brazil in 1995 and now has 90 stores there.
May-June 2012 - N°10 - BW Confidential
Table of Contents for the Digital Edition of BW Confidential - Issue #10 - May/June 2012
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Clinique global brand president Lynne Greene
- Category overview
- Retail technology
- Retail viewpoint
- The latest trends
- Spas & healthcare
- Spa case studies
- Inspiration from Apple
- Store concepts
Market watch: China
- Country overview
- Industry viewpoint
- Prestige retailing
- Taobao & the internet
Digital focus Social media strategies
Strategy spotlight Case studies to inspire
Travel retail: Asia Pacific
- Regional overview
- Interview: Delhi Duty Free Services coo Arun Barathi
Radar Six up-and-coming beauty brands
- Make-up packs
- Innovation showcase
Last word Metis Insights director Stéphanie Morou
BW Confidential - Issue #10 - May/June 2012