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Celebrity Fragrances Add to Slide at Elizabeth Arden

Posted by Unknown on Tuesday, August 19, 2014

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Business Day |Celebrity Fragrances Add to Slide at Elizabeth Arden



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So much for the sweet smell of success.


Elizabeth Arden, the beauty company, blamed its celebrity fragrance lines featuring Justin Bieber and Taylor Swift, among others, for a steep drop in sales in the fiscal fourth quarter.


Its earnings report delivered a bleak picture — recording Arden’s worst quarterly decline in a decade — for a company that has tried to appeal to a younger clientele by teaming up with pop stars and by retooling some of its signature Red Door salons. Along with “Someday,” a soft, musky scent in Mr. Bieber’s line, Elizabeth Arden also has fragrances from the rapper Nicki Minaj and the former teenage idol Britney Spears.


Net sales fell close to 30 percent to $191 million for the three months that ended June 30. For the year, net sales fell to $1.1 billion, from $1.3 billion in 2013.


The immediate future does not look too bright, either. In its earnings release, the company warned that the first quarter of its 2015 fiscal year “will continue to be challenged by the same factors that affected recent quarters.”




Taylor Swift is among the celebrities who have a fragrance line. Evan Agostini/Associated Press

Elizabeth Arden relies more heavily on sales of its fragrances than rivals like Estée Lauder, and it has a large presence in mass-market stores like Walmart. Fragrances make up 75 percent of the company’s sales, while its own brand of cosmetics accounts for 25 percent.


And unlike the high-end fragrances at department stores, celebrity lines stock the shelves at retailers like Walmart and Kohl’s, whose budget-conscious customers have not recovered from the recession.


“The celebrity fragrance market is still a good market,” said Jason Gere, a consumer product analyst at KeyBanc Capital Markets “Right now, it seems to be buckling a little bit with the weaker consumer out there.”


The earnings report on Tuesday sent the company’s stock plummeting more than 23 percent.


Companies like Elizabeth Arden have had some success capitalizing on their celebrity partnerships. At its height, Ms. Spears’s perfume generated more than $100 million in sales a year, Mr. Gere said. And celebrities, as well as their handlers, continue to seek partnerships with the fragrance business to help build a star’s brand.


Elizabeth Arden still carries a line of fragrance featuring the actress Elizabeth Taylor, who introduced a fragrance more than 20 years ago, when such celebrity branding was far less common.


Since then, the world of celebrity perfumes has become more democratized as many companies have tried to target a younger audience. Perfumes bear the names of actresses like Sarah Jessica Parker, Jennifer Aniston and Halle Berry, along with socialites who include Kim Kardashian and Paris Hilton.


Elizabeth Arden’s cosmetics mainly appeal to middle-age and older women, who are familiar with its red-and-white logo. For the fragrance lines aimed at younger consumers, however, many of the bottles use designs that prominently feature celebrity names rather than the company logo.


The company’s other celebrity fragrances include lines from Mariah Carey and Usher. And all its perfumes may still have an audience, even if that audience is unwilling, or unable, to buy them right now.


“There’s this attraction to wearing the same things that movie stars wear or singers,” Mr. Gere said. “There’s just this natural aspiration to be like somebody else.”


The company also announced on Tuesday that the private equity firm Rhône Capital had agreed to buy $50 million of preferred stock and warrants to purchase 7.6 percent of the company.


In its earnings release, E. Scott Beattie, Elizabeth Arden’s chief executive, said:


“I am very excited to have Rhône Capital as an equity partner, to support the turnaround of our business in the short term and the continued global growth and development of our brands and organization in the future. I am confident that we have a compelling business plan to improve the company’s performance.”



A version of this article appears in print on August 20, 2014, on page B3 of the New York edition with the headline: Stars’ Scents Add to Slide At Company In Cosmetics .




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