Estee Lauder to Buy Smashbox Cosmetics

Estée Lauder Cos. nabs the photo-studio-born makeup company Smashbox, a company founded in 1996 by Dean and Davis Factor.

with contributions from Rachel Brown
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Smashbox Cosmetics

Photo By Courtesy Photo

Smashbox’s move to QVC was auspicious and the home shopping channel has been an important platform for the brand’s products. Halo Hydrating Perfecting Powder, which boasts the benefits of skin care ingredients, is a case in point. QVC put the product, priced at roughly $72, on its Web site three months before it was presented on air and had a year-long exclusive. To date, more than 144,000 units have been ordered via QVC.

Currently, Lauder sells Bobbi Brown, Origins, Clinique and the hair care line Ojon on QVC. At this point, none of the Lauder brands are sold on QVC’s main rival, HSN.

Smashbox is best known for camera-friendly products such as Photo Finish primer and Photo Op Under Eye Brightener. Freda said its positioning as a photo-studio inspired, Hollywood brand gives Smashbox a unique positioning within the Lauder brand portfolio, which includes makeup artist-created lines MAC Cosmetics, with its strong fashion bent, and Bobbi Brown, which is tailored for everyday women. Also, because Smashbox largely lives in different retail channels from MAC and Bobbi Brown, Freda said he does not anticipate the brand to cannibalize sales of the other two or the remaining 24 brands in the group’s portfolio.

John Demsey, Lauder group president responsible for the MAC, Bobbi Brown, Estée Lauder, Tom Ford, Prescriptives, Jo Malone and La Mer brands, will oversee Smashbox after the close of the deal. “This is a meeting of like-minded organizations,” he said, noting they are both family oriented and focused on field service and selective distribution. Demsey said, “We come here with tremendous respect for what [Smashbox] has accomplished. Smashbox offers a fresh new way of looking at specialty retail and at video and creative production.”

William Lauder, executive chairman of Lauder, stated, “One of the enduring strengths of the Estée Lauder Cos. is our ability to identify brands with unique positioning and nurture those brands to accelerate their momentum and realize their full growth potential. The addition of Smashbox to our portfolio continues this 64-year legacy. We expect that with our strong cultural synergies and shared appreciation for family heritage, this will be a wonderful union.”

At first glance, Smashbox doesn’t seem to neatly fit into Lauder’s strategic priorities — as outlined by Freda earlier this year — of skin care and Asia. But last month, Freda clarified to WWD, “Skin care and Asia are our priorities, but we also will look more broadly.” He emphasized, “We’ve always said [mergers and acquisitions] are part of our strategy,” adding the company will pursue opportunities that widen its reach by category, distribution channel and in geographic scope.

As one analyst declared, “Lauder can’t ignore open sell anymore.”

The news of Lauder’s acquisition of Smashbox did not shock retailers, although some expressed modest surprise. They are curious to see how Lauder will grow the brand.

Robin Coe-Hutshing, founder and creative director of Studio BeautyMix, which houses a Smashbox Pro Studio, said, “I knew Lauder would never be going the indie route again with smaller brands. I don’t see them nurturing small brands to the finish line any more.” She added, “It has to be something that can really go to the distance in the Lauder scheme of bigness and this certainly fits the bill. I think it complements their other brands. It is not particularly redundant in terms of the mission statement of the brand.”

Burke of QVC gave the union his blessing, saying, “We love Smashbox. We are so grateful to them for their commitment to us for all of these years, and we are very much in awe of the Lauder corporation and anxious to be a greater partner to them. It is good thing as far as we are concerned.”

As mergers and acquisition activity has begun to thaw this spring, multichannel beauty brands have been in high demand. Earlier this year, Shiseido Co. Ltd. acquired mineral makeup company Bare Escentuals Inc. for $1.7 billion, giving the Japanese cosmetics giant a stronger foothold across all retail channels, TV shopping and open sell included.


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