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A New Beauty Makeup at Unilever

With one swift, decisive stroke, Unilever consolidated and streamlined the top management of its prestige fragrance business Thursday.

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Laura Lee Miller

Laura Lee Miller

Photo By WWD Staff

Hillary Dart

Hillary Dart

Photo By WWD Staff

Gabriele Pungerscheg

Gabriele Pungerscheg

Photo By WWD Staff

NEW YORK — With one swift, decisive stroke, Unilever consolidated and streamlined the top management of its prestige fragrance business Thursday.

The three former divisions of Unilever Cosmetics International — Calvin Klein Cosmetics, Unilever Prestige and European Designer Parfums — are being combined, and their former presidents — Hilary Dart, Laura Lee Miller and Gabriele Pungerscheg — are being replaced by a 20-year Unilever veteran, Laura Klauberg.

She will assume her new duties today as senior vice president of marketing for UCI, reporting to Kevin Boyce, president and chief executive officer of UCI. He took the helm in June following an earlier shakeup in May, in which longtime Calvin Klein veteran Paulanne Mancuso left the company. Boyce previously had been president and ceo of Unilever Canada.

Klauberg is formerly vice president of brand development for skin care at Unilever Home and Personal Care, North America. Her previous brands include Ponds, Vaseline, Brut and Fabergé.

In her new role, she will head global marketing for all of UCI’s brands, including Calvin Klein, Nautica, Vera Wang, BCBG Max Azria, Chloé, Cerruti and Karl Lagerfeld. Unilever previously sold its Valentino beauty license to Procter & Gamble.

Boyce could not be reached for comment Thursday, but in a statement he said, “We are creating this important position to leverage the strength of our organization’s marketing creativity and resources, leading to even greater growth opportunities for our brands. Laura brings to UCI a wealth of experience in innovation and marketing and the entire team here is excited about working with her on major UCI initiatives for 2004, including innovations for Calvin Klein, Cerruti and Vera Wang.”

A Unilever spokeswoman indicated that plans would go forward to launch a men’s version of the hot-selling Vera Wang and a new Cerruti men’s fragrance, called CerrutiSi, which will be launched in Europe and the Middle East in mid-March.

The spokeswoman asserted that Unilever appreciates the contributions and the “incredible talents” of the three departing presidents. She repeatedly stressed that the move is being made to strengthen the business in a drive to “refine the organization to lead to greater growth and align the organization to focus resources.”
She added that Klauberg will “solidify the marketing platform” and that there will be great gains in efficiency and continuity. “We are very optimistic,” she concluded.

However, executives in the market are not so sure. “Laura Lee Miller was a key factor in making the Vera Wang fragrance number-one in the prestige category,” said Chet Hazzard, president and chief operating officer of Vera Wang, one of Unilever’s licensors. “Laura has led the Vera Wang fragrance business with a professionalism and a passion that I think is very rare in this industry. Together, we created a momentum that continues today, with new product launches over the next 18 months. We are obviously concerned about this sudden and very unexpected change. We are anxious to better understand Unilever’s strategy in the prestige fragrance part of their business, given these changes.”

At Calvin Klein Inc., another licensor, Tom Murry, president and chief operating officer, said,“We have a long-standing and excellent relationship with Calvin Klein Cosmetics, and trust that the decisions being announced today are best for the future of the business. We are in the process of some great growth initiatives that will increase our media spend and maintain our strong position in the market.”

Despite declarations of optimism by the company, Thursday’s developments tended to fan the flames of long-simmering speculation that Unilever is intent on selling its fragrance businesses. The Unilever spokeswoman cited a policy against commenting on rumors, while insisting that Unilever is committed to the business.

A year ago, Unilever was rumored to have shopped its entire fragrance business with the hope of getting a sale price in excess of $1 billion. According to sources, the highest bid came in at around $425 million and Unilever took the offer off the block. At that time, sales of Klein were estimated at $500 million to $600 million and the entire business was said to amount to $750 million to $850 million. In the year since, the entire business is said to have been flat at best.

The current speculation is that Elizabeth Arden is gunning to buy the Calvin Klein Cosmetics business, perhaps as soon as next spring.

“The rumor that Elizabeth Arden is interested in buying Calvin Klein Cosmetics has been in the market for a long time,” said David Maura, an analyst who covers Elizabeth Arden for First Albany Corp. “One could read into Arden’s recent announcement [of an additional public offering of common stock] that they are trying to position themselves to make further acquisitions. Elizabeth Arden is one of the best at distribution in the midtier and mass channels. I think Scott Beattie [chief executive officer of Elizabeth Arden] would have bought Calvin Klein a year ago if possible, but he wanted to wait until he had a stronger balance sheet and stronger operating results before contemplating another acquisition. Clearly, in our view, he’s done both.”
Arden announced on Oct. 2 that it planned to undertake a public offering of 4 million shares of its common stock and had filed a preliminary prospectus supplement to its existing shelf registration statement with the Securities and Exchange Commission to that effect.

Speculation among market executives is that Beattie’s chief obstacle in making an acquisition is that Unilever already holds Elizabeth Arden stock from a previous deal in which Beattie acquired the Arden and Elizabeth Taylor businesses from Unilever. Those shares must be bought back before another deal can be made, or so sources speculate. Currently, Arden holds about 2.7 million shares of its stock, and Unilever owns approximately 1.3 million shares of Arden stock.

Arden gained 3 percent, or 55 cents, to close at $18.89 in Thursday’s Nasdaq session, while Unilever closed up 40 cents, or 1.2 percent, to close at $34.85 on the New York Stock Exchange.

Scott Beattie, reached at press time Thursday, declined to comment on the market rumors that Arden is a likely suitor for Calvin Klein Cosmetics if Unilever places it up for sale.

On July 30, Unilever plc chairman Niall FitzGerald turned up the heat on the firm’s prestige perfume business after the firm reported lower sales and earnings for the second quarter. Speaking to analysts on a conference call, FitzGerald identified frozen foods, household care and prestige fragrances as three businesses that were failing to meet its standards and were holding back sales growth.

“These businesses are ‘on watch’; they are not up for sale,” he said during the call. “These businesses are not performing up to standard. If they don’t step up and meet our targets, we will look for alternative solutions. But these businesses should be well capable of meeting our standards.”

During her four-year tenure at Calvin Klein Cosmetics, Dart won praise from retailers for aggressively pursuing a new product growth strategy with a steady stream of flanker and limited-edition fragrances, although the Crave men’s fragrance was said to be a costly disappointment. Before joining Klein, she was one of the most respected retailers in Britain, as a result of holding beauty and fashion buying positions at Selfridges for 16 years.
Miller has been praised as being the architect of the success of Vera Wang’s women’s fragrance, which was perhaps the most impactive launch of 2002. Neither Dart, Miller or Pungerscheg could be reached for comment.