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.”