Fragrance Deluge Brightens Prestige Beauty’s Gloss for Fall

The global beauty industry sees a glimmer of hope for fall, with rebounds in consumer confidence and the economy.

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“Clearly, there’s a real fragility in the marketplace, because of the economy, tourism, world tensions and many other factors,” said Arie Kopelman, Chanel’s president and chief operating officer in New York. “Deep discounts in other product categories could also really hurt the beauty category in the fourth quarter. Although we feel we’re in a good position for the second half, the real turnaround, we think, will come in 2004.”

That said, Kopelman added, there are bright spots in Chanel’s business. Color cosmetics and skin care saw some softness in the first quarter, both then saw strong gains in the second quarter, he said. Kopelman is especially bullish on scent. “We’re up over 20 percent in fragrance,” he said.

In color cosmetics, gains in the second quarter were led by the eye category, he said. “Lips, which had been soft in the first quarter, are also going up, led by a gloss business that is up 37 percent year-to-date,” he said. And skin care saw strong increases in the second quarter, led by Ultra Correction Eye, Kopelman said.

“I think that it’s going to pick up in the second half,” said Robin Burns, president and ceo of The Limited’s Intimate Beauty Corp. and its Aura Science and Victoria’s Secret Beauty divisions. Burns attributed this to a rise in consumer confidence, plus stock market gains and low interest rates that are beginning to have a small effect on people’s attitudes about shopping. However, she added, “none of these things is so vastly improved that I think we’re going to see a surge, but I do think that we’re beginning to see it already in our own business and it will continue into second half.”

Burns noted that Victoria’s Secret Beauty posted double-digit positive comps in June and expects July to be strong with the launch of Breathless. Burns expects the company’s “momentum to continue into the fall season” with the launch of a second men’s fragrance and a strong holiday program. “Industry-wise, we’re thinking it’s going to be mid- to low-single digits, but for our own business we’re expecting our growth to be in the high-single digits and that’s on top of double-digit growth last year,” noted Burns.
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