BeautyBank Seeks Good Results With User Friendly Skin Care Brand

BeautyBank is positioning Good Skin skin care as an "easy to use" brand with color-coded packaging that allows women to self diagnose skin problems to purchase the appropriate products, the Estee Lauder division said. The company unveiled the third BeautyBank brand Aug. 13.

Good Skin is separated into basic and specialized care categories. Basic care addresses dry, oily and combination/normal skin, while specialized care treats specific problems.

The basic category includes gel, foam and cream cleansers and moisturizers, such as soft skin creamy cleanser and perfect balance moisture lotion.

Specialized care comprises products for dull or aging skin, acne-prone skin, red/irritated skin and severely dry skin, including all right medicated cleanser and all firm rebuilding serum.

The 36-product line also includes makeup offerings like foundation, powder, concealer and lip balm in three categories - all skin, dull or aging skin and red/irritated skin. Good Skin prices range from $10.50 for a cleanser to $25 for advanced treatments. Pricing falls above most mass market brands, but below prestige, the firm noted.

Good Skin was formulated with the help of New York City-based dermatologist Doris Day, MD. Day was chosen because of her skin care philosophy, which advocates a simple regimen of cleansing, exfoliation and moisturization, as well as targeted treatment of specific problems, according to Estee Lauder.

The line will be supported with sampling in-store, as well as through direct mail and in women's books, the firm said. In addition, Day will promote the brand in television appearances.

While beauty advisers will be on hand in store to assist women, the packaging was designed to fit an open sell environment in which consumers can identify their specific skin type and choose appropriate products, according to the firm.

Good Skin will be expanded with a "new and improved" product in January 2005, and other SKUs will be launched next spring, according to Paulson. Industry sources estimate the line could generate $30 mil. at retail in its first year.

In line with Lauder's strategy to develop each BeautyBank brand with an eye toward distribution outside Kohl's, Good Skin would likely be a good fit in a pharmacy channel, the company predicted.

Lauder began testing that strategy by launching the second BeautyBank brand, Flirt! , in Bergdorf Goodman, ahead of the scheduled rollout of the brands in Kohl's this fall.

Explaining the move, Specialty Brands Group President Dan Brestle noted that "Each of the new brands will have different places where they sell to help the brand positioning" beyond the discount department store retailer. Kohl's welcomed the Bergdorf launch as a way to associate Flirt! with more upscale ranges, the exec added during Lauder's fourth quarter and year-end earnings call Aug. 17.

The first BeautyBank line, American Beauty , was announced in June and Flirt! was unveiled last month (¹ (Also see "Estee Lauder Signs American Beauty Ashley Judd As Face Of New Brand" - HBW Insight, 28 Jun, 2004.), p. 8 and ² (Also see "BeautyBank Flirts With Color For Second Cosmetics Collection" - HBW Insight, 26 Jul, 2004.), p. 4). All three brands will launch in October in 280 Kohl's doors and reach full distribution in 2005.

The BeautyBank division likely will break even in FY 2005, with profitability expected by the fourth quarter, President and CEO William Lauder reported during the call.

Estee Lauder's net sales grew 14% to $5.79 bil. in FY 2004. Net earnings were up 24% to $375.4 mil. including the effects of a special charge taken last year related to a pending cosmetic lawsuit settlement, or 19% excluding the charge.

Skin care sales rose 13% to $2.14 bil. on a reported basis, or 8% in local currency, driven by recent launches such as Estee Lauder Hydra Complete Multi-Level Moisture Crème and Idealist Micro-D Thermal Refinisher. Growth in the segment also was boosted by sales of Re-Nutriv Intensive Lifting products, as well as Clinique Repairwear Day SPF 15 Intensive Cream and Pore Minimizer, the firm said.

Makeup sales posted a 14% increase on a reported basis to $2.15 bil., or 10% in local currency, led by markeup artist brands MAC and Bobbi Brown , in addition to new products like Clinique Perfectly Real Makeup and High Impact Mascara, the company stated.

Fragrance sales grew 15% on a reported basis, or 10% in local currency, to $1.22 bil., boosted by the launches of Estee Lauder Beyond Paradise , Aramis Life , Clinique Simply and Tommy Jeans . Revenue in the division, however, was "partially offset by lower sales of Estee Lauder Pleasures , Intuition and Beautiful by Estee Lauder , certain Tommy Hilfiger fragrances and Clinique Happy .

Hair care revenue was up 9% on a reported basis, or 7% in local currency, to $249.4 mil. on higher sales of Aveda and Bumble and bumble due in part to distribution expansion, according to Estee Lauder.

Operating income in the skin care, makeup and hair care divisions rose on higher sales, but fragrance operating income declined due to "the soft domestic fragrance market," increased spending behind new products and development costs for future products, the firm noted.

The firm's fragrance business is expected to become profitable in two to three years as a result of more effective and targeted sampling and advertising initiatives, Lauder said.

In North America, sales increased 7% to $3.15 bil., while in Europe, the Middle East and Africa, revenue was up 24% to $1.87 bil., or 14% in local currency. Asia Pacific net sales grew 17% on a reported basis, or 9% in local currency, to $771.4 mil.

Fourth quarter net sales increased 15% to $1.4 bil., or 12% excluding currency effects. Net earnings grew 41% to $71.3 mil., or 11% excluding the special charge.

In FY 2005, Estee Lauder anticipates hair care and skin care will lead 7%-8% top line growth, according to Lauder. Plans are in place to expand distribution of Aveda and Bumble and bumble into new regions.

Additionally, La Mer , Rodan & Fields and Darphin will expand distribution and launch new products, Lauder said.

The company will support its brands with increased advertorials and promotional programs, as well as geographic expansion, Lauder noted. For example, Jo Malone , which is marketed currently in the U.S. and UK, will launch in France and Australia, La Mer will bow in China and expand in Europe and MAC will be introduced in China, Poland and Turkey, the exec stated.