Monday, September 21, 2009

Bye, Bye Prescriptives

It's only been six months since Fabrizio Freda took over as CEO of Estée Lauder, and already he has sent shockwaves throughout the cosmetics industry.

Last week, Estée Lauder announced that it will shut down its 30 year-old Prescriptives cosmetic line by Jan. 31, 2010.
"A core component of The Estée Lauder Companies' corporate strategy is to evaluate, and where possible, turn around underperforming brands with the goal of improving return on investment. After a thorough analysis of the Prescriptives brand, management concluded that the brand's long term business model is no longer viable given the current market environment. The Company is committed to placing as many impacted employees as possible in open positions within the Company"
Prescriptives products will continue to be sold online at to U.S. customers only while supplies last.
Eliminating brands from their portfolio is nothing new for EL, but Prescriptives is a homegrown brand launched by Ronald Lauder in 1979, and one of the largest in retail volume in EL's arsenal. Its closure shows that Mr. Freda is serious about dramatically restructuring the company.
"We believe that the difficult decision relating to Prescriptives will allow us to redirect our resources to key strategic imperatives where we see the highest growth potential," said Fabrizio Freda, President and Chief Executive Officer, The Estée Lauder Companies. "Ultimately this action allows us to focus on those areas which we expect to benefit the Company, our shareholders and business partners. We intend to work closely with our retail partners and continue to communicate with our consumers to ensure a seamless transition."
In the May issue of WWD Beauty Biz, Mr. Freda gave a hint to the possible elimination of Prescriptives:
“We are really focused on fixing the underperforming brands,” Freda said in May. “We have finished a review of the brands and have identified which are the brands where we want to invest and which are the brands that today are underperforming by our standards. For the underperforming brands, we have put a specific plan [in place] for the next 18 to 24 months. In the case we are not successful in turning around the brands, we will make different decisions.”

When asked, he declined to identify which brands comprised that list, but emphasized that “small” and “underperforming” were not synonymous in the Lauder portfolio. “Smaller brands, if they have the right productivity per door, are very interesting businesses,” he said in May. (SOURCE:
Prescriptives was one of the top prestige brands in the mid-80s, enjoying prime cosmetic counter real estate in upscale department stores such as Neiman Marcus. But with the emergence of makeup artist cosmetics lines such as M.A.C. and Bobbi Brown in the mid-90s cut into Prescriptives' niche and thus began the brand's decline.

EL maintains ownership of the Prescriptives name as well as all its trademarks and assets. A company spokeswoman says that the Calyx fragrance will be merchandised by the Aramis and Designer Fragrances division.

For Prescriptives consumer support, toll free numbers have been set up in North America (1-877-819-2968, English, Spanish and French speaking), the United Kingdom (0800 088 4168) and the Republic of Ireland (1800 936 080).

(SOURCES:, Estée LauderCompanies Inc.)

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