The parent of Victoria's Secret, not known for spending lavishly on print advertising, is expected to expand national distribution of its new cosmetics line with a substantial campaign in women's magazines.
Publishers not used to calling on Intimate Brands received a surprise recently. Robin Burns, the former Estee Lauder executive hired last year to run the cosmetics division, Intimate Beauty, told a handful of publishers she may advertise in their books, according to executives close to the situation.
RELIEF TO PUBLISHERS
That's welcome relief to the glossy magazine world, which watched Intimate Brands spend $38.3 million on media advertising last year-all on TV.
The news comes as Intimate Beauty finalizes a marketing plan for the cosmetics line, called Victoria's Secret Beauty. The company declined to comment, but some industry experts speculate the budget could reach as high as $50 million.
Ms. Burns, accustomed to large marketing war chests at Estee Lauder, "came in with a huge budget or she would not have taken the job," said a former cosmetics executive. "This could be a $50 million ticket."
Added analyst Richard Jaffe of PaineWebber: "These guys are really committed to building a brand. They've got marketing religion. I'm sure they'll extend it to the makeup brand."
Intimate Beauty will need a big purse to stand out in a cluttered category. In late March, the company shifted headquarters from Columbus, Ohio, to New York to place it at the center of the fashion and cosmetics industries. In mid-April, Sherry Baker joins as VP marketing and general merchandise manager, from VP-marketing at Sephora, the French cosmetics retailer.
Intimate Brands operates 812 Victoria's Secret lingerie shops. Intimate Beauty runs 447 Victoria's Secret Beauty shops, which sell creams, soaps and perfumes. Currently, only 100 of the beauty stores carry the cosmetics line. By July, the line is expected to be in another 50 to 80 Victoria's Secret Beauty stores.
Industry experts speculate the line will introduce advertising in the third or fourth quarters, before the Christmas shopping season.
The beauty stores could be more lucrative than Victoria's Secret's profitable lingerie business, said PaineWebber's Mr. Jaffe.
Sharon Pearson, analyst at Morgan Stanley Dean Witter, projects Intimate Brands' revenues will rise 11% to 12% this year, with Intimate Beauty being "a meaningful contributor" to that growth.
She projects sales of the beauty unit will more than double this year, to nearly $1 billion.
Victoria's Secret is only one of many apparel retailers jumping into the cosmetics and toiletries arena in search of higher profits. Banana Republic, Old Navy, AnnTaylor, Talbots, Abercrombie & Fitch and Wet Seal have introduced products recently. The Gap also is testing a free-standing store concept, Gap Body Works, to sell underwear, toiletries and cosmetics.
REQUIRES MORE MARKETING $$
"Despite what some cosmetics companies want you to think, it's not rocket science," said Margaret Gilliam, president of financial consultancy Gilliam & Co. Profit margins on cosmetics are about twice those for apparel, but a successful launch requires lots of advertising and marketing dollars, she said.
Procter & Gamble Co. is spending nearly $70 million this year for the launch of the Oil of Olay Color Collection, and Johnson & Johnson is putting an estimated $40 million behind its launch of Neutrogena Cosmetics.