NEW YORK — William McMenemy, who spent his entire career at Del Laboratories, resigned his post as president and chief executive officer Monday, leaving retailers wondering what his departure means for the maker of major beauty names such as Sally Hansen and N.Y.C. New York Color.
Del’s chief operating officer, Charles J. Hinkaty, who will assume the top spot today, asserted that the Del management team is enthusiastically committed to beauty. “It’s the most important part of our business,” he declared, noting that 75 percent of the company’s beauty and over-the-counter brands are leaders in their respective segments. The company is also working on improving deliveries, fill rates and service to its retail accounts.
“We won’t miss a beat,” Hinkaty said, referring to retailers’ concerns.
McMenemy was named to the top executive slot following the sale of the company to DLI Holding Corp. last year. He replaced Dan K. Wassong, the architect of Del’s growth, who retired at the time of the sale. Wassong had groomed McMenemy to assume the role during McMenemy’s 40 years at the company, where he ascended from the mail room to the top marketing role.
McMenemy helped Del be first in the mass market with numerous innovations such as Chrome Nail Makeup and Sally Hansen Airbrush Legs. His time spent developing products, however, precluded him from getting maximum trade exposure and it was only recently that many buyer-level executives met him. He was, however, a fixture at the National Association of Chain Drug Stores’ Annual Meeting, where he had solid contacts with top chain management. Wassong, on the other hand, was highly visible in the trade and was known to send flowers to buyers on their birthdays. Retailers also associate Del with Harvey Alstodt, another longtime Del executive who was elevated to president of Global Business after the sale, and is now president of Del Cosmetics.
McMenemy’s replacement, Hinkaty, is known as an expert in running the over-the-counter portion of Del’s business, which includes highly profitable products such as Orajel and Pronto Plus. He has served with Del since 1985. Hinkaty’s appointment has buyers pondering whether DLI has an interest in spinning off the harder-to-manage beauty portion of the firm, especially since DLI has ties to the over-the-counter portion of the business. Del’s nonbeauty businesses yield bountiful gross margins and face less competition than beauty.
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However, there is an opposing school of thought among observers. Some executives speculate that Del could divest some of its highly desirable over-the-counter products to raise the capital to focus on beauty.
Despite his departure, McMenemy has firmly put his stamp on the company. “You can’t find a better marketer than Bill,” said Allan Mottus, an industry consultant. “But the mass market cosmetics business is not profitable and the business is going to all the low-cost providers. Other than chains like Wal-Mart, Walgreens, CVS and Target, the industry is not healthy.” He added that McMenemy was on the right path with his efforts to put Del in the right price range of value for today’s mass climate.
Many retailers wonder if McMenemy will emerge at another company. Del executives said things are going full-speed ahead, despite the management changes. Buyers said they expect to see more changes, perhaps some consolidation of roles. Hinkaty acknowledged Del is working to make the company a leaner and more efficient operation.
McMenemy, reached by phone, said he plans to take time off, decompress and examine his options. He remains on the Del board. In the meantime, retailers noted Del has lost some ground in key areas while it was undergoing the acquisition. Its Sally Hansen Healing Beauty has hit upon success with key items, but not the entire line. N.Y.C. has been involved in shelf-space wars with contenders such as Wet ‘n’ Wild and implements are facing sharp competition from new players to the field. One major chain sliced 2 feet from Sally Hansen to make room for new lines. However, several retailers said they are pleased with the pipeline of products coming out from Del, especially in spa products and foot care.
McMenemy had been removed from new product development over the last year as he had to oversee the acquisition and absorb his new responsibilities. Several buyers said they had only recently met him for the first time, but added that contact with him was not as crucial as a pipeline of innovative products. In private meetings this week, Del sales representatives pledged that the company is committed to building sales and that it is well financed to support growth.
Del has emerged as one of the few companies to break out from being a second-tier manufacturer to a major force in beauty. The Sally Hansen brand surpassed Revlon in nail color sales in 2003 and, recently, the company nudged its way into the salon business with the Elizabeth Arden nail polish line.
It is a crucial time in the industry for Del to convey a solid message to the trade. Megabrands such as Revlon and L’Oréal are planning launches and small brands with unique positioning are emerging. Space will be squeezed from weaker links. Del beauty brands must prove their worth on the planogram or face editing.
“We have tremendous hallmarks in cosmetics,” noted Alstodt, who will begin to assume more of a role in beauty marketing in light of his new post as president of Del Cosmetics. “We continue to look to department stores and salons for products that will translate to mass. And there are great opportunities internationally.”
The company’s international business accounts for about 20 percent of overall sales. Last year, the Sally Hansen brand launched in Italy and in Russia, and this year Sally Hansen nail care entered Germany.