NEW YORK — America’s largest perfume chain, Perfumania, is tweaking its merchandising, streamlining its fragrance selection and adding exclusive bath, spa and cosmetics items to become a more “complete retailer,” a change that could positively affect Perfumania’s bottom line in 2006, since spa and bath items offer a 70 percent margin compared with perfume’s 50 percent.
The $200 million retailer, which operates 230 stores in the U.S. and Puerto Rico, and discounts prices by 10 to 20 percent on many leading fragrance brands, including Estée Lauder’s, is streamlining its scent selection by cutting out slow-selling stockkeeping units to make room for private label and international bath, spa and cosmetics brands. The goal of the new product mix is to make fragrances 85 percent of sales for 2006 — down from 95 percent in 2005 — according to Ray Peirgiorgi, vice president of merchandising and marketing for Perfumania.
Perfumania, a wholly owned subsidiary of E Com Ventures Inc., reported July retail sales of approximately $15 million and comparable-store sales of $13.6 million, up 5.2 percent and 2.2 percent, respectively, compared with last July. Sales for its fiscal second quarter, which ended July 30, grew 9.1 percent; comp-store sales increased 6.9 percent.
The changes come a year-and-a-half after members of the Nussdorf family, the owners of the Long Island, New York, distributor Quality King, acquired a majority stake in the Sunrise, Fla., chain from shareholders in January 2004. At that time, management shuffling immediately ensued and several Quality King executives replaced Perfumania’s chief executive officer and chief merchandiser. Michael Katz and Peirgiorgi filled the roles, respectively.
Now, the fruits of their labor are beginning to emerge, starting with the new nonfragrance items that enter stores in September. First there’s HydraPlump, a private label line of noninjectable lip-plumping glosses, available in three shades, retailing for $19.99. In October, Perfumania will feature private label spa line Sedona Valley Spa, an eight-item collection with a desert theme that includes Prickly Pear Cactus Body Scrub, Shea & Cactus Body Butter, Cactus & Peppermint Foot Scrub, Aloe & Hibiscus Flower Foot Balm, Mojave Desert Body Mud, Sun Glow Body Mist, Yucca & Agave Body Moisturizer and Desert Flower Body Wash. Prices will be under $30.
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A Brazilian bath and body line, Vyvedas, is slated to enter stores in the fourth quarter, as is a vitamin C-based line and items hailing from New Zealand. In total, Peirgiorgi expects to stock 40 bath, body and spa items between Thanksgiving and Christmas — when Perfumania generates about 40 percent of company sales. All currently merchandised spa and bath items will be discontinued.
“These are not cheap products. They are quality items from different countries and we are giving them instant access to the U.S. consumer. It’s kind of like what Target and CVS are doing with Boots,” said Peirgiorgi.
The average Perfumania measures 1,200 square feet, said Peirgiorgi, explaining that private label deals not only offer exclusivity, but also allow stores to better handle their space crunch. “We don’t have the real estate” to add a complete line of a national brand, he said.
Sixteen new stores already sport the chain’s overhauled look. Instead of chrome and glass shelving, the stores use wood merchandising units, and an open-sell environment has been put in place. Sections dedicated to women, men, spa — and even kids — have been put in place to making shopping more efficient.
“It’s all open sell, where we put out products and testers in front of people. It’s more like what Sephora does. We still have sales help, but they’re not chasing customers. The consumer can try everything under the sun,” said Peirgiorgi. The look is planned for eight new stores by the end of the year.
Perfumania will end 2005 with 238 stores, and looks to end 2006 with 260 stores, a number that includes store closures. Ultimately, the chain hopes to reach 400 units by 2008.
So far, the chain’s sales are up an estimated 6 percent for the year; Peirgiorgi expects mid- to high-single-digit sales increases for 2005. His reason for the chain’s success in a competitive fragrance market?
“People just aren’t buying [fragrance] at department stores anymore. They are buying where they shop everyday, at an outlet center or in a mall. They are looking for bargains, prestige items for less.”