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Elizabeth Arden Co.

 


Address:
1345 Avenue of the Americas
New York, New York 10105
U.S.A.

Telephone: (212) 261-1000
Fax: (212) 261-1315


Statistics:
Wholly Owned Subsidiary of Unilever PLC
Incorporated: 1911
Employees: 7,000
Sales: $2.25 billion
SICs: 2844 Toilet Preparations; 2841 Soap & Other Detergent


Company History:

For decades Elizabeth Arden Co. cosmetics and perfumes have been synonymous with luxury and prestige. A world leader in the cosmetics industry since the 1920s, Elizabeth Arden was acquired by Unilever PLC, a conglomerate of consumer product companies. Despite intense competition and a severe recession, Elizabeth Arden's "White Diamonds" perfume was the number one selling fragrance in the country in 1991, and the company's fine line of cosmetics and perfumes continues to earn numerous quality awards. Elizabeth Arden, who founded the company in 1911, can be credited with single-handedly laying the foundations of the modern American cosmetics industry.

Elizabeth Arden was born Florence Nightingale Graham in Canada during the late 1870s. Named for the renowned nurse who served during the Crimean War, Florence grew up in a large, poverty stricken family. When she was unable to finish high school because her family lacked the finances, she persuaded herself that nursing was her true vocation and began training for that profession. Florence quickly realized her mistake. It was sales, not suffering humanity, that finally lured her and tapped her real talents.

While a student nurse, Florence had met a chemist experimenting with a facial cream that could help acne sufferers. The concept intrigued her, leading to her conviction that most women would give anything for beauty. An unsuccessful early attempt to start a mail-order business marketing her own version of face cream failed largely because of her father's impatience with his madcap daughter's strange concoctions. Instead Florence toiled at a series of jobs in Toronto that afforded her a chance to display her salesmanship. At one point employed as a dental assistant, she doubled the dentist's sales in a short time when she hit upon the idea of persuasively writing each patient to explain the necessity of regular dental check-ups.

Nearly 30 years old and unwilling to marry for fear of losing her independence, Florence set off for New York City in 1908. Landing a job as a bookkeeper for the prominent Squibb Pharmaceutical Company, she was impressed by the state-of-the-art laboratories and the constant attention to research and development. This inspired her to fashion a small lab of her own, where she might "scientifically" test out her own beauty ideas. Before venturing into this unknown arena, however, Florence quit her job at Squibb to become an assistant in a newly established beauty culture salon. Catering to a wealthy clientele, these early beauty parlors came to be the nucleus of the future cosmetics industry. They emphasized skin care rather than hair care, and the methods for achieving glowing skin did not rest with makeup as much as with skin massage and the applications of creams and lotions.

Unfamiliar with the concept of beauty salons before coming to New York, what she learned there helped Florence lay the foundations for the cosmetics industry she was to eventually build. Florence was hired as a "treatment girl" to deliver facial massages, mix the facial concoctions of the owner, Mrs. Eleanor Adair, and give manicures. Florence displayed unusual talent and sales ability, and quickly learned all the aspects of the beauty culture field.

Until then, Florence Nightingale Graham had never worn cosmetics. Even in the early twentieth century, a proper woman simply hoped for a healthy complexion--facial "paint," usually applied without skill or finesse, was considered disreputable. However, higher levels of female education coupled with the women's suffrage movement provided the stimuli for change. By the time Florence arrived in New York, shorter hair and cosmetics were becoming increasingly associated with emancipation.

Soon Florence felt confident enough to go into business for herself. Without funds to finance the endeavor on her own, however, she formed a partnership with Elizabeth Hubbard in 1910. While the nameplate bore the partner's name--Florence Nightingale was rejected as suggestive of a hospital ward--the cosmetic mixtures and other ideas were clearly Florence's. She dubbed her pricey lotions and powders "Grecian," endowing them with a romantic allure and prestige that would become her trademark.

Instead of a parlor, the establishment was referred to as a salon, since Florence thought it would appeal to higher class society women. Although the partners could barely afford the rent, Florence had insisted on lavish quarters in a brownstone on New York's Fifth Avenue, which was rapidly turning into a major business district. The partners quarreled soon after their salon opened its doors, however, and Elizabeth Hubbard abruptly departed, leaving Florence to pay the huge rent. Borrowing $6,000 from her brother to keep her salon open, Florence worked as a manicurist after hours to supplement her income.

In addition to the problems of trying to pay the rent, it was necessary for Florence to decide on a name for her salon. While the suffragettes were taking steps towards women's rights, their emancipation had not reached the point where "Miss" connoted respectability, and Florence decided to use "Mrs." Her former partner's name, Elizabeth, appealed to her, although a new last name was harder to come by. She finally chose Arden after reading the name in a poem by Alfred, Lord Tennyson. The new name seemed to evoke the prestige and understated glamour that Florence not only craved for her business, but for herself as well. Thus Florence Nightingale Graham became Elizabeth Arden.

After hours, when she was not manicuring nails for extra income, Elizabeth experimented with cosmetics. One of her distinctive contributions was the addition of fragrance to the lotions and powders of the day, which had been lacking scent. The facial creams sold at the time were greasy and heavy, but Elizabeth hired a chemist to formulate a light, fluffy cream that became an instant success. It was at this point that she developed her "total beauty" idea. The concept initially involved sharing her salon quarters with a "prestige" hairdresser and a milliner; later a clothing shop was included. Eventually the idea was further expanded to include beauty spas.

Elizabeth Arden's hard work and imagination paid off, making her salons enormously profitable. Without serious competitors for the first several years after establishing her business, her success was also aided by changing attitudes toward equality of the sexes. Emancipation had progressed so far as to soften the prejudices against women who wore short hair and cosmetics. Times were changing so rapidly that by 1914, Elizabeth Arden removed the "Mrs." from her nameplate and substituted "Miss." It was good for business.

A steady stream of products was marketed in the initial years of Elizabeth Arden's business, including rouges and fragrant, tinted powders that she taught her "girls" to apply with subtlety and finesse. In 1914, on the eve of the outbreak of World War I, Elizabeth traveled to Paris, her first trip abroad. During her summer-long sojourn, Elizabeth became acquainted with the more sophisticated Parisian techniques of beauty culture and makeup application. She brought these techniques back with her, in addition to the cosmetic products, including the eye makeup worn by wealthy dames of Paris society. Though chemists improved on the products, Elizabeth found it difficult to convince her clients to apply it--eye makeup for many was going too far. It was America's entry into the First World War, however, that provided the necessary catalyst. While the men were away at war, women found themselves employed in many lines of work formerly closed to them, and as they gained even greater independence, many of the restrictive taboos became outdated. Women began experimenting with Elizabeth Arden's eye makeup, the first to be introduced in the United States.

Elizabeth Arden's Venetian line of cosmetics along with her velvety Cream Amoretta--in her signature chic bottling--were being sold in department stores all over the east coast, and her salon with the famous red door was duplicated in Washington, DC, in 1914, proving an instant success. A year later Arden perfumes were introduced, further expanding the line of products offered in the salons. However, her reign as undisputed queen of cosmetics was not due to last. After the war, competition came to the fore, marking the beginning of the lifelong personal animosity between Elizabeth Arden and her chief rival, Helena Rubenstein. The cosmetics industry began growing at a rapid pace and became steadily more lucrative, especially to women, for whom it was one of the few lines of business in which they could rise to the top and be leaders.

However, Elizabeth Arden was, more often than not, the industry standard bearer. By the start of World War II in Europe, there were dozens of Elizabeth Arden salons all over the world, and hundreds of products being marketed, including soaps, bath salts, even toothpaste, as well as perfumes to go with either morning, afternoon or evening dress. No one advertised cosmetics as frequently nor as lavishly as Elizabeth Arden. This was in accord with her philosophy, held throughout her life, that in order to make money, one had to spend it. Meanwhile American women were in fact spending six million dollars annually on cosmetics by 1925, barely fifteen years after Elizabeth Arden had hung up her shingle. That year her company reaped over two million dollars in sales, a figure that doubled only four years later.

During the Depression, Elizabeth Arden predicted--and advertised accordingly--that the American woman would not stint on beauty. Unlike most American businesses, Elizabeth Arden's company earned handsome profits during those years, even making strides with innovative lipsticks which, until 1932, had come in only a few basic shades. Elizabeth Arden believed that just as perfume should go with the costume, so too should lipstick. Her "lipstick kit" containing several different shades was a big hit at the height of the Depression, creating a sensation in the industry as competitors scrambled to imitate the concept. Then in 1934 she established her extremely successful "beauty spa" in Maine--another was opened in Arizona in 1946--where women shed excess pounds and immersed themselves in Elizabeth Arden bath salts and after bath lotions for $500 per week. By the mid-1930s there were 29 Elizabeth Arden salons around the world, while her company manufactured and marketed 108 different products.

The outbreak of the Second World War, which spelled a loss of overseas markets and raw materials, did not catch Elizabeth Arden by surprise. Just as she had done before World War I, Elizabeth Arden stocked up on raw materials early, and offset the loss of income from her overseas salons by concentrating on expanding her domestic market. Her products were not only carried in department stores coast to coast, but the war years saw Elizabeth expanding into all of the major drugstore chains of the day. Consequently in 1944, at the height of the war, business at Elizabeth Arden's was booming, and the company remained a pacesetter. A line of clothing was added in the 1950s, and Elizabeth Arden became the first in the industry to target male customers by marketing men's fragrances and opening a "men's boutique."

Elizabeth Arden continued her reign as grande dame of the cosmetics industry until her death in 1966. By then the cosmetics industry in the United States had grown into a multi-billion dollar business, and large corporations were mass producing personal care products that, while lacking in prestige, could be sold at much lower prices. Friends and relatives had urged Elizabeth to sell her profitable business as early as 1929, when a $15 million offer was made. She refused, and no further mention was ever made of selling or merging. However, negotiations for the sale of the company began shortly after her death. Elizabeth Arden Co. was finally acquired in late 1970 by the pharmaceutical company, Eli Lilly & Co., which cut costs and instituted streamlined procedures before putting it up for sale again in 1987. The company changed hands twice more until 1990 when it was purchased by the Anglo-Dutch conglomerate Unilever PLC. Two years later Unilever established the Prestige Personal Products Group, which included Elizabeth Arden Co. and Calvin Klein.

A constant during these changeovers was Elizabeth Arden's president and CEO, Joseph F. Ronchetti, who had joined the company after Elizabeth's death. In 1986, when the company was still a subsidiary of Eli Lilly, Ronchetti devised a five-year plan to revitalize Elizabeth Arden Co. and make it more competitive. While the budget for advertising--especially targeted at baby boomers--was doubled, more modern packaging and innovative bottling was instituted. Ronchetti stuck with the plan throughout the changes in ownership. By the end of the five years, advertising was conducting an average of 200-300 promotions a month, and research and development had created many pace-setting products, including a line of ultraviolet (UV) sun protection creams and lotions that was distinguished by awards from the Skin Cancer Foundation. In addition, Elizabeth Taylor's White Diamonds became the number one selling fragrance in 1991 after the famous actress personally introduced the scent in ten U.S. cities. Elizabeth Arden had also become more responsive to its social environment--animal-testing of cosmetics is virtually never done, and considerable donations were made to such causes as AIDS research and child welfare. When Ronchetti was succeeded as president and CEO in 1992 by Robert M. Phillips, Elizabeth Arden Co. had not only profited during the recession, but was one of the fastest growing cosmetics companies in the industry, increasing its sales in one year by 24 percent--three times higher than the industry average.

Unilever's purchase of Elizabeth Arden, coupled with that of Fabergé, Inc. in 1990, made the conglomerate the second-largest cosmetics company in the world. With a distribution network in virtually every country on earth, in addition to state-of-the-art research facilities, Elizabeth Arden Co. stands to benefit from its acquisition by the corporation. Under the helm of Phillips, Elizabeth Arden Co. plans to branch out into new international markets in Asia, the Pacific Rim, as well as eastern Europe, bringing long-deprived consumers there a special blend of beauty.





Further Reading:


"Arden's Colorbox Blockbuster to Assist Children's Charity," Women's Wear Daily, September 25, 1992, section 1, p. 6.
"Elizabeth Arden Company Creates In-House Media Department," New York Times, February 4, 1991, p. C9(N), D9(L).
"Elizabeth Arden Losing Its Chief in a Merger," New York Times, June 13, 1992, p. 19(N), 37(L).
Elizabeth Arden: The Woman, the Company, the Legacy, New York: Elizabeth Arden Co., 1993.
Lewis, Alfred Allan and Constance Woodworth, Miss Elizabeth Arden, New York: Coward, McCann & Geoghegan, 1972.
Raj, D. D., "Global Cosmetics & Household Product Industry--Industry Report," Merrill Lynch Capital Markets, December 1, 1992.
Rice, Faye, "Elizabeth Arden: Profiting by Perseverance," Fortune, January 27, 1992, p. 84.
Stern, Aimee L., "How Elizabeth Arden Gave Itself a Makeover," AdWeek's Marketing Week, September 9, 1991, pp. 18-19.
Unilever United States, Inc. 1991 Report to Employees, New York: Unilever United States, Inc., 1991.
Zinn, Laura, "Beauty and the Beastliness," Business Week, June 29, 1992, p. 39.

Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.




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