P&G phases out Max Factor distribution in US
The company says that it will gradually wind down its US distribution during the course of this year and will stop selling the brand in retail outlets in the nation during the first quarter of 2010.
The brand currently generates around $1.2bn in annual revenues, but the company says that the vast majority of sales are now attributed to a wide variety of international markets.
Sales of the brand, which was established by Polish immigrant Max Factor in 1909, have been slowly overshadowed by the company’s other leading color cosmetics and make-up brand, Cover Girl.
P&G bought the Max Factor brand from Revlon in 1991 for $1.5bn and in the US it is marketed under the slogan ‘The Makeup of Makeup Artists’ and is noted for its eye, lip and face products.
Cover Girl overshadows
The company says that sales of the younger and more funky Cover Girl brand have grown exponentially over the past eight years to reach $1bn.
The decision also reflects the fact that the US color cosmetics segment is now ultra competitive due to the presence of a handful of major players such as MAC and Revlon, as well as a growing number of niche players, including Bare Escentuals.
Strategy to hone competitiveness
The move to fine tune the Max Factor business falls in line with the company’s objective to hone all its operations to fulfill optimum competitiveness, a strategy that was outlined by the company’s CFO Joe Mueller at a business conference last week.
The company also mentioned at the conference that it expects sales growth to hover around zero in the coming fiscal year as its prediction is in the range of up 1 percent to down 2 percent.
Likewise, it anticipates organic sales growth of 1 to 3 percent driven mainly by market share growth.
Sales for P&G’s most recent quarter, ending 31 March, dropped 8 percent to $18.42bn, from $18.9bn a year earlier, a figure that reflected lower sales volumes offset slightly by higher pricing.
