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Estee Lauder Sells Jane Cosmetics Line

By Laura Klepacki

(WWD) - The Estee Lauder Companies has ended its six-and-a-half-year experiment with the mass beauty market. As anticipated, the company on Monday said it has sold its Jane Cosmetics teen brand. The new parent is Jane & Company, LLC, a joint venture recently formed between brothers Harry and Alex Adjmi, owners and operators of the apparel company One Step Up, and Lisa Yarnell, a longtime mass market beauty executive whose experience includes stints at L'Oreal, Coty and Renaissance Cosmetics. The purchase price was not disclosed.

Harry Adjmi is chairman and Yarnell is president and chief executive officer. Yarnell will be running the business out of Jane's Baltimore, MD., headquarters, replacing Todd C. First, who had been general manager of Jane under Lauder. Yarnell said Monday that her first order of business would be to meet with retailers "to learn what the concerns and issues are, so we can reinvigorate mass efforts towards it." Jane remains in 2,200 Wal-Mart doors, 250 Target doors and a smattering of drugstores. Yarnell believes it's possible to rebuild Jane's retail sales, which have sunk under $25 million from a high of $50 million a few years ago. "I don't see why Jane can't be a $100 million brand," she declared. Industry observers say Lauder underinvested in Jane, but the brand's sales also were hurt by a flood of competitors into the teen cosmetics market.

Adjmi, who sells private label apparel lines to discounters like Wal-Mart and K-mart, as well as specialty and department stores, said the intention is to broaden the brand base and maybe launch a fragrance and accessories to complement the cosmetics, he said.

A New York showroom is being created for Jane, which Yarnell described as offering, "high-quality products with a fashion sense at a value price."

Lauder surprised the industry when it snapped up Jane in September 1997, taking the prestige vendor into the mass-market segment for the first time. Jane Cosmetics was a darling of mass retailers in the beginning, for it was the first dedicated teen color brand, and it was hoped that it would unlock sales in an expanding market segment. A heartfelt, spirited brand with a bit of sassiness, it was launched in 1994 as an offshoot by the Sassaby Company, a maker of cosmetics boxes. The line awakened other marketers to the swelling ranks of teen consumers and the strength of their buying power.

Up until then, Cover Girl, a general market brand that enjoys a teen following, and Bonnie Bell, a youth brand with an emphasis on flavored lip items, were the brands most directly connecting with young shoppers. The introduction of Jane inspired a flood of teen and tween brands that followed, such as Caboodles and Fira, along with a host of private label youth collections.

From the beginning, Lauder had big visions for Jane. Chairman Leonard Lauder said in 1997 that what drew Lauder to Jane was the company needed a brand with more modest price points to help it break into emerging markets such as China and India. Another intention was to use Jane as a learning vehicle and as a wedge into the $3.5 billion mass color market. When acquired, Lauder initially retained Jane's founding managers Don Pettit and Howard Katkov to guide its growth, but over time, both were quietly eased out of Lauder organization as high-level Lauder management began weighing in on the brand.

"I think we learned that each of the major cosmetics channels, be they direct, mass or prestige, has certain skills and the fact that we are in the cosmetics business doesn't necessarily give us the data bank to compete in every channel, "Daniel Brestle, a group vice president at Estee Lauder, said in an interview Monday. "Jane was a business we looked at to give us exposure to the [mass] channel. I thought it was a great experience for those of us here, but at the end, strategically, it was never going to be as big was what we wanted." Brestle noted that the brand's general manager, Todd First, "had done a terrific job" over the past two years. Brestle said the Jane brand that was sold was a well-run organization with high-quality products. But in the end analysis, he said, Lauder's core competence is in service environments. Said Brestle: "We do that pretty well."