P&G buys luxury hair care brand Frederic Fekkai
in an effort to ensure continued sales and profit growth despite
the faltering US economy.
The consumer goods giant bought the luxury brand from the private equity firm Catterton Partners but did not disclose the financial details of the deal. Leading brand Described by P&G as 'the leading hair care brand in the US prestige channel', Fekkai is expected to be an important addition to its portfolio of brands in the luxury personal care market. The company said the acquisition fits its strategy of focusing on fast-growing, high-margin and asset-efficient businesses. "We see an opportunity to learn and build this unique business model," said P&G spokesperson Craig Bahner. Fekkai produces a range of luxury hair care products that it sells through leading retailers such as Nordstrom's and Neiman Marcus as well as its own salons. High margins Manufacturers of luxury hair care products and salon brands enjoy relatively high margins as consumers are willing to pay premium prices for the professional touch. Other leading finished goods manufacturers have been acquisitive in this market as they seek to maintain their sales growth and stabilize their margins in the increasingly gloomy economic environment. L'Oreal, for example, sees great potential in this market, having acquired three hair salon businesses in the US recently; Maly's West, Beauty Alliance and Columbia Beauty Supply. As well as making selective acquisitions P&G is pursuing other strategies to protect its profits in the face of falling demand and rising commodity prices. In a recent presentation chief financial officer Clayt Daley and CEO A.G. Lafley said the company would focus on cost cutting. The executives said this would be achieved through divestment of unprofitable businesses, management job cuts and the movement of manufacturing facilities closer to the customer base.
