Kathy Widmer has resigned as executive vice president and chief marketing officer of Elizabeth Arden in conjunction with a massive restructuring that includes closing out brands and global headcount reductions. Her departure is effective Aug. 28.
The company expects annual savings of $27 million to $35 million from its ‘2014 Performance Improvement Plan,’ along with ongoing cuts that will bring total savings of $40 million to $50 million. The overhaul comes on the heels of back-to-back earnings reports that saw Arden’s revenues tumble double digits. The company will present further details in August.
In an SEC filing this week, Arden said the initiatives will reduce the size and cost of the company’s overhead structure and help improve gross margins and profitability going forward. On the table are weak retail doors, fragrance license agreements and poor performing products. Arden is closing its affiliate in Puerto Rico, with more changes in its distribution and supply chain to come.
It estimates pre-tax charges of $65 million to $72 million to execute the plan over the next year, with employee severance among the costs.
Kathy was a chief architect of the Elizabeth Arden brand makeover that brought new products, packaging, store fixtures and an increase in prices. The West Point graduate joined Arden in 2009 after a 21-year career with Johnson & Johnson. In its most recent quarter ended March 31, Arden’s sales dropped 20.3% to $211 million, with an adjusted net loss of -$0.84 earnings per share, its worst performance in 10 years. The U.S. mass fragrance business has been the major culprit, although international fragrance sales have been ailing, too, due to promotional competition. A bright spot has been the flagship Elizabeth Arden counters where sales rose 11.2% domestically and 18.7% internationally.
In a research note, SunTrust Robinson analyst Bill Chappell called Arden’s recent results “dismal” and said the restructuring efforts “are long overdue.” The company has hired Goldman Sachs to evaluate strategic alternatives and Bill predicts a “takeout” (sale) of the company “is a likely outcome.”
“We continue to believe the company’s broad fragrance portfolio, strong U.S. footprint, and un-levered balance sheet will be attractive to multiple suitors,” he wrote. Arden didn’t respond to a request for comment.