Unilever Puts Top Perfumes Up for Sale

Anglo-Dutch Unilever Plc/NV, London, is looking to sell its Cosmetics International unit, including its Calvin Klein, Karl Lagerfeld and Valentino perfumes to raise up to $750 million, according to sources close to the situation.

The consumer products giant is mid-way through a five-year program to trim the number of its brands to 400 from 800 to boost sales growth and profit margins, and these top scent brands look next to go, executives said. The market has speculated that Unilever may want to sell off its top perfumes since it sold Elizabeth Arden cosmetics and fragrances business in 2000, to focus on its mainstream brands such as Dove soap, Knorr soup and Lipton tea.

Unilever has hired U.S. investment bank Morgan Stanley to sell the unit, said a source familiar with the situation.

The perfume division also makes Nautica, Vera Wang and Cerruti fragrances and is likely to attract attention from rival consumer goods groups such as L’Oreal, Estee Lauder Co.s Inc. and Procter & Gamble Co., and also private equity groups, the sources said. Unilever declined to comment.

Since the Bestfoods deal, Unilever has sold its professional cleaning services business DiverseyLever, Mazola corn oil, Batchelors soups and Oxo bouillons to cut its hefty debt and focus on its top 400 brands.

Its Path to Growth strategy is aimed at driving its underlying annual sales growth to 5-6% and profit margin to above 16% by 2004. It has been cutting jobs, closing factories and eliminating brands as part of that program. By the end of this year, it expects its top 400 brands will account for 90% of overall sales.

In 2001, Unilever’s top 400 brands showed sales growth of 5.3% after 3.8% in 2000. This year, poor weather has led to disappointing ice cream sales this summer in Europe and Unilever expects its 400 brands sales to show growth at just 4.5-5% for 2002.