Phasing in a new skin-care company

Skin-care companies are doing makeup. Makeup brands are rolling out skin-care lines. Makers of bubble bath are doing both. Never have women had so many choices among moisturizers, foundations and lipsticks.

Into this crowded field jumps Aura Science, a new skin-care and makeup company that is a joint venture between Limited Brands, the Columbus, Ohio-based retail giant, and Shiseido Co., the upscale skin-care and makeup company from Japan.

Aura Science’s point of differentiation: Products are grouped according to the life phase of a customer’s complexion and run the gamut from teenage skin to dry, sagging older skin. Shoppers are “phased” by answering a few questions on a touch-screen terminal soon after walking in the door.

You won’t find Aura Science at your local department store because the brand is being sold through its own freestanding chain. The first Chicago-area store debuted several weeks ago in Schaumburg’s Woodfield mall. The second opened Friday in Water Tower Place.

Of course, the challenge facing Aura Science is enormous. Most women already are loyal to a skin-care line, and many like to mix and match products from a variety of cosmetic lines. Given the intense competition, the level of promotions offered by well-established competitors–free facials and makeovers–has reached a new high.

But Robin Burns, the chief executive of Limited’s Intimate Beauty unit, is confident Aura Science will break through the clutter with its modern, brightly lit stores and special little touches, such as offering a warm hand towel to everyone who walks through the door.

In order to get skeptics to try the new line, Aura Science will hand out free samples of its basic three-step skin-care program to shoppers whether they buy something or not. The sampling program will be an ongoing feature, not something that ends after a few weeks.

The stores also are doing direct marketing, inviting residents in for free skin consultations. Prices are middle-of-the road, at the low end of the department store cosmetic aisle. Think Clinique, not Chanel.

“Women are intelligent,” says Burns, who spent eight years as president of cosmetic giant Estee Lauder before joining Limited. “You can’t tell a 25-year-old that the products she uses should be the same when she is 35 or 40. To retain customers, you have to give them credible products.”

Burns, who spent four years developing Aura Science, is wisely wary of sounding overconfident. Look what happened when Sears, Roebuck and Co. predicted its proprietary Circle of Beauty brand could someday rack up $500 million in sales. It never came close, and last year, Sears pulled the plug.

But given Aura Science’s early results, Burns believes the brand could eventually expand to a 500-store chain and bring in $1 billion in annual sales, the lofty goal she was handed by Limited Chief Executive Leslie Wexner.

“I do think this resonates globally. It will play very well in Europe and Asia,” Burns says. “I have no reason yet to be discouraged.”

What did I do wrong? In Wall Street’s often perverse fashion, Walgreen Co. stock took a pounding Monday for, of all things, posting another record quarter of sales and profits. And the Deerfield-based drugstore chain didn’t just surpass itself by a little. Net income was up 21 percent, while sales soared 17.5 percent.

Why the negative reaction? Walgreen only met analysts’ earnings estimates rather than beating them. But at least one analyst, Mark Husson of Merrill Lynch, thought the market’s reaction was nuts, and he upgraded Walgreen’s rating after the earnings report.

“We strongly advise clients to look beyond the impressive 21 percent number and its drivers to two other impressive features–sharply higher inventory turns and strong free cash flow generation,” Husson said.

And thanks to the decline in Walgreen’s stock price, “we do not have our usual concern on valuation,” he added. Husson is projecting a $50 price target for Walgreen shares next year based on his 2003 earnings-per-share forecast of $1.28.

Somehow, we bet his e-mails to colleagues would be just as upbeat.

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