LVMH Moet Hennessy Louis Vuitton is pulling the plug on its just relaunched Fendi fragrance business. The line has only one fragrance on the market, which is being discontinued.
The company will stop selling its Fendi Palazzo women's fragrance, which it introduced in 2007, due to sales that "while encouraging, didn't meet expectations” in 2008, stated Gabriella Scarpa, country general manager for LVMH Perfumes and Cosmetics in Italy. At the time of its introduction, industry sources estimated Palazzo would ring up $50 million in global retail revenues during its first year on counter.
An LVMH spokesman in Italy declined further comment, but market sources believe that despite the setback, Fendi will forge ahead with a fragrance business at a later date.
Palazzo was Fendi's first major fragrance launch in collaboration with the company's distribution partner, Christian Dior Perfumes and Cosmetics. Unveiled at a major press event in Rome in summer 2007, Palazzo was Fendi's first scent to be introduced since the mid-Eighties. Its rectangular bottle with a graphic black sketch of a building was meant to resemble Fendi's headquarters. Karl Lagerfeld shot images for Palazzo's ad and also for a storybook, called Palazzo, to accompany the scent's launch.
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"Perhaps their expectations were too big," said Antonella Mandelli, general manager of Mazzolari, one of Milan's leading perfumeries. "It's a very strong signal they are sending out, as they realized it wasn't performing how they wanted it to. Other companies should have the courage to do the same thing."
Essentially the entire project didn't pan out, so LVMH cut its losses. Right now all divisions are under a microscope and those that aren't profitable face a dim future.
