PORTFOLIO COMPANY NEWS
Nancy McKay Joins Nest Fragrances as CEO
Nancy McKay, a 28-year veteran of the Estée Lauder Cos. Inc., will join Nest Fragrances as chief executive officer at the beginning of the year. Founder Laura Slatkin moves up to executive chairman while rolling out a dramatic growth campaign, driven by an expansion of distribution overseas.
At Lauder, McKay recently became senior vice president and general manager of the Lauder brand, Tom Ford Beauty and Aerin Beauty. Her skill set and experience is what Slatkin said the home fragrance and fine fragrance company needs right now.
"Nest Fragrances is at important crossroad," she observed. "We've experienced a significant amount of growth over the past few years. A strong, seasoned team is necessary to guide the company and take advantage of the tremendous potential that lies ahead."
And McKay is ready. "I have a 100-day plan," she asserted, noting that the first thing on her to-do list is "a listening tour" of employees and retailers. "I want to deliver an outstanding growth plan," she said, adding she wants to shore up "even more of our existing retail partnerships. We just want to see how big we can make it. The opportunity is to make sure that we're executing on every cylinder in the U.S. and looking for other opportunities, as well."
In 2005, McKay was named senior vice president of sales for Lauder's flagship brand, and recently became general manager of North America. In 2011, she became responsible for Tom Ford Beauty, North America, and, more recently, the introduction of Aerin Beauty. Previously, she held senior posts at Clinique, Aramis and the Designer Fragrances Division.
McKay is joining a relatively young company. A forerunner of Nest, The Candela Group, was formed in 2005 as a private-label manufacturer of fashion candles, then Nest was launched in 2008 with its own signature candle brands distributed in specialty stores like Neiman Marcus. In September 2012, Slatkin made the leap into fine fragrance with a collection of three scents. That number has grown to seven, with an eighth fragrance due in the spring. The fragrances are distributed in 177 of Sephora's 360 freestanding stores in North America. According to Nest, the Sephora sales leaped 143 percent over budget for 2013, are running 38 percent ahead of plan this year and are projected to grow another 35 percent next year. While Slatkin declined to disclose the company's sales results, industry sources estimate that the fledgling brand is doing about $30 million at wholesale. About 80 percent of the revenue is generated by candles — including 12 core home scents and two holiday offerings — and the rest of the volume comes from fragrances.
Nest's distribution includes Neiman's, Saks Fifth Avenue, Bloomingdale's, Nordstrom and more than 1,000 boutiques. Considering Nest's growth trajectory, Slatkin has set an ambitious plan for the future. She said the company could potentially triple its size in the next three-to-four years. "Fine fragrances will be the vehicle to achieve that expansion," she said.
Another broad avenue for growth is international expansion. "We are transforming the company into a luxury lifestyle beauty brand," she said, adding, "we are going to be expanding internationally." Slatkin intends to enter Sephora overseas, starting with the Canadian chain, where the brand is already doing business and will step up the pace next year. Beyond that, plans call for establishing distribution in Europe, the Middle East and Australia. "That is going to be the big focus of 2015, 2016," she said.
But she added that the U.S. will also be further developed. "We are going to optimize our presence in the channels of distribution that we are presently in," she said, noting the company will continue on the path set down a month ago with the opening of a shop-in-shop in the North Park unit of Neiman's in Dallas. Slatkin said she wants to roll out the concept of fine fragrance and home fragrance combined "where the world of Nest comes together."
"Hiring a ceo with Nancy's deep expertise and knowledge of the beauty industry — that's why it's such a necessary step in the evolution of our brand," she said.
Slatkin notes that her day-to-day role — design, product development, setting the vision for the brand, formulating strategy, meeting with retailers and doing special events — will remain roughly the same. "We have at the company exceptional business leaders, but bringing in Nancy will just strengthen that team and give us the leadership we need to forge into the future," Slatkin said. In particular, McKay is expected to demonstrate how the brand can be cohesively presented in department stores, said Slatkin.