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THE COSMETICS INDUSTRY The cosmet

THE COSMETICS INDUSTRY: AN ANALYSIS

The cosmetics industry in the United States produces and markets both cosmetics and toiletries (Royce, 1991). The major players in the industry are Alberto Culver, Avon, Chesebrough Ponds, Faberge, Gillette, International Flavors and Fragrances, Noxell, and Revlon, although not all of these firms are independent entities (Standard & Poor's, 1990).

The history of the cosmetics industry can likely be traced to some of the very earliest days of civilization. It was in the lasthalf of the nineteenth century, however, when toiletries and cosmetics began to be produced and marketed on a mass scale, as opposed to being concocted in essentially local establishments. In 1880, the country's largest cosmetic firm, Avon, was founded (Moskowitz, Katz & Levering, 1985).

Industry sales in 1990 were $11.4 billion, which represented a 9.6 percent increase over the $10.4 billion of 1989. From 1987 through 1990, industry sales grew by 34.1 percent, and by 1993 should near $15 billion, a gain of 31.6 percent over 1990 levels (Royce, 1991).

Operating margins in the industry are relatively high, with 17.5 percent being recorded in 1990. Operating margins increased annually from 16.1 percent recorded in 1987, and are expected to reach 19 percent by 1993 (Royce, 1991).

Net profit in the industry is also strong. The net profit recorded in 1990 was 7.5 percent, up from 6.8 percent in 1987. By 1993, industry net profit is expected to reach 9 percent (Royce, 1991).

The industry is moderately leveraged. The longterm debt to equity ratio in 1990 was .46:1, down from a staggering 1.94:1 in 1988. By 1993, the longterm debt to equity ratio is projected to be only .32:1 (Royce, 1991).

The industry return on total capital (longterm debt and equity) is strong. A 20.5 percent return on total capital was recorded in 1990, up from 16.1 percent in 1987. By 1993, the return on total capital is pr...

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THE COSMETICS INDUSTRY The cosmet. (1969, December 31). In LotsofEssays.com. Retrieved 02:09, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1705089.html