Remington Products Co., L.L.C.

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Remington Products Co., L.L.C.

founded: 1979

Contact Information:

headquarters: 60 main st.
bridgeport, ct 06604 phone: (203)367-4400 fax: (203)366-6039 url: http://www.remington-products.com

OVERVIEW

Remington Products Company LLC is a designer, manufacturer, marketer, and distributor of men's and ladies' shavers, grooming and personal care products, and travel appliances. Chairman Victor Kiam, who owns 44 percent of the company as of 1998, was noted for appearing in television advertisements saying that he liked Remington shavers so much that he bought the company.

Remington Products maintains its world headquarters in Bridgeport, Connecticut, where most Remington shavers are manufactured for worldwide distribution. The company has a worldwide sales network and operations in several countries, including Canada, the United Kingdom, Australia, France, and New Zealand. Other products, such as grooming, personal care, and travel appliances, are manufactured by subcontractors located mainly in the Far East.

Remington sells its products worldwide through retailers, mass merchandisers, and 80 company stores in the United States, the United Kingdom, and Canada. The company stores sell shavers, knives, scissors, gifts, and related products. The stores also service Remington's products, as well as those made by competitors.

Sales by Remington Products stagnated over the 1996-1997 period. A new management team was installed in 1997. By the end of 1997 Remington was the number two seller of electric shavers; Norelco was the leader of the $400 million market. In the last half of 1997 and into 1998, the team redesigned the company's line of shavers and boosted advertising costs. By early 1998 sales for Remington Products were on the rise, but so were costs. Profits remained in the negative figures.

COMPANY FINANCES

Remington Products' 1996 sales were $242.0 million, down 5.2 percent from the previous year. The company also posted a loss of $21.4 million for the year. In November 1996 Standard & Poor's (S&P), a corporate credit rating firm, placed Remington Products Co. LLC's and Remington Capital Corporation's single-B-plus corporate credit rating and single-B-minus subordinated debt rating on what S&P called "Credit Watch." The move meant there were negative implications in Remington's recent financial performance, mainly weaker than expected third quarter 1996 financial results and the expectation that full-year financial results would be below levels expected by S&P. The move by S&P affected about $130 million of Remington's long-term debt.

Remington's financial difficulties were brought about, in part, by lower average pricing of shaver products, lower sales in certain personal care lines, new product introduction delays, and inventory reductions at major retailing customers, according to S&P.

In 1997 Remington Products experienced financial losses in both its first and second quarters. Although the company usually reports losses early in the year, due to the seasonal nature of its products, Remington Products needed a change. A new management team was installed in 1997, focusing on new and better products, more advertising, and cost-cutting efforts.

By the end of 1997 Remington Products began to see a turnaround. Although sales were still flat, $241.6 million in 1997 compared to $242.0 million for 1996, the losses slowed. Net income for the company was -$7.9 million in 1997 and -$21.4 in 1996.

The first quarter of 1998 showed positive results from the introduction of new products. Net sales were $38.9 million, an increase of 6.8 percent over 1997's first quarter. The company anticipated higher sales and profits throughout 1998 as more new products were introduced to the market.

HISTORY

Remington Products is a direct descendant of the firearms maker E. Remington and Sons, founded in 1816. Remington Typewriter Company spun off of the firearms maker and in 1927 merged with Rand Kardex Corporation to become Remington Rand, Inc. In addition to typewriters, the company was a leading office equipment manufacturer.

In 1937 the first Remington electric shaver was introduced to the U.S. market by Remington Rand. Almost two decades later, in 1955, Remington Rand and the Sperry Corporation merged to form the Sperry Rand Corporation. In 1979 the Sperry Rand Corporation became the computer company Sperry Corporation. The office machine business was sold and Victor Kiam, in a leveraged buyout, acquired the small appliance division, named Remington Products Inc. In 1981 the company made its first venture into the retail market when it opened a company store in New Haven, Connecticut. The venture grew into an 80-store U.S. network by the mid-1990s, including several overseas units as well.

Remington's shavers became very profitable and soon the company branched out to other personal care appliances. In 1993 the firm acquired the personal care appliance division of Clairol Inc. Victor Kiam sold his controlling interest of Remington in 1994 to Ike Perlmutter.

In the mid-1990s Remington Products explored alternative financial arrangements for the company. In early 1995 Remington Products was in acquisition talks with Sunbeam-Oster, but the companies ended the talks on May 13, 1995 because of disagreements over the terms and price of the acquisition.

In June 1996 Vestar Partners became the new parent company for Remington Products and provided $70 million in capital for Remington to introduce new products and provide advertising support for retailers. As part of this recapitalization, the company became Remington Products Company, LLC.

STRATEGY

Remington Products' main business strategy is to sell its appliances through leading retailers and its company stores. Due to flat sales for the years 1995-97, Remington revamped its products and increased incentives to its sales force. This led to both higher gross profit margins and selling, general, and administrative expenses for the first quarter of 1998.

The new management team, led by CEO Neil DeFeo, came on board in mid-1997. The first order of business was to pump up Remington's advertising and marketing budget. The new team felt the old management set short-term goals when it came to advertising. As a result, Remington spent 30 percent more in advertising in the fourth quarter 1997 than in the fourth quarter 1996, the company's traditional high selling season. In fact, the company spent 40 percent more in advertising for all of 1997 than 1996.

Electric shaver retail prices ranged from $30 to $200 in 1998. Remington, along with competitor Braun decided to repackage its products in early 1998 in order to make features more obvious to the consumer. Remington formerly had see-through blister packages, but later decided to package the electric shavers in color-coded boxes. The MicroScreen series will have a numbering system, to differentiate between the 1, 2, and 3 series.

PRODUCTS

In the mid-1990s Remington Products introduced a variety of new personal care products to supplement its existing line of products. In January 1995 the company signed a licensing agreement with Intratex Enterprises America for use of the Remington name on a line of radios. The new products included clock radios, travel alarm clocks, headphones, and a karaoke unit. Intratex was also expected to market a line of telecommunications accessories under the Remington Rand name.

In the late-1990s Remington's product line was focused in five main areas: shavers (men's and ladies'); grooming (haircut kits, beard, and moustache trimmers); personal care (hairsetters, hairdryers, curling irons); travel appliances (irons, steamers, voltage converters); and parts & accessories.

Remington's men's and women's electric shaver lines include Triple Foil and Dual Foil/XLR Shavers for men, and the Ladies' Wet/Dry and WER (women's electric razor). Remington's triple foil shavers use three flexible foils combined with three independent floating cutters that automatically adjust to the contours of the user's face and neck. Remington's dual foil "microscreen" shavers use two ultra-thin flexible foils to lift the user's whiskers to shave below skin level, while the company's dual track rotary shavers use 60 precision sharp cutting blades within independently mounted assemblies that float and adjust to facial contours. Shavers accounted for about 35 percent of Remington's 1996 sales. Its other products include hair dryers, curling irons, and nose and ear hair trimmers.

In women's shavers, Remington offers several different models, including the WDF-2000 Wet/Dry Rechargeable Shaver, a dual foil model, which can be used by women to shave their legs in or out of the shower. A similar model, the LWDB-3000 Wet/Dry Battery Shaver, uses 2 "AA" batteries. Other Remington women's shavers include the WRR-6000 Rechargeable Rotary Shaver, which cuts hair in the natural direction of growth. The twin heads float and adjust to different skin contours. The WER-4200 Corded Shaver uses specially designed dual cutters and blades to eliminate the risk of nicks, scrapes, or cuts, and is particularly useful for underarm shaving.

Other Remington products include the K-40 Aqua Curl, which provides steam/mist to produce long-lasting curls, according to the company, and the Smart Styler Curling Iron, which changes colors when the correct heat is reached. Different curling iron models use different sized chrome barrels, including ones for tight curls and bang touch ups; big, loose curls; and gentle curls and soft waves.

FAST FACTS: About Remington Products Co., L.L.C.

Ownership: Remington Products is a privately owned company.

Officers: Victor K. Kiam II, Chmn.; Neil P. DeFeo, Pres. & CEO; Alexander R. Castaldi, Exec. VP & COO

Employees: 1,145

Principal Subsidiary Companies: Remington Products' main subsidiary is the Remington Equities Corp.

Chief Competitors: Remington Products competes against makers of small household appliances. Competitors also include those who own specialty stores in the small appliance field. Major competitors include: Gillette; Philips Electronics; and Braun.

GLOBAL PRESENCE

As of early 1998, Remington Products operates outside the United States through subsidiaries in the United Kingdom, Canada, Australia, and Germany, and had branch operations in France and New Zealand and independent

CHRONOLOGY: Key Dates for Remington Products Co., L.L.C.

1816:: E. Remington and Sons is founded as a firearms maker
1927:: Remington Typewriter Company is spun off by the parent company and merges with Rand Kardex to become Remington Rand, making office equipment
1937:: The first Remington electric shaver is introduced
1955:: Remington Rand and Sperry merge to form the Sperry Rand Corporation
1979:: Sperry Rand becomes Sperry Corporation, a computer company
1980:: In a leveraged buyout, Victor Kiam acquires the small appliance division called Remington Products Inc.
1981:: Remington opens its first company store
1993:: Acquires the personal care appliance division of Clairol Inc.
1994:: Kiam sells his interest of Remington to Ike Perlmutter
1996:: Vestar Partners buys Remington Products

HAIR TODAY, GONE TOMORROW

Humanity has been obsessed with body hair (either its presence or absence) for a millennium. Julius Caesar, it is said, had himself plucked clean on a regular basis. Today, of course, he would pick up something like Remington's Dual Microscreen electric razor and have the job done in a jiffy. Remington offers men's and women's electric razors, hair clippers, beard and moustache trimmers, and even nose- and ear-hair trimmers. As Julius Caesar himself would appreciate, the electric shaver wars are fiercely competitive, with Norelco, Braun, and Remington all striving to put out the most innovative product. Wet shavers (as they are called) are the latest type of shavers in the marketplace, fueling the competition among the electric shaver companies.

distributors throughout the rest of the world. Its primary foreign subsidiaries are Remington Consumer Products Limited (Northampton, England); Remington Products Australia Pty (Victoria, Australia); and Remington Products Inc. (Markham, Ontario, Canada).

SOURCES OF INFORMATION

Bibliography

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——. "Remington, Braun Vie On Packs, Too." Brandweek, 19 January 1998.

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