Are Cosmetics Recession-Proof? Mary Kay Thrives in Bad Economic Times

In Down Economy, Lipstick Sells
ABCNEWS.com

Thousands of women were recognized for expanding their businesses at the Mary Kay Cosmetics Career Conference's awards nights in Dallas this past summer because, contrary to almost everything else in the current economic downturn, lipstick sells in tough times.

In the first six months of this year, more than 200,000 recruits signed up to sell Mary Kay products. There are now 2.5 million independent sales consultants selling $2.5 billion worth of mascara, moisturizer and other beauty products globally.

"People still want to buy lipstick," CEO David Holl told "Nightline." "They may not want to buy as many lipsticks or as much of the skincare line, but you clearly see that if you have a value product that is just a little bit lower price point, that our sales force and their customers jump on that for sure."

Mary Kay's success is based on personalized attention, competitive prices, a fun way to shop and convenient delivery. Courtney Armstrong was a big seller in East Texas when "Nightline" first profiled her in 2009 and she says the recession hasn't slowed her down since then.

"I know the economy's kind of hurting a lot of people, but really we haven't seen that in Mary Kay," she said. "I have more customers now, more consultants now that I've been working with and it's really been an incredible year. We increased over the last year and added over a hundred new women to my team in the past year."

Armstrong and her team sell enough make-up to keep her in one of those famous pink Cadillac SUVs – her second, and she's positioned to earn a third.

"A lot of women are looking for a back-up plan," Armstrong said. "They're concerned about stability of their job, the stability of their husband's job. So they're looking for a back-up plan. A way to make extra money."

Company founder Mary Kay Ash, who started the business in 1963, joins a long list of other famous female entrepreneurs who have turned a simple idea or product to a branded empire.

PHOTO: Estee Lauder is seen during the Annual Costume Institute Gala Exhibition, in this Dec. 4, 1989 file photo at the Metropolitan Museum of Art in New York City, New York.
Ron Galella, Ltd./WireImage/Getty Images
Estee Lauder
Raised in Corona, Queens, Estee Lauder founded a cosmetic company with her husband in 1946.

She started out selling her chemist uncle's skin creams and persuaded Manhattan department stores to stock her products. By 1948, she had secured counter space at Saks Fifth Avenue and her products spread to other stores.

Turning her company into an international empire, Lauder was the only woman on TIME magazine's 1998 list of 20 most influential geniuses of the 20th century.

The New York-based company, which makes Clinique, Bobbi Brown and MAC Cosmetics, announced in August that its total revenue rose 13 percent to $8.81 billion from $7.8 billion last year.

PHOTO: Essie Weingarten attends Mercedes-Benz Fashion Week at Bryant Park, Feb. 16, 2010 in New York City.
Katy Winn/Getty Images for IMG
Essie Weingarten
Essie Weingarten arrived in Las Vegas in 1981 with a suitcase full of nail polish in hopes of selling her chip-resistant, high-gloss line to hotels, beauty salons and spas.

Weingarten started out with just 12 colors, which ranged from classic red to mauve shades, and each carried unconventional names such as "Baby's Breath" and "Bordeaux" -- two colors still in the Essie line today.

Over the years, Weingarten has turned the company she founded into a global luxury brand at the comestic counter. Essie Cosmetics now offers over 300 different nail colors, as well as a line of nail treatments, nail accessories, spa products and lip gloss.

It's estimated that the company generated $28 million in sales last year.

L'Oreal, the world's largest cosmetics company, acquired the nail polish maker in April 2010. Essie Cosmetics remains headquartered in New York City.

Gabrielle "Coco" Chanel
One of the greatest fashion designer icons of the 20th century, Gabrielle "Coco" Chanel (1883-1971) opened her first shop in Paris in 1913, selling hats and a small clothing line.

Taking some of her inspirations from men's fashion and tailoring them for women, Chanel's designs were considered innovative because they allowed women to be freed from the corset.

By 1926, American "Vogue" likened her "little black dress" to the Ford, referring to its popularity as a closet basic. After closing her salon during World War II, Chanel made a come back into the fashion world in 1953, and the Chanel suit, made of tweed fabric and trimmed with gold buttons, became a status symbol.

Her fragrance, Chanel No. 5, has now been on the market for 90 years. According to cultural historian Tilar Mazzeo's book, "The Secret of Chanel No. 5: The Intimate History of the World's Most Famous Perfume," someone buys a bottle every 30 seconds.

PHOTO: Fashion designer Liz Claiborne is shown in this undated file photo.
Liz Claiborne,Inc./AP Photo
Liz Claiborne
Liz Claiborne launched Liz Claiborne Inc. in 1976, along with her husband and two partners out of a small office in New York City. Their mission: to design affordable "ensemble driven" sportswear to rival the more expensive Calvin Klein and Bill Blass brands, according to the company's website.

By 1985, it was the first company founded by a woman to be listed in the Fortune 500. Now the company's retail has expanded to women, men and children's wear, shoes, handbags, luggage, home décor and fragrances.

Its design and marketing umbrella includes other well-established brands: Juicy Couture, kate spade new york, Lucky Brand and Mexx.

According to BusinessWeek.com, Liz Claiborne Inc.'s total revenue in the past year is $2.5 billion.

PHOTO: Dame Anita Roddick, founder of The Body Shop, is shown in this April 26, 2002 file photo, in London, England.
Gareth Davies/Getty Images
Anita Roddick
After not much success in opening a restaurant and hotel, Anita Roddick opened a store filled with 15 different natural skin care products in refillable containers. That was 1976.

More than 30 years later, there are more than 2,600 Body Shops operating in more than 50 countries worldwide.

More than 300 products now carry the Body Shop label. The Body Shop was one of the first companies to ban product testing on animals and was outspoken in other environmental and human rights causes. Roddick sold the Body Shop to L'Oreal in 2006.

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