Conair Corporation History

Address:
150 Milford Rd.
East Windsor, New Jersey 08520
U.S.A.

Telephone: (609) 426-1300
Fax: (609) 426-9475

Website:
Private Company
Incorporated: 1959 as Continental Hair Products, Inc.
Employees: 4,000
Sales: $1.27 billion (2003 est.)
NAIC: 335211 Electric Housewares Manufacturing

Company Perspectives:

Conair is engaged in the development, manufacturing and marketing of health and beauty products and kitchen and electronic appliances. Since its founding in 1959, the company has become a leading manufacturer of nationally branded personal and healthcare appliances.

Key Dates:

1959:
Continental Hair Products is incorporated.
1965:
Fire destroys Brooklyn quarters.
1972:
Company offers publicly traded stock.
1973:
Continental Hair acquires Ethical Personal Hair Products, Ltd. and Jheri Redding Products, Inc.
1985:
First leveraged buyout is accomplished through sale of junk bonds; company returns to private status.
1996:
Conair settles patent suit with Braun.
2000:
Conair CEO Leandro Rizzuto is charged with $4 million tax fraud; sales reach the billion dollar mark.
2002:
Conair acquires Pollenex water products.
2003:
Conair appeals $43 million judgment in patent infringement case, winning the appeal a year later.

Company History:

Conair Corporation is one of the world's largest privately held health and beauty and small appliance companies. Conair manufactures products under the Cuisinart, Interplak, ConairPro, Conair, Jheri Redding, Pollenex, Thinner, BaByliss, Waring, and Rusk names.

Continental Hair Products: 1959-75

Continental Hair Products, Inc., established and incorporated in 1959, was founded by Julian Rizzuto and his son Leandro (Lee). Julian had invented the "machineless permanent wave," a chemical process that replaced electric hair curlers for a time. He ran a beauty parlor on Manhattan's East 42nd Street with his wife, but this business collapsed in the late 1950s. This left him with only an improved, fast-drying hair roller he had invented. Continental Hair was launched in a Brooklyn basement to produce these premium-quality, premium-priced hair curlers for sale to the beauty salon business. The start-up capital was $100, raised from the $5,000 sale of Lee's Cadillac, with the rest of the money going to pay off family debt. The business was an instant success, requiring the Rizzutos to expand their assembly capacity nine times in four years. Within a few years the firm was selling curlers and Japanese-made hair clips at the rate of ten million per month.

Continental Hair suffered a setback when a fire in 1965 destroyed its underinsured Brooklyn quarters. Julian Rizzuto died two years later. The company began recording remarkable and uninterrupted progress during 1968-69, however, when it developed and introduced hot combs, curling irons, and the first of a line of pistol-grip hair styler-dryers, which helped to popularize blow-dried hair styles. Initially made exclusively for the professional beauty care market, the hair dryers were immediately embraced as superior to the conventional bonnet-type, salon-type dryers. Continental Hair also began selling retail lines of electric hair appliances in late 1971, when it introduced the "Conair Pro-Style" dryer. Sales grew from $1.1 million in 1968 to $12.6 million in 1973. Net income rose from $52,000 to $910,000 in the same period.

Continental Hair was also designing and marketing a wide variety of electric appliances by 1974, including other hand-held dryers under the Conair name, and hot combs, curling irons, shampoos, conditioners, and other hair-care accessories. It was manufacturing the Vidal Sassoon line of hand-held dryers, brushes, and cutlery, as well as producing a number of private-label products. In 1973 it acquired Ethical Personal Care Products, Ltd., which became a subsidiary selling a line of hair dryers to mass-merchandise chains under the brand name "Superstars." Also in 1973, the company entered the liquid end of the business by acquiring Jheri Redding Products, Inc., whose product line, including shampoos, conditioners, and other hair care products, had a strong and wide following among hair stylists and beauticians throughout the United States.

Continental Hair's first venture into manufacturing as well as marketing its products occurred in 1972, when it purchased a one-third interest in a Hong Kong company. In 1973, 85 percent of the hair dryers sold by Continental Hair were produced by this firm, but the company remained substantially dependent on independent Japanese suppliers who could not sufficiently meet its demands for stepped-up production. Continental Hair, therefore, built a combination warehouse/manufacturing facility in Arizona in 1974 and moved its headquarters in 1975 from Brooklyn to a newly purchased assembly plant in Edison, New Jersey. Also in 1975, the company added personal care products to its line. The principal items were two shower massage units manufactured in Edison and marketed under the trade name "Waterfingers."

Public Company: 1972-85

Continental Hair made its first public offering of stock in 1972 to raise funds for working capital and expansion, but the majority of the shares remained in management hands. Net sales reached $24.7 million in 1975, and net income was $1.9 million. The company's name became Conair Corporation in 1976, when net sales reached $36.4 million and net income $2.2 million. The following year sales increased to $53 million and net income rose to $3.5 million.

In 1977 Conair's principal product line remained its electrical hair care products, headed by eight basic models of pistol-grip hair dryers plus variations of these models. It commanded the nation's largest overall share of this market. The Conair appliance line also included five models of curling irons, an air-styling hot comb, and an infrared standing model lamp sold exclusively to the professional market and used for hair drying, permanents, and coloring. In the shower massage market, Waterfingers was second only to Teledyne's Water-Pik. These and other Conair hair-care and personal care products were being sold in thousands of stores. The company also was conducting hundreds of "seminars" a year to demonstrate its products to professional customers.

The company's growth, which had been averaging an annual 32 percent on equity, came to a screeching halt in 1978, when it lost $2.1 million on sharply reduced sales of $40 million. A 1977 strike at the Edison plant had set the target dates on some Conair products behind by six months to a year--a virtual lifetime in the hotly competitive market for personal care appliances. Because of the delay, the company's new "Pro Baby" yellow, curved, freestanding hair dryers were released hastily, untested; they proved to be costly flops. Waterfingers sales also dropped sharply. In addition, a new IBM database system proved so complex that it took a year and a half to become operational.

Conair was able to unload its huge unsold Pro Baby inventory by using its component parts for the Pistol Power 1200, which by mid-1979 had become the hottest compact dryer on the market. To make itself less dependent on hair dryers (which were accounting for 80 percent of Conair's sales), the company introduced an affordable espresso/cappuccino coffeemaker and two new lines of liquid hair products for retail distribution: Royal Persian Henna shampoos, conditioners, and sprays; and "nucleic" hair-care products, so called because they contained nucleic acids, which were thought to benefit hair. Sal DiMascio, an experienced corporate controller, was hired as chief financial officer to impose more sophisticated financial controls and procedures. The manufacturing of appliances was shifted from Edison to Hong Kong and Taiwan.

The most lasting consequence of the Pro Baby debacle was Conair's decision to shift its emphasis from hard goods to toiletries, specifically to the Jheri Redding line of liquid hair-care products. Originally geared to the professional market, this line was renamed "Milk 'n Honee" for 1981 retail distribution. Bottles that sold for $3.50 to hairdressers were doubled in size and sold for $1.99, yet Conair still made money, partly because of economies of scale, partly because the salons had been selling these products to their customers for an exorbitant profit. By 1982 some 70 percent of company sales (85 percent by 1983) were being made directly by Conair through its own sales force and representatives, instead of 70 percent by distributors.

Conair's sales rose to $50.8 million in 1979, $64.7 million in 1980, and $87 million in 1981, and net income was $1.25 million, $2 million, and $3.1 million, respectively. In late 1982 the company held 30 percent of market share in hair dryers, almost twice that of its nearest competitor. This business accounted for 40 percent of its 1981 sales. Other personal care appliance lines, including curling irons and brushes, hairsetters, lighted makeup mirrors, and muscle relaxers, accounted for 45 percent. "Milk 'n Honee" products accounted for about 10 percent of company sales in its first year of distribution. The company's short-term debt of $10.6 million was liquidated completely in 1981, and long-term debt as a percentage of total capitalization was a modest 16 percent in late 1982.

Conair entered consumer electronics in 1983, when it began selling a line of telephones under the Conair Phone brand name. The new consumer electronics division's other products included telephone answering devices and cordless telephones.

1985 Leveraged Buyout

In June 1985 Conair arranged what was called the first leveraged buyout to be financed through the public sale of debt securities (in this case junk bonds), rather than a privately arranged bank loan. The financing called for Rizzuto to sell $190 million of debt securities through a new company that he wholly owned, Conair Acquisitions Corp., which then merged into Conair Corporation. Proceeds of the debt sale were used to buy $169 million of common stock from Conair shareholders.

The buyout was a windfall for Rizzuto, who had owned 40 percent of Conair's stock and emerged with $25 million in cash as well as complete ownership of the new, private Conair and a ten-year employment contract as chairman and president at $750,000 per year, not counting bonuses. Conair's shareholders also were well rewarded, receiving the highest price level in the company's history for their stock. An investor putting $8,750 into Conair's initial public offering of stock in 1972 would receive almost $300,000 before taxes. The new Conair's debt consisted of $80 million in zero coupon financing, with no cash payments required before 1990, and $110 million in interest-bearing debentures, due near the year 2000.

Private Company: 1985-95

Conair moved its headquarters to Stamford, Connecticut, and entered the kitchen appliance field, a market five times the size of personal care, in 1986. Launching a line called Conair Cuisine for delivery in 1987, the company introduced a downsized food processor, a countertop can opener, a five-speed hand mixer, and a two-slice toaster. The Conair Cuisine line, in late 1988, also included an automatic drip coffeemaker, microwave oven, shake and beverage maker, and three battery-powered gadgets. An Ultra line of more deluxe items also had been added, including an electric juicer, cordless can opener, programmable coffeemaker with automatic shutoff, and microwave oven that also baked, broiled, and toasted.

Conair's net sales rose from $235.4 million in 1986 to $256 million in 1987 and $282.2 million in 1988. Net income increased from $628,000 in 1986 to $6.3 million in 1987 and $118.4 million in 1988. The latter figure reflected the sale of the hair-care products division, a wholly owned subsidiary named Zotos International, Inc., to Japan's Shoseido Co. for more than $329 million. Conair had bought Zotos in 1983 for $71 million. In 1988 Conair had manufacturing facilities in Taiwan and Hong Kong and warehouses in Phoenix and East Windsor, New Jersey. The following year it also began to produce toiletry products in Rantoul, Illinois, and appliances in Costa Rica. Conair's long-term debt fell from $272.5 million at the end of 1987 to $145.6 million at the end of 1988 as the company used proceeds of the Zotos sale to pay off zero coupon notes.

Rizzuto had sought to buy Cuisinart Inc., manufacturers of the first food processor for home use in the United States, in 1986. After the company filed for bankruptcy in 1989, following a botched leveraged buyout, Conair paid about $17.7 million for the trademarks, patents, and assets of the $40- to $50-million-a-year company. It was not responsible for Cuisinart's debts, which eventually were settled for less than 50 cents on the dollar. In 1995 the Cuisinart product line included food processors, stainless steel cookware, accessories, and other kitchen appliances, such as pasta makers, hand mixers, chopper/grinders, toasters, blenders, and coffeemakers.

At the National Houseware Manufacturers Association's show in January 1990, Conair introduced, in the personal care segment of its business, three high-fashion hairstyling products for the home, two compact products for easy storage and travel, and a facial sauna. In the kitchen appliance segment, it introduced products with the Cuisinart label on them in two new categories: espresso makers and microwave ovens. Another new Cuisinart product was a juice extractor/juicer. Contrary to speculation, the Cuisinart cookware line was retained. Conair also announced plans to enter a joint venture in Japan to market the Cuisinart line.

Conair's reputation for quality was underlined by Discount Store News surveys in 1989, 1990, and 1991 that found the company, in the opinion of both shoppers and store managers, to be tops in the field of personal care appliances. Twenty-three percent of discount shoppers rated Conair a preferred brand in 1991, compared with 14 percent for the runner-ups, Norelco, Clairol, and Vidal Sassoon. In 1994 Conair was still tops in this field among discount shoppers.

In 1995 Conair acquired Babyliss, S.A., a manufacturer and marketer of personal care appliances, principally in Western Europe, for about $38 million. During the early 1990s it signed long-term licensing and distribution agreements giving it exclusive rights to market telephones under the Southwestern Bell name and personal care products in Western Europe and Mexico under the Revlon name and in the Asia Pacific region under the Vidal Sassoon name.

Conair's net sales rose from $361.8 million in 1992 to $442.6 million in 1993 and $524.4 million in 1994. Net income rose from $1.2 million to $12 million and $20.5 million in these years, respectively. Of 1994 sales, personal care appliances accounted for 43 percent, consumer electronics for 29 percent, toiletries and professional salon products for 17 percent, and Cuisinart products for 11 percent. More than 5 percent of sales was international. The company's long-term debt was $100.4 million at the end of 1994.

At that time Conair entered the United Kingdom when it began selling hair-care items under the Revlon name. The company turned its sights to further expansion in Europe throughout the 1990s by buying the French personal care appliance company Babyliss SA in 1995.

Babyliss was the inventor of the first electric hair curling iron and topped the charts as the leading French manufacturer of personal care appliances. In addition to curling irons the company produced waxers, and facial saunas that were sold throughout the European market. Before acquiring Babyliss, Conair sales were approximately $500 million. With the addition of the French company sales for Conair rose to more than $650 million.

In 1996, Conair competitor Braun brought suit against Conair for patent infringement over a volumizing hair dryer attachment. Conair settled the suit and agreed to stop selling the attachment. This was the first of several patent infringement lawsuits that would plague the company over the next ten years.

The company continued to closely monitor consumer spending trends on personal care appliances and to develop products that followed shopper's interests. Throughout the late 1990s a trend for personal spa related items was growing and Conair introduced many new products that brought a spa-like experience into the home.

Conair developed a line of massagers that included a chair cushion massager in 1996, and a foot massager based on the Japanese shiatsu method of pressure point massage, aptly named the Sole Doctor.

The company also produced a hand held type of shiatsu massager named the spin doctor, and a super reach massager, the Twist and Tone and the Infra Touch Plus Massager, for arthritic consumers.

By October 1996 the Cuisinart division of the Conair Corporation reported solid and growing sales. Cuisinart was responsible for approximately $100 million of the company's sales figures. Cuisinart had captured 70 percent of the small home electronics market.

Cuisinart helped sustain its higher end product reputation among gourmands by sponsoring the popular televised cooking show The Cooking Secrets of the CIA. The CIA referred to was the prestigious Cooking Institute of America.

Conair looked to an increasingly lucrative dental goods market in the latter part of 1996. At the time, 14 percent of all U.S. households were using power toothbrushes. That left 96 percent of the market share open to new buyers.

The end of the 1990s brought a string of consolidations in the housewares industry. Conair as one of the largest competitors joined in by buying Bausch & Lomb's oral care division. Interplak was its signature product and Conair capitalized on the Interplak name and introduced a series of new products. The company launched three new oral care appliances for the summer of 1998. The company planned further product development for its fourth quarter that year when it brought out its own fluoride toothpaste and antiseptic dental rinse.

In 1999 Conair continued to grow its personal spa equipment line by selling a runner bath mat that imitated a Jacuzzi action in an ordinary bath tub. The trend to develop goods that were therapeutic in nature was an attempt by the company to address the perceived needs of the aging baby boomer population, a demographic that retailers were eager to target.

In March 1999 Conair's Cuisinart division signed a licensing deal with kitchenware company Ekco to make higher end kitchen tools under the Cuisinart name. The kitchen tools were sold at department stores and select kitchen retailers.

In May 2000, Conair CEO Leandro Rizzuto and Arthur Taylor, head of Conair's importing and international shipping work, were charged in a $4 million tax fraud conspiracy. The alleged scheme for which they were subsequently indicted and convicted, involved overcharging on shipments from Hong Kong and then receiving kickbacks that were funneled into Swiss bank accounts.

There was further bad news for the company in November 2000. The Schawbel Corporation filed suit against Conair claiming it violated its patented Thermacell technology, a technology used for cordless hair curlers. Conair settled the suit and ceased manufacturing using a Thermacell type cartridge. The company eventually bought the Schawbel hair-care business in March 2003 and began producing cordless curlers.

While corporate wrongdoings hampered the company throughout the decade sales continued to grow and Conair reached the billion dollar threshold in December 2000. It now had an array of recognized brands that were leading the industry, among them Cuisinart, Waring, Interplak, Rusk, ConairPro, Jheri Redding, Conair Shine, Forfex, BaByliss, Southwestern Bell Freedom Phone, and Conairphone.

In January 2002 Holmes sold the brand Pollenex and its water related showerheads, and massagers to Conair for an undisclosed amount of money.

The company continued its expansion in March 2004, buying Measurement Specialties Inc.'s Thinner brand bath-scales. Conair produced scales and body-fat monitors under the Thinner brand name.

Conair's patent infringement history took a turn for the better in April 2004 when on appeal, the company's $46 million judgment, resulting from a lawsuit brought by Dr. Harry Gaus, a German engineer, was reversed. Dr. Gaus attempted to further appeal the ruling by turning to the U.S. Supreme Court in August 2004, but Gaus's petition to the court was turned down.

In July 2004 Conair changed its distribution channels by opening a center in Southhaven, Mississippi. The facility was within the borders of a Foreign Trade Zone that operated outside the jurisdiction of U.S. Customs. The site was chosen in part to offset the cost of paying custom fees when shipping internationally.

The company continued to seek out consumer trends and produce products in anticipation of new markets into the mid-2000s with an emphasis on an aging baby boomer population and the needs it might perceive.

Principal Subsidiaries: Babyliss S.A. (France); Conair Consumer Products, Inc. (Canada); Conair Costa Rica, S.A. (Costa Rica); Conair UK, Ltd.; Continental Conair Ltd. (Hong Kong); Continental Products, S.A. (France; 50%); Cristal Gesellschaft fur Beteiligungen und Finanzierugen, S.A. (Switzerland); Cuisinart-Sanyei Co., Ltd. (Japan; 50%); HERC Consumer Products, LLC (50%); Rusk, Inc. (50%).

Principal Competitors: Braun GmbH; Helen of Troy Corporation; Rayovac Corporation.

Further Reading:

  • "Acquiring to Thrive," Business and Industry, June 30, 1997, p. 19.
  • Belmont, David J., "Conair Stretching Its Line of Massagers," Business and Industry, August 5, 1996, p. 62.
  • Claffey, Mike, "Conair Head Charged in 4M Tax Fraud," New York Daily News, May 4, 2000, p. 42.
  • "Conair Buys into Europe," Business and Industry, January 30, 1995, p. 1.
  • "Cuisinart at 25: More in Store," Business and Industry, October, 14, 1996, p. 71.
  • Eckardt, Dorothy, "Conair Corporation," Wall Street Transcript, November 8, 1982, p. 67726.
  • Ellis, Beth R., "Conair's Commodity Savvy," HFD, November 16, 1987, pp. 141-43.
  • Gendron, Marie, "Braun Settles Patent Suit Charging Rival Conair Corp.," Boston Herald, January 16, 1996, p. 23.
  • Gissen, Jay, "Update Conair: 'Class to the Mass,'" Forbes, February 1, 1982, p. 104.
  • Griffin, Marie, "Conair Adds Novelty to Items in Kitchen Electrics Assortment," HFD, November 7, 1988, pp. 77, 80.
  • Mayer, Ted, "Conair Corporation," Wall Street Transcript, April 11, 1977, pp. 46715-46716.
  • Monaghan, Jean, "Electrical Hair Items Spur CONH's Growth," Investment Dealers' Digest, September 9, 1975, pp. 16-17.
  • "Power Seekers," Business and Industry, November 18, 1996, p. 53.
  • Purpura, Linda, "Hair Trends Bring Versatility," Business and Industry, February 5, 1996, p. 64.
  • ------, "Smooth Sailing for Massagers," Business and Industry, March 18, 1996, p. 44.
  • Sample, Ann, "Conair Unfolds Plan for the Millennium," Business and Industry, May 3, 1999, p. 32.
  • Smith, Geoffrey, "You Don't Learn Anything from Success," Forbes, September 3, 1979, pp. 98+.
  • Thau, Barbara, "Ekco Housewares Licenses Cuisinart Name," Business and Industry, March 15, 1999, p. 46.
  • Trachtenberg, Jeffrey A., "Make My Day," Forbes, July 29, 1985, p. 74.

Source: International Directory of Company Histories, Vol.69. St. James Press, 2005.