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Highlighters and backpacks are turning things around for Schwan-Stabilo

Munich The trend in industry is currently towards focus. Corporations like Siemens, General Electric and Toshiba have split up or have presented plans for it. But for the family business Schwan-Stabilo, the broader lineup has paid off in the pandemic. Because Stabilo stationery and Deuter backpacks provided enough money to convert the cosmetics division.

“External investors want to make portfolio decisions themselves,” says Schwan Stabilo boss Sebastian Schwanhäußer in an interview with Handelsblatt. Therefore there is a trend towards separations. A family business could put together the desired portfolio in a targeted manner.

Patience pays off: The cosmetics division shrank in the past fiscal year 2020/21, which ended on June 30th. But the other business areas performed better. During the lockdowns, many customers bought crayons and highlighters for the home office and backpacks for the vacation on their doorstep.

Overall, after three years of declining sales, Schwan-Stabilo was able to increase sales by two percent to 623 million euros.

Schwanhäußer announces with satisfaction: “We have managed to turn the tide thanks to a strong team effort.” In the past few months, demand has increased across all areas. “Instead of short-time working, we are now sometimes working additional shifts.” If nothing comes of the way, sales will continue to increase in 2021/22.

Schwan-Stabilo: additional shifts instead of short-time work

In the past few years, the cosmetics division was the big problem child. This had structural, but also home-made causes. Many women have been using less cosmetics for a long time. “In addition, we weren’t innovative enough for a while,” admits Schwanhäußer. As a consequence, Schwan-Stabilo cut massive jobs and developed new products.

Sebastian Schwanhäußer

In the fifth generation, the heir leads the company with more than three dozen shareholders.

(Photo: Schwan-Stabilo)

Corona made the turnaround difficult. “Due to the pandemic, make-up products were less in demand because there was almost no need to put on make-up,” says Schwan-Stabilo. In many places, lipstick in particular was a slow seller due to the mask requirement.

The Franconians do not sell their cosmetics directly to customers, but supply major cosmetic brands. In the 2020/21 financial year, sales in the cosmetics division fell again by eleven percent to 227 million euros. For comparison: in 2017/18 it was still 322 million euros.

But in the fourth quarter of the financial year, the demand for products for the eyes, but also for lipsticks, picked up again significantly. Thomás Espinosa, the new managing director of Schwan Cosmetics, attributes this to a stronger focus on sustainability.

More sustainable make-up should increase sales

For example, the share of fossil plastic in products is expected to decrease by a quarter by the end of 2022. A new eyeshadow pencil requires up to 70 percent less plastic because more wood is used. “It depends on every contribution to the protection of the environment,” says Espinosa, “whether energy consumption, materials, packaging, recycling, we want to take a pioneering role in the cosmetics industry with our extensive know-how.”

A separation from cosmetics was never an issue, according to Schwanhäußer. “In the long term, the cosmetics market will continue to grow by around five percent a year.” The industry is being driven by growing demand in China.

In order to reduce its dependence on make-up and pens, the family company had long been looking for a third pillar in addition to pens and cosmetics. In 2007 the decision was made for the outdoor segment and the backpack specialist Deuter was bought. The brands Ortovox, Maier Sports and Gonso were later added to the portfolio.

The decision turned out to be visionary. “The pandemic gave all four brands an additional boost,” says Martin Riebel, who heads Schwan-Stabilo’s outdoor division. Sales in this area rose by 17 percent to 186 million euros. This brings Outdoor closer to the other two corporate divisions.

The pen division also grew. The subgroup’s sales grew by eight percent to 209 million euros. This was the first time that the leap over the 200 million euro mark was achieved.

For example, a special pack for the 50th birthday of the highlighter with new colors was a great sales success. In tense times, “moments of lightness are particularly in demand – and this is due to the sight of 23 colors on the kitchen table in the improvised home office”, said Horst Brinkmann, CEO of the pencil division.

Faber-Castell is seeing increasing demand

At competitor Faber-Castell, sales in the 2020/21 financial year, adjusted for currency effects, fell by ten percent to 452 million euros. In view of the challenges, the company cut 1,100 jobs, 110 of them in Germany. “These measures hurt,” said CEO Stefan Leitz.

In the meantime, however, Faber-Castell is also noticing a significant increase in demand. For the current year, the group expects growth of at least six percent again. Calm has returned on the shareholder side as well. The heirs worked out a new family constitution over the past two years.

At Schwan-Stabilo, there has been harmony among the shareholders in recent years, despite the problems. “This stability is also one of the reasons why things are going so well for us,” says Schwanhäußer. In the fifth generation, he has been at the helm of the company with more than three dozen shareholders for more than a decade.

When cosmetics was in crisis, he had temporarily taken over the management of the division himself. Was he glad that this time was over? “It was a good opportunity for me to get to know the cosmetics business even better,” he says.

More: The secrets of the Corona winners: Which companies emerge stronger from the crisis

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