OVERVIEW OF THE 2002 U.S. COSMETIC MARKET

1. Dollar Volume in Manufacturer's Sales (millions)

2002 sales are flat vs 2001.

	2000	2001	2002
Prestige	$6,676	$6,524	$6,801
Broad	7,280	7,498	7,335
Alternative	8,325	8,501	8,402
TOTAL	$22,281	$22,523	$22,538

The retail environment continues to fragment, offering:

• more places that sell beauty products
• greater assortments and greater assortments across brands
• more niche brands, narrowly targeted to specific consumers
• cross distribution of brands, many selling in two channels of distribution
• greater access to exclusively distributed brands via the internet

There is a clear focus on youth in brand marketing, especially in the color and fragrance sectors.
At the same time, the maturing baby boomer is being recognized with anti-aging products and luxury retails of $100 and up.

The Alternative segment of the market continued to grow in overall strength in the total category.
While Free Standing Stores have experienced a decline in total sales, Salons/Spas sales were flat and Direct Selling, Direct Response and Health Food Stores experienced market growth.

Total internet sales increased more than 35%. Beauty-related internet sales are estimated to have increased 13% over 2001, to $2.2 billion.

(Prestige distribution is department stores, specialty stores and chain department stores. Broad
Distribution is drug stores, super stores and mass merchandisers. Alternative is direct sales, direct
response, free standing stores, spas and salons, the internet and health food stores.)

2. Growth (percentage)

Prestige, which experienced a 3% decrease in 2001, more than recovered with an increase of 4% in 2002.

	2001 v 2000	2002 v 2001
Prestige	-2.3%	+4.2%
Broad	+3.0%	-2.2%
Alternative	+2.1%	-1.2%
TOTAL	+1.1%	flat

3. Market Share (percentage)

Prestige distribution took market share from Broad. Alternative was unchanged.

	2000	2001	2002
Prestige	30%	29%	31%
Broad	33%	33%	31%
Alternative	37%	38%	38%
TOTAL	100%	100%	100%

1. Dollar Volume in Manufacturers' Sales (millions)

Skin care sales enjoyed a 2.5% sales increase over 2001, boosted by continued interest in anti-aging products for baby boomers and acne treatments. Cleansers and traditional moisturizers had sales declines.  Doctors' and professional lines are thriving.

Niche makeup products drove sales.  These included lip glosses, concealers and brow products.  Lips and eyes did well, as did applicators and cosmetic storage items.  Face makeup was flat and nails continued the downward spiral.

Multi-use products in the skin and color segments continued to be key items.

Body and Bath had a 6% decline in total volume, but body care products showed a slight increase.  The category suffered from the closing of many doors in Free Standing Stores.

Fragrances continue to be viewed as "me too" and boring, and are being undergoing a fundamental shift to shorter life cycles as opposed to brand longevity.

2. Growth

Fragrance-related sectors continued their sales declines of 2001.  Skin Care and Color Cosmetics had growth, but it had slowed down vs 2001.

3. Market Share

Skin Care and Color Cosmetics gained market share at the expense of fragrance-related products.