BERLIN — Restructuring charges and exceptional items largely relating to Wella’s takeover by Procter & Gamble adversely affected the German hair care company’s earnings for the abridged financial year ending June 2004.
Wella reported $249.1 million (195.2 million euros) in earnings before interest and taxes at Wella AG for the nine-month period. The company did not provide a comparable figure for 2003, but noted that a pretax loss of $290.8 million (227.9 million euros) compared with pretax earnings of $91.7 million (71.9 million euros) for the nine-month period in 2003. All dollar figures are calculated from the euro at current exchange rates.
The Darmstadt-based firm said even after adjusting for $276.9 million (217 million euros) in restructuring charges, exceptional factors such as spending on defensive measures in the professional division, residual fixed costs in the consumer division and legal expenses took their toll on earnings for the shortened business year. Wella made the decision to shift to a July 1- June 30 fiscal year in keeping with P&G’s financial calendar at an extraordinary general meeting in February 2004.
Sales, including the consumer division, which is in the process of being transferred to P&G, reached $1.98 billion (1.55 billion euros) in the nine-month period, a nominal increase of 0.2 percent. The core professional and cosmetic and fragrance divisions grew sales a nominal 5 percent in the period, or 7.2 percent when adjusted for currency effects.
The worldwide transfer of the consumer division will be completed by mid-2005. Sales for the division fell as expected, down 10.9 percent to $524.7 million (411.2 million euros). The division generated a loss in EBIT of $249.1 million (195.2 million euros), of which $215.9 million (162.9 million euros) can be attributed to restructuring charges.
The professional division increased sales for the abridged year a nominal 2.3 percent, or 4.4 percent after adjusting for currency effects to $973.6 million (763 million euros). EBIT was down to $44 million (34.5 million euros) due to restructuring charges of $49.6 million (38.9 million euros) and other exceptional items.
Cosmetics and fragrances continued its strong growth performance, with sales up a nominal 11 percent to $479.5 million (375.8 million euros). Wella said North America and Asia were the regional motors behind the division’s growth. In terms of brands, Gucci Parfums, Escada and Rochas increased sales and revenues about 20 percent compared with last year. However, restructuring costs also slashed the division’s EBIT, with an operating loss of $18.1 million (14.2 million euros) compared with earnings of $19.3 million (15.1 million euros) for the period last year.For fiscal 2004-2005 (the year ending June 30), Wella is forecasting low single-digit growth in professional products sales, powered by color items. The consumer division will be fully transferred to P&G by the end of the 2005 fiscal year. While Wella did not make projections for the cosmetic and fragrance division, it said fragrance launches from Max Mara, Tom Tailor and Gerry Weber at the end of 2004, and scents from Gucci Parfums, Escada, Mexx and Montblanc should have a positive effect on the business.
Avon Earnings Swell 32.9%
NEW YORK — Strong performances from its international markets continued to ignite earnings for Avon Products Inc. during the third quarter.
For the three months ended Sept. 30, the New York-based beauty products giant reported a 32.9 percent bump in earnings to $176.9 million, or 37 cents a diluted share. Earnings bested Wall Street’s consensus estimate and its own guidance of 34 cents. Comparatively, the company reported earnings of $133.1 million, or 28 cents, in the year-ago period.
Revenue increased 11.4 percent to $1.81 billion compared with revenue of $1.62 billion in the same period a year ago. Beauty products made up the lion’s share of sales, which rose 11.2 percent to $1.78 billion from $1.6 billion. Excluding the benefits of currency exchange, sales rose 10 percent.
“Beauty growth significantly outpaced overall growth,” said Andrea Jung, chairman and chief executive officer, during the company’s conference call to Wall Street analysts. “Our beauty sales were up 15 percent versus the same period a year ago, and at the end of the quarter, beauty accounted for 69 percent of total sales compared with 67 percent in the same period last year.”
For the nine months to date, earnings bloomed 38.1 percent to $557.3 million, or $1.17 a share, from $403.5 million, or 84 cents, in the same period a year ago. Revenue grew 14.6 percent to $5.44 billion from $4.74 billion.
Results were strong enough for management to raise its earnings expectations for the year to between $1.75 and $1.77 a share, which, if achieved, would mark a 26 percent improvement over 2003. The company’s earlier full-year guidance had anticipated earnings of $1.72 a share.— Ross Tucker
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye