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Sales Drop, Fire Depress Allou Profits

NEW YORK — Slumping sales and greater costs associated with a warehouse fire caused Allou Healthcare Inc.’s profits to regress by more than a third in the third quarter.<br><br>For the three months ended Dec. 31, the Brentwood, N.Y.-based...

NEW YORK — Slumping sales and greater costs associated with a warehouse fire caused Allou Healthcare Inc.’s profits to regress by more than a third in the third quarter.

This story first appeared in the February 12, 2003 issue of WWD.  Subscribe Today.

For the three months ended Dec. 31, the Brentwood, N.Y.-based health and beauty distributor reported net income fell 33.7 percent to $1.3 million, or 16 cents a diluted share. That compares with last year’s earnings of $2 million, or 28 cents. Earnings per share included non-operating income of approximately 11 cents as a result of changes in the value of outstanding warrants to purchase the firm’s Class A common stock. In the prior-year period, changes in the value of those warrants reduced net income by about 1 cent a share. Moreover, this year’s results were hurt by expenses and other factors related to the previously reported warehouse fire in September.

Sales for the period declined 4 percent to $156.8 million from $163.3 million a year ago.

“Our gross profits were squeezed as a result of changes in our business practices as a consequence of the Brooklyn, N.Y., warehouse fire and the failure to date by the insurance companies to make prompt payment of our insurance claim,” said chief financial officer David Shamilzadeh in a statement. “What is particularly gratifying is the continued growth experienced by our manufacturing subsidiary, Stanford Personal Care Manufacturing, which enjoys gross profit margins exceeding 50 percent.”

For the quarter, gross profit declined 3 percent to $15 million, or 9.6 percent of sales, as compared with last year’s $15.5 million, or 9.5 percent.

Overall, for the first nine months of the year, Allou reported a 45.8 percent surge in net income to $6.6 million, or 77 cents a diluted share. That compares with last year’s profits of $4.5 million, or 64 cents.

Sales for the period gained 11.5 percent to $471.1 million from $422.5 million a year ago.