Alberto-Culver Co.’s profits were up sharply during the third quarter ended June 30, despite a decline in revenues.
Net earnings jumped 32.4 percent to $28 million from $21.1 million on sales that were down 3.6 percent to $351.6 million from $364.9 million in the same period a year ago.
The increase in profits stemmed mainly from discontinued operations from the sale a year ago of the firm’s Cederroth consumer products subsidiary, which the company accounted for as an $8.6 million net loss in the third quarter of 2008.
Earnings per diluted share in the most recent quarter came in at 28 cents, compared with 21 cents a year ago. When adjusted for restructuring and discrete tax benefits, however, diluted earnings per share from continuing operations were 30 cents, compared with 27 cents in the prior year, the firm stated.
Analysts had estimated earnings per share of 29 cents, according to Yahoo Finance.
Net sales were reduced by 7.9 percent as a result of currency fluctuations, but excluding these effects — as well as the acquisition of Noxzema last year — organic sales were up 2 percent, the company said.
The firm, which owns the TRESemmé, Nexxus and Alberto VO5 hair care brands, as well as St. Ives skin care, attributed the 2 percent growth in organic sales mainly to U.S. and international growth of TRESemmé and international growth of St. Ives and Alberto VO5.
“Despite prolonged softness in hair care, we continue to outpace the category,” V. James Marino, president and chief executive officer of Alberto-Culver, told analysts during a conference call Monday. He added that more than 70 percent of the firm’s business is in hair care and noted, “We continue to grow market share in hair care in key markets around the world.”
In the U.S., the company registered sales of $221 million during the quarter. “We’re very pleased with our accomplishments, especially [given] the economic environment,” said Marino.
Gross profit margin, which was impacted by high raw material costs, was 50.8 percent of sales, compared with 53 percent a year ago, but Marino said he expects raw material costs to ease in the fourth quarter.
Gross profits were $178.5 million, down 7.6 percent from $193.3 million in the third quarter of last year.
Advertising and other marketing investments decreased 20.3 percent to $56.3 million from the prior year period, but advertising investments were increased behind TRESemmé and Nexxus, stated Marino.
He added that during the fourth quarter, the marketing investment would be stepped up behind TRESemmé, Nexxus and Alberto VO5 — as well as St. Ives, which is being “restaged.” That initiative will include new packaging, formula upgrades and a new advertising campaign. Prices in the St. Ives assortment will remain unchanged “for the most part,” said Marino.
As for other restages, Noxzema, which has seen “positive consumption trends,” is to be relaunched in 2010, according to Marino, who added the company is now in the process of rationalizing underperforming items in the Noxzema assortment.
For the first nine months of the fiscal year, profits were up 8.2 percent to $87.7 million, or 89 cents a diluted share, from $81.1 million, or 80 cents a share. Sales were down by 0.8 percent year-to-date to $1.05 billion from $1.06 billion, while organic sales increased 5.8 percent.
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