Bare Escentuals Inc. cited belt-tightening from retailers and shoppers for an 8.8 percent decline in forth-quarter profits.
But sagging economy or not, the company is determined to convert more women to the mineral makeup trend, with a revved up bus tour and social networking efforts in 2009, chief executive officer Leslie Blodgett told analysts during the company’s earnings call Thursday.
Bare Escentuals Inc.’s profits for the quarter ended Dec. 28 declined 8.8 percent to $24.6 million, or 26 cents a diluted share, from $27 million, or 29 cents a share, in the prior-year period. Net sales for the quarter gained 1.7 percent to $147.1 million from $144.6 million.
For the year, net income gained 11.2 percent to $98 million, or $1.05 a diluted share, from $88.1 million, or 95 cents a share, on sales that gained 8.8 percent to $556.2 million from $511 million.
Blodgett said, “We know we can’t change the macro trends in the economy, but we can and will remain acutely attuned to them, managing appropriately for both the near and long term and focusing our energy and resources on the things we can control. That means peddling even harder and smarter in key areas.”
She reiterated the mineral-makeup firm’s four key focus areas: building its loyal customer base, improving customer acquisition, expanding distribution and simplifying its organizational structure.
In the third quarter, Bare Escentuals said it planned to trim its workforce by 10 percent. On Thursday, Blodgett said the company remains in cost-cutting mode and is “examining where every dollar gets spent, [a] strategy to grow over the long term.”
Given that retailers continue to pare down inventory levels, Bare Escentuals said it expects first-quarter 2009 sales to decline in the teens on a percentage basis compared with the prior year. As a result, earnings per share for the first quarter are expected to be in the range of 12 cents to 15 cents per diluted share.
Myles McCormick, chief operating officer and chief financial officer, stated, “Due to the tightening of trade inventories across all consumer products, our first-quarter shipments have been adversely impacted. As a result of lower sell-in, we expect to see a meaningful decline in overall first-quarter net sales versus the prior year. However, our corresponding domestic retail sell-through for the quarter is trending positive to last year.”
He added, “We do expect that once our retail partners adjust to their more conservative inventory positions that shipments will again approximate the pace of retail sales. As such, we do not view first-quarter net sales trends to be indicative of full-year expectations.”
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