By  on July 30, 2009

A sales decline brought on by a slowdown in its direct-to-consumer business contributed to a drop in profits at Bare Escentuals Inc. in its second quarter.

In the three months ended June 28, profits at the San Francisco-based mineral cosmetics firm fell 20 percent to $19.8 million, or 21 cents a diluted share, from $24.7 million, or 26 cents a share, last year.

Net sales in the three months dropped 4.4 percent to $132.5 million from $138.5 million in the comparable 2008 period.

Analysts polled by Yahoo Finance had expected net income of 20 cents a share on revenues $130.9 million on average.

On a conference call with investors, chief executive officer Leslie Blodgett said the company was encouraged by its year-to-date performance, but it was taking steps to lessen the impact of the current environment.

“This includes working closely with our retailers to offer products and values that are compelling to our customers and moving quickly to control cost and improve efficiencies throughout the organization,” Blodgett said.

Compared with the prior-year period, North American retail sales grew 5.2 percent in the quarter to $77.9 million, while direct-to-consumer sales in the region declined 19.5 percent to $39 million.

“The TV shopping market is challenging and as such we saw lower year-over-year on-air productivity in the quarter,” said Myles McCormick, chief operating officer and chief financial officer, on the conference call.

International sales dropped 2.7 percent to $15.6 million in the quarter, largely due to currency fluctuations.

Selling, general and administrative expenses increased 10.8 percent to $56.2 million mainly because of occupancy and operating costs related to new boutiques, the company said.

Gross margins in the second quarter were up by 140 basis points to 73.2 percent of sales from 71.8 percent.

For the first six months of fiscal 2009, Bare Escentuals’ net income declined 27.8 percent to $36.5 million, or 39 cents a share, from $50.5 million, or 54 cents a share, last year.

Revenues in the two quarters fell 7.9 percent to $256.7 million from $278.9 million.

Shares of the cosmetics firm ended the session before its after-hours earnings announcement down 1 cent, or 0.1 percent, at $7.48.

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