By  on May 7, 2010

The problem-solution cosmetics company Physicians Formula Holdings Inc. on Thursday reported a first-quarter net profit of $520,000, or 4 cents a diluted share, compared with a loss of $1.7 million, or 13 cents a share, in the year-earlier period.

Sales during the three-month period ended March 31 increased 13.9 percent to $23 million, up from $20.2 million in the year-ago period, fueled by 2010 product launches, which include the new Bamboo Wear franchise, and lower product returns from retailers. Sales were partially offset by the loss of Walgreen Co., a major drugstore customer, last year.

Sales were aided by the company’s move to prune underperforming products from its assortment. “We are seeing increased productivity along the [retail-display] wall,” chairman and chief executive officer Ingrid Jackel told WWD.

At the National Association of Chain Drug Stores’ annual meeting held in Florida last week, the company met with key retail partners, who are beginning to increase their order sizes, said Jackel. “Retailers’ confidence is up,” she said.

In the second quarter, Physicians Formula is partnering with Wal-Mart for a print and digital advertising campaign that also includes Procter & Gamble Co.’s Cover Girl brand. Ads appear in selected May beauty books.

“This is the time to invest strongly behind the brand,” said Jackel, noting the company is moving away from “prehistoric” advertising tools, toward retail-specific programs and social media efforts.

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