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Physicians Formula Reports Loss

After being dropped by Walgreens last year, the drugstore now plans to re-introduce the brand to their online business within the next few weeks.

Physicians Formula Holdings Inc. on Thursday reported third-quarter loss of $420,000, or 3 cents a diluted share, compared with a loss of $302,000, or 2 cents a share, in the year-earlier period.

The company said the loss was in-line with company expectations, given the seasonal nature of its business. Physicians Formula ships the bulk of its products to retailers between December and April, as stores begin to reset their planograms in January, said Jeff Berry, chief financial officer.

Sales during the three-month period ended Sept. 30, ticked up 0.7 percent to $14.3 million, compared to $14.2 million in the year-ago period, driven by a strong performance in Canada, which comprises 12 percent of company sales, said Ingrid Jackel, chairwoman and chief executive officer.

Sales in previous quarters were dampened by the loss last year of Walgreen Co., a major drugstore customer. However, Jackel said that retailer plans to re-introduce Physicians Formula to their online business within the next few weeks. “We are excited to be re-entering distribution with this customer, although it will not be a meaningful sales contributor in 2010,” she said.

Jackel told WWD the company is developing an exclusive line in a new beauty category for Wal-Mart, which is slated to launch in the third-quarter of 2011.

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For the first half of the year, net income was $1.5 million, or 10 cents a diluted share, compared to a loss of $1.4 million, or 10 cents a share, in the year-ago period. Sales for the six month period gained 4.7 percent to $58.1 million, compared to $55.5 million.

On the international front, Physicians Formula, which is sold across North America and Australia, recently began shipping to South Africa, and plans to expand to 10 more markets outside the U.S. in 2011.

Jackel stated, “Our third quarter results were in line with our expectations, as the third quarter is a seasonally lower sales quarter for the company. While we are pleased with the expansion of our Canadian platform and improved product return levels during the third quarter, U.S. sales were lackluster given weak consumer demand. We remain cautious about the U.S. sales environment in the coming quarters.”