Bare Escentuals Inc. posted a nearly 12 percent gain in third-quarter profits, but took measures to brace for a bumpy end to 2008, including trimming its workforce by 10 percent.
During the mineral makeup firm’s earnings call Thursday evening, chief executive officer Leslie Blodgett said of the layoffs, “As much as this has been a difficult decision, we’re confident that this change will allow us to be more responsive to our customers and best position the company for long-term success.”
This story first appeared in the November 3, 2008 issue of WWD. Subscribe Today.
Bare Escentuals Inc.’s profits for the quarter ended Sept. 28 gained 11.8 percent to $22.9 million, or 25 cents a diluted share, from $20.5 million, or 22 cents, in the year-earlier period. Net sales for the quarter gained 2.8 percent to $130.2 million from $126.6 million.
For the nine-month period, net income grew 20.1 percent to $73.4 million, or 79 cents a diluted share, from $61.1 million, or 66 cents a share, on sales that rose 11.6 percent to $409.1 million from $366.4 million.
Bare Escentuals, as a number of its beauty peers have acknowledged, said the company has seen a pullback in consumer spending over the last six weeks.
In keeping with previously announced plans to attract customers and entice existing ones into buying beauty products beyond its mineral foundations, Bare Escentuals will introduce 100 products next year across the lip, eye and skin care categories.
The company plans to increase marketing spending to between 6 and 7 percent of sales from the current level of 5 percent. The firm also will reallocate its marketing dollars, investing about 50 percent on infomercial air time, down from the current level of 95 percent. The adjustments come as Bare Escentuals has worked to move its business from the air waves to retail stores. The brand is now sold in more than 750 doors in the U.S.
For the second quarter in a row, the company lowered its sales growth expectations for the fiscal year, this time to 10 percent from the previously stated goal of 15 to 20 percent.
Blodgett told analysts, “We will neither chase every opportunity nor race to the bottom by competing on price, but instead are committed to building a sustainable, dominant, global brand focused on profitable growth.”