The problem-solution cosmetics company Physicians Formula Holdings Inc. on Thursday reported second-quarter net profits were $1.4 million, or 9 cents a diluted share, compared with $591,000, or 4 cents a share, in the year-earlier period. The quarter included a noncash intangible asset impairment charge of $1.1 million.

Sales during the three-month period ended June 30, dipped 1.4 percent to $20.8 million, down from $21.1 million in the year-ago period. Sales were hampered by the loss of Walgreen Co., a major drugstore customer, last year. Excluding the impact of the lost retail partner, sales would have increased 3 percent in the quarter, according to the company.

For the first half of the year, net income was $1.9 million, or 13 cents a diluted share, compared to a loss of $1.1 million, or 8 cents a share, in the year-ago period. Sales for the six month period gained 6.1 percent to $43.7 million, compared to $41.2 million.

The beauty firm’s efforts to weed out underperforming products also is paying off. Ingrid Jackel, chairwoman and chief executive officer, told WWD that Physicians Formulas’ new product assortment is more than 50 percent more productive in 2010 than in 2009.

Jackel stated, “We are pleased with our second-quarter results. Our net sales grew when adjusting for the loss of the customer last year. We also had substantially improved product return rates and demonstrated we can control costs well. However, we remain cautious about consumer spending in the back half of the year.”

In the second quarter, Physicians Formula partnered with Wal-Mart for a print and digital advertising campaign that also included Procter & Gamble Co.’s Cover Girl brand. Wal-Mart selected Physicians Formula for the winter campaign as well, said Jackel, adding the brand’s business at the retailer is growing nicely.

Retailers, in general, have shifted from chain-wide promotions to focusing their efforts on selected stores, said Jeff Rogers, president and director, adding “It’s the best pre-packs, in the best stores.”



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