Physicians Formula Holdings Inc. on Thursday reported first-quarter profits declined 13.3 percent on lower sales and higher marketing spending.


For the three months ended March 31, the mass market beauty firm’s net income was $451,000, or 3 cents a diluted share, down from $520,000, or 4 cents, a year ago. Sales dropped 8 percent to $21.1 million from $23 million.


The company stated that gross sales increased by mid-single digits compared to the year-ago period, but said these gains were more than offset by “significantly higher co-operative advertising and retail marketing investments” ahead of Physicians Formula’s 2011 product lineup.


Ingrid Jackel, chairman and chief executive officer, stated, “Our first-quarter results are ahead of our expectations at both the top and bottom lines. Our 2011 new products have performed even better since our year-end earnings release in March, and, in April, we once again returned to our legacy of being the fastest-growing U.S. color cosmetics brand among the top eight brands, according to A.C. Nielsen twelve-week-data as of April 16. As a result, our masstige market share increased from 5.8 percent at year-end 2010 to 6.8 percent at the end of the first quarter.”


As of March 31, the company said its net debt was $8.4 million — comprised of $800,000 of line of credit borrowings and $7.6 million of subordinated long-term debt.

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