DIAL INCOME, SALES RISE
Byline: Andrea M. Grossman
NEW YORK — The Dial Corp., maker of Freeman and Sarah Michaels hair and bath products, posted a second quarter income of $14.7 million, or 16 cents per share, compared with net income of $1.1 million, or a penny per share last year. Prior year’s figures included a pre-tax restructuring charge of $21.1 million and a one-time gain of $6.7 million. Earnings per share of last year’s second quarter — without the charge and gain — was $0.10.
Sales for the second quarter were $429.2 million, up 5 percent from last year. Sales gains were attributed to the company’s personal cleansing and laundry businesses. Sales from the company’s Specialty Personal Care unit were down 38.3 percent to $11.3 million. Sales decreases within SPC were attributed to the discontinuation of the Nature’s Accent bath line and the elimination of unprofitable sku’s within the Freeman and Sarah Michaels brands. SPC is expected to lose $11 million to $12 million this year on an operating income basis. Last year, SPC lost $27 million on an operating income basis.
In a conference call with analysts on Wednesday, Herb Baum, Dial chairman and chief executive officer, explained that Dial’s body wash brands, which include Tone and Dial, continue to be strong. Sales of body wash for the quarter grew 37 percent due mainly to increased distribution. According to Baum, Dial is now the number two marketer of body wash overall. The Dial brand of body wash is the number three best seller in the category, he said.
Baum told analysts he is still actively looking for a buyer for SPC. A meeting next Friday with the board of directors may generate some news regarding its sale. Dial estimates that if SPC were divested, it would require a write-down in the range of $180 million to $200 million after tax. Dial previously estimated this write-down to approach $150 million to $170 million.
SPC has been on the selling block for almost a year. Selling it, Baum believes, may make selling Dial — which itself has been on the market — more attractive to a potential buyer. “We hope that what we are doing with [SPC] will make us more competitive but also more attractive to a buyer,” Baum said.
Speculation of a potential buyer for SPC centers on Solar Cosmetic Labs, Inc., according to one manufacturer broker who asked not to be named. Solar Cosmetic is based in Miami Lakes, Fla., and is privately owned, with annual sales estimated at $30 million. Solar Cosmetic makes skin care and sun care products under the NO-AD brand, as well as bath and body products under the Body & Earth brand.
Neither Solar Cosmetic nor Dial would comment on the speculation. Baum, however, stressed that there are “more than two potential buyers” showing interest in SPC. Baum is optimistic that the unit will be sold by the end of the third quarter, a date that has already been pushed back twice.
Baum said one of the key issues tying up the sale of SPC is the bad credit market.