ALBERTO BUILDS ITS BASE IN EUROPE
Byline: Julie Naughton
NEW YORK — Alberto-Culver added another element to its international business this week: the Polish skin care firm Soraya SA.
According to Howard B. Bernick, president and chief executive officer of Alberto-Culver, the company plans to use the unit as a springboard for continued growth abroad.
“Soraya gives us manufacturing, distribution, sales and marketing infrastructure to build our brands in Poland, as well as an opportunity to build our business in other Central and Eastern European countries,” said Bernick.
“We will grow Soraya, while using its infrastructure as a platform for further expanding the sales of our global Alberto V05 and St. Ives Swiss Formula brands,” he added. St. Ives is a skin care company that Alberto-Culver acquired in 1996.
Soraya, with annual sales of about $8 million, produces a number of skin care lines, including moisturizers, self-tanners and color cosmetics. The majority of Soraya’s business is done in Poland. Terms of the deal were not disclosed.
“We had limited distribution already in Eastern Europe and Poland, but we identified Poland as our target priority in that area of the world,” said Bernick. “Several factors — chiefly, the population, economy, developing retail trade structure and the demand for our products that already exists there — make this an attractive area for us. With Soraya, we expect to be able to grow much more quickly.”
The acquisition is characteristic of Alberto-Culver’s international strategies, said Bernick. “This purchase is a continuation of our international growth strategy,” said Bernick. “We have a very highly developed international infrastructure. Sometimes we grow through strategic partnerships, sometimes through distribution arrangements, and other times by buying local manufacturing plants. We have strong domestic and international businesses, and our growth momentum is continuing.”
This isn’t the first time that Alberto-Culver has purchased a foreign firm to build its infrastructure overseas. It followed the same strategy in January 1999, when it bought the Argentinian soap and deodorant firm La Farmaco. That addition gave Alberto-Culver the ability to manufacture and distribute Alberto V05 and St. Ives for the South American region. It had also purchased a small Chilean firm called Key Company at that time, also to further South American business.
Alberto-Culver also owns a Scandinavian packaged-goods operation, Cederroth, which is expected to lend support to the Central and Eastern European growth efforts.
The company’s brands are currently sold in more than 120 countries. According to Bernick, retail growth internationally — and for that matter, domestically — is driven by the 45-year-old Alberto V05 hair care franchise and by St. Ives.
To maximize worldwide opportunities for these brands, the company is continuing to coordinate V05 and St. Ives marketing, formulas, packaging and advertising messages globally. “We’re continuing that effort,” said Bernick. “As we continue to implement, it will maximize our opportunities globally.”
In fact, Bernick added that further acquisition announcements are likely to be announced before the end of 2000. “We’re pursuing a number of strategic acquisition initiatives,” he said.
Alberto-Culver’s 1999 global sales topped $1.97 million in 1999. “We expect to reach $2.2 billion in sales in 2000,” Bernick added.
Internationally, retail sales topped $441.4 million in 1999, while North American consumer sales were $455.5 million in the same period. The company’s Sally Beauty division — which operates more than 2,100 stores globally and operates full-service salon products distributorships in the U.S. and Canada — added another $1 billion to the company’s bottom line.
“We are on target to meet analysts’ expectations for the March quarter and the 2000 fiscal year, which will make this our ninth consecutive year of reporting record sales and earnings,” said Bernick. “We continue to be surprised and disappointed at the price at which our shares are trading and their particularly low price-earning multiple vis-a-vis those of other companies, particularly in view of Alberto-Culver’s faster rates of sales and earnings growth, our accelerating growth momentum during the last 12 months, and our consistent historic growth profile.” Alberto-Culver shares closed Thursday at 20 on the New York Stock Exchange.