Beauty Packaging Breaking News

Est�e Lauder Signs Tom Pecheux

Melissa Meisel — Fri, 06 Nov 2009 09:57:00 -0500

Looking to revitalize the brand, Estée Lauder named world-renowned makeup artist Tom Pecheux creative makeup director.

Beginning in Spring 2010, new, high-impact color products influenced by Mr. Pecheux will appear at Estée Lauder counters. His makeup artistry will be featured in new advertising campaigns with Estée Lauder model Hilary Rhoda.

A favorite of top photographers, stylists and fashion editors around the world for his sophisticated take on Parisian glamour, Mr. Pecheux will work closely with the Estée Lauder brand to help set artistic direction for the next generation of Estée Lauder makeup and communicate his point of view on modern beauty to consumers, press and fashion and beauty influencers, said the company.

“We are incredibly excited to partner with Tom Pecheux,” said Jane Hertzmark Hudis, global brand president, Estée Lauder. “Tom will add a new energy, style and fashion edge to Estée Lauder makeup. His intuitive sense of color and expertise in global beauty trends will help us redefine modern color in a bold new way.”

Sales Up 8% at Parlux

Melissa Meisel — Thu, 05 Nov 2009 07:59:00 -0500

Parlux Fragrances, Inc.posted results of its second quarter ended Sept. 30, 2009. Net sales reached $56.5 million - an 8% increase over the prior year. For the six-month period ended Sept. 30, 2009, net sales climbed 6% to $80.1 million.

Mr. Neil J. Katz, chairman and chief executive officer, said, "We have strategically continued to invest in building the Parlux portfolio of brands, led by the recent launches of Queen Latifah, Josie Natori, and Marc Ecko, all of which are exceeding retailers planned sales in their respective distribution channels." Mr. Katz continued, "As you are aware, we are transitioning out of our GUESS? business on an orderly basis as of Dec. 31, 2009, and we fully expect that the new brands in fiscal year 2011 will exceed our past GUESS? business."

Mr. Katz said, "I am extremely pleased that we have been able to effectively launch three new brands, as well as a new Paris Hilton and a new Jessica Simpson brand, while prudently maintaining spending investment at prior year levels. This has allowed us to absorb our first quarter loss, and to achieve profitability for the six-month period."

Mr. Katz concluded, "I believe that this performance, combined with an anticipated improved holiday season, will help lead to a positive conclusion on a new financing arrangement. In the meantime, we are projecting to be cash-flow positive through the balance of the year ending March 31, 2010, and remain prudently optimistic regarding profitable results for fiscal 2010."

Murad Massages Skin Care Deal

Jamie Matusow — Wed, 04 Nov 2009 08:03:00 -0500

Murad has branched out and, through a new partnership, now brings its skin care solutions to a new group of consumers. The expansion comes as part of a joint partnership between Murad, Inc. and Massage Envy, the nation`s largest franchise of massage therapy clinics, which announced earlier this yearthat it will begin converting many of its nearly 600 clinics and opening new clinics as Massage Envy Spas throughout the U.S. Massage Envy Spa will offer Murad treatment facials, including special treatments, which are customized specifically for this partnership. The treatments will be performed by licensedestheticians who will receive ongoing training and education from Murad for maximum client results. Massage Envy makes massage therapy and skin care treatments available to a larger population thanks to convenient hours,including late nights and weekends.

The U By Ungaro Color Collection is New at Avon

Melissa Meisel — Tue, 03 Nov 2009 14:14:00 -0500

Celebrated for capturing the spirit of Paris through iconic designs, international fashion powerhouse Emanuel Ungaro brings effortless, chic
sensibility to Avon's debut U by Ungaro Color Collection. Following the success of the U by Ungaro fragrances, the range features items such as U by Ungaro Eyeshadow Singles ($13.00) available in Champagne, Runway Pink and Glam.

More info: www.avon.com

BareMinerals Introduces Mineral Veil Buffing Brush

Melissa Meisel — Tue, 03 Nov 2009 14:13:00 -0500

A new special-edition Refillable Buffing Brush from Bare Escentuals ($35) is filled with award-winning bareMinerals Mineral Veil, which infuses skin with
softness and light for the look of airbrushed perfection, according to the company. Packaged in a premium, pink-metallic, sleek Refillable Buffing Brush, Mineral Veil provides easy application anywhere, anytime. Plus, it is refillable with any BareMinerals product. More info: www.bareescentuals.com

Shiseido Signs Marketing Deal

Jamie Matusow — Mon, 02 Nov 2009 10:30:00 -0500

Shiseido may have suffered domestic losses in 2008, but the Japanese beauty firm continues on its path to become “a global player representing Asia with its origins in Japan,” currently hoping to gain market share in Greece.

Shiseido International Europe S.A., a wholly owned subsidiary of Shiseido Co., Ltd., has signed a joint-venture agreement with Gerolymatos Cosmetics S.A., a cosmetics importer and seller located in Greece. The agreement paves the way for the establishment of a joint venture to strengthen sales of cosmetics in Greece.

Plans call for the joint venture Shiseido Hellas S.A. to start operations in January 2010. The new company will sell the global brand Shiseido that is available in markets worldwide.

By undertaking direct operations through a joint venture, Shiseido, which began selling its cosmetics products in the Greek market through a distributor in 1991, is seeking to establish a sales organization that is intimately connected to the market, and ultimately to increase sales by creating an enhanced presence for the Shiseido brand.

Salon/Spa Industry Reports Positive Outlook

Jamie Matusow — Mon, 02 Nov 2009 10:12:00 -0500

The outlook for the salon/spa industry remained positive in the third quarter, as the Professional Beauty Association's (PBA) Salon/Spa Performance Index (SSPI) rose for the second consecutive quarter. The SSPI - a quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry - stood at 101.9 in the third quarter, up 0.1% from its second-quarter level. The SSPI is constructed so that the health of the salon/spa industry is measured in relation to a steady state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

"For the first time this year, salon/spa owners reported a net increase in service sales. However, they also reported that retail sales continue to be soft," said Sam Leyvas, PBA's director of government affairs. "Long term we are seeing growing optimism on the part of salon/spa owners both in terms of service and retail sales in the months ahead.

The SSPI is based on the responses to PBA's Salon/Spa Industry Tracking Survey, which is fielded quarterly among 800 salon/spa owners nationwide on a variety of indicators including service and retail sales, customer traffic, employee/hours and capital expenditures. The Index consists of two components - the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), stood at 99.1 in the third quarter - down 0.6% from its second quarter level of 99.7. The Current Situation Index has remained below 100 throughout 2009, which represents contraction in the current situation indicators.

For the first time in 2009, salon/spa owners reported a net increase in service sales, meaning more owners reported higher sales than lower sales. Thirty-eight percent of salon/spa owners reported an increase in same-store service sales between the third quarters of 2008 and 2009, while 36% reported a sales decline.

Although salon/spa owners reported an improvement in service sales in the third quarter, they continued to report soft retail sales. Forty-seven percent of salon/spa owners reported lower retail sales in the third quarter while 36% of salon/spa owners reported higher retail sales between the third quarters of 2008 and 2009.

Salon/spa owners are also much more optimistic about stronger retail sales in the months ahead. Sixty-one percent of salon/spa owners said they expect to have higher retail sales in six months (compared to the same period in the previous year. In comparison, just 9% expect their retail sales to decline in six months (compared to the same period in the previous year).

"PBA takes pride in providing timely and relevant economic data to the marketplace," said Sam Leyvas "doing so is critical to our mission as the industry's leading trade association."

The full SSPI and second quarter Salon/Spa Tracking Survey Report can be found at www.probeauty.org.

Prestige Sells Three Shampoo Brands

Melissa Meisel — Fri, 30 Oct 2009 14:28:00 -0500

Prestige Brands Holdings, Inc. has sold its three shampoo businesses to Ultimark Products. The transaction includes Prell Shampoo, Denorex Dandruff Shampoo and Zincon Dandruff Shampoo from the company's personal care segment. These brands collectively represent approximately 2-3% of annual company sales.

Terms of the agreement include an upfront payment of $8 million in cash, followed by a subsequent payment of $1 million on Oct. 28, 2010. The company will use the proceeds of the sale to pay down debt.

"The successful sale of these businesses allows us to increase focus on our two larger segments, over-the-counter healthcare and household cleaning products, to enhance shareholder value," said Matthew Mannelly, company president and chief executive officer

Prestige markets beauty brands such as Cutex nail polish remover. Ultimark has multiple product distribution channels throughout North America including electronic retailing, direct to consumer and major retailers.

Cosmoprof Worldwide Bologna Announces Partnership

Jamie Matusow — Thu, 29 Oct 2009 09:54:00 -0500

BolognaFiere Group and SoGeCos S.p.A., organizer of Cosmoprof Worldwide Bologna, have signed a strategic partnership agreement with Ipekyolu, the Turkish organizer of the trade show BeautyEurasia. The two parties will work together to further develop the event, which is held annually in Istanbul.

BolognaFiere Group, a leading trade show organizer in the cosmetics, fashion, architecture and building, art and culture sectors, features more than 80 exhibitions in its portfolio, among domestic and international events.

BeautyEurasia is a well-established trade show. In 2009, it attracted more than 340 exhibitors from 40 countries and welcomed more than 17,000 professional visitors. The Istanbul show has proven to be the ideal gateway to doing business not only with the local Turkish market but also with the surrounding regions including the Balkans, Middle East, North Africa and Central Asia. More than 2,000 importers and buyers who participated at the event came from this Eurasian area demonstrating the event’s importance as a regional show. Its organizers, Ipekyolu have been running exhibitions in Turkey since 1999. They also have a sister company that runs shows in Kazhakistan and Central Asia and they organize Turkish group participation at international exhibitions, mainly in Dubai.

Under the terms of this agreement SoGeCos S.p.A., 100% owned by BolognaFiere Group, will be in charge of international marketing and, in cooperation with Fairsystem International Exhibition Services s.p.a. - another company of BolognaFiere Group - of the international sales. SoGeCos S.p.A. and its offices in Milan, Paris, New York and Shanghai will ensure that all the companies interested in developing business opportunities in the Eurasia region have professional and easy access to organizing their participation.

Announcing the partnership SoGeCos S.p.A. Managing Director, Aureliana De Sanctis, said: “Ipekyolu is an ideal partner for growing our business in the Eurasian region. We share a common view on the opportunities presented to us by the Eurasia region and are delighted to collaborate on the project.”

Ipekyolu president, Mahmut Er, said: Cosmoprof is the world's leading exhibition for the perfumery, cosmetics, hairstyling, beauty, spa and nail sectors. The expertise and insight of SoGeCos S.p.A. and BolognaFiere Group will be invaluable to the success and growth of the show as well as to the development of the beauty business in the region”.

The 6th edition of BeautyEurasia is scheduled for June17th -19,2010 at the Tuyap Exhibition Centre, Istanbul.

P&G First Quarter Sales and EPS Exceed Expectations

Jamie Matusow — Thu, 29 Oct 2009 09:05:00 -0500

The Procter & Gamble Company has reported net sales of $19.8 billion for the July - September quarter, which exceeded the company's guidance. Organic sales growth was up 2% versus a guidance range of flat to minus 3% on better than expected results across most business segments. Diluted net earnings per share increased 3% to $1.06, above the Company's guidance range of $0.95 to $1.00. The Company raised its outlook for the October - December quarter and fiscal 2010 organic sales growth citing modestly higher expectation for market growth. The Company also increased the low end of its fiscal year guidance range by $0.03 per share to reflect the higher top-line growth projection.

"Our September quarter results give us encouragement we are making the right choices to grow market share profitably," said president and chief executive officer Bob McDonald. "We are investing in innovation, expanding our portfolio and improving consumer value to serve more consumers, in more parts of the world, more completely. We are driving simplification and improving execution while leveraging scale to create cost efficiencies that help fund these investments and accelerate growth."

Net sales for the quarter were $19.8 billion, a decrease of 6% that was primarily due to unfavorable foreign exchange impacts as the U.S. dollar remained above prior year levels. The company had previously guided to a net sales decrease of 7-10%.
Organic sales, which exclude the impacts of acquisitions, divestitures and foreign exchange, increased 2%.

Beauty net sales were down 5% for the quarter to $4.9 billion on a 2% decline in unit volume. Organic sales grew 2%. Unfavorable foreign exchange impacted net sales by 7%. Price increases and positive product mix added 3% and 1% to net sales, respectively. Organic volume, which excludes acquisitions and divestitures, was down 1% mainly due to volume declines in the CEEMEA region and in the more discretionary businesses of Professional Salon and Prestige. Hair Care volume grew low single digits behind initiative-driven growth of Pantene, Head & Shoulders and Rejoice and delivered growth in every region except CEEMEA. Professional Salon volume declined double digits due to the exit of non-strategic businesses and continued market contractions. Prestige volume decreased high single digits primarily due to the continued contraction of the fragrance market, partially offset by double-digit growth of SK-II. Female Beauty volume was down mid-single digits primarily due to lower shipments in CEEMEA, share losses on non-strategic personal cleansing brands, lower merchandising and initiative activity in cosmetics and the fiscal 2009 divestiture of Noxzema. Net earnings decreased one percent for the quarter to $777 million as negative foreign currency impacts and lower net sales were mostly offset by lower overhead and marketing costs and manufacturing cost savings.

Grooming net sales in the first fiscal quarter decreased 11% to $1.9 billion. Organic sales declined 2%. Unfavorable foreign exchange and lower unit volume reduced net sales by 9% and 8%, respectively. These impacts were partially offset by positive pricing impacts of 6%. Volume in Male Blades and Razors declined high single digits behind market contractions. Gillette Fusion volume continued to grow but was more than offset by volume declines in legacy shaving systems. Volume in Male Personal Care declined high single digits behind lower shipments of shave preparation products due to increased competitive promotional activity. Volume in Braun was down double digits mainly due to market contractions, particularly in home and hair care appliances. Net earnings declined 21% versus the prior year period to $351 million primarily driven by lower net sales and negative foreign currency impacts.

Elizabeth Arden Says First-Quarter Results Encouraging

Jamie Matusow — Thu, 29 Oct 2009 08:55:00 -0500

Elizabeth Arden, Inc., has announced financial results for its first fiscal quarter ended September 30, 2009, in which the company reported net sales of $265.2 million, a decrease of 6.7%, as compared to the first quarter of the prior fiscal year. Excluding the unfavorable impact of foreign currency translation, net sales decreased by 5.0%.

Net income per diluted share for the first fiscal quarter ended September 30, 2009 was $0.00, as compared to a net loss per diluted share of $0.45 for the prior year period. Excluding restructuring and other expenses associated with the company's Global Efficiency Re-engineering initiative, net income per diluted share for the three months ended September 30, 2009 was $0.05, as compared to net income per diluted share of $0.11 for the prior year period. The prior year period also excludes expenses and non-cash charges related to the Liz Claiborne license agreement. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes to this press release.

E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, Inc., commented, "We are encouraged by our first quarter results, with each of our business units generally performing as we had expected. Sales results were at the high end of our expectations, and earnings exceeded prior guidance, aided by improved trends in the travel retail and distributor markets and more favorable foreign currency rates. We are particularly pleased with the progress we continue to make with our Global Efficiency Re-engineering initiative. Gross margins increased by 90 basis points this quarter, and we were able to reduce inventory by $105 million from September 2008 levels, resulting in a $92 million reduction in credit line and accounts payable balances."

Beattie continued, "There are signs that economic conditions are beginning to improve, and, while early, we are expecting good performance from our new launches for the holiday season. We are still not yet seeing, however, a return to normalized replenishment by our retailers, particularly in our North America fragrance business. While we expect the gap between retail sales and inventory replenishment to improve, it is difficult to predict the timing and magnitude of any improvement. We remain confident that with the success of our operational initiatives, an improvement in retailer replenishment should lead to accelerated growth in earnings and return on invested capital."

For the second quarter of fiscal 2010, the company expects net sales of $380 million to $390 million and net income per diluted share of $0.65 to $0.75. The net sales guidance for the second fiscal quarter assumes a favorable impact from foreign currency translation of approximately 2.5% as compared to the prior year period.

The company is updating its annual net sales and earnings guidance for the fiscal year ending June 30, 2010, and now expects a net sales increase of 2.5% to 3.5%, as compared to the prior fiscal year, and earnings per diluted share to be in the range of $0.55 to $0.65.

Avon Reports Third-Quarter Results

Jamie Matusow — Thu, 29 Oct 2009 08:36:00 -0500

Avon Products, Inc., reported third-quarter 2009 total revenue of $2.6 billion, 4% lower than that of 2008's third quarter, but up 7% on a local-currency basis as foreign exchange pressured growth by 11 percentage points. Beauty sales in the third quarter of 2009 were 3% lower versus the prior-year period, but increased 8% on a local-currency basis. Active Representatives grew 10%, with growth in all regions. Units overall rose 5% versus the prior-year quarter and Beauty units increased 6%.

Avon's 8% local-currency growth in Beauty sales included gains in all categories: fragrance, color cosmetics, skin care and personal care grew 9%, 17%, 1%, and 7%, respectively. On a reported basis, these growth rates were -4%, +4%, -8% and -4%, respectively.

Third-quarter 2009 gross margin of 62.6% was 50 basis points below that of the prior-year quarter. Strong manufacturing productivity gains, benefits from the company's Strategic Sourcing Initiative, and strategic price increases offset most of 140 basis points of unfavorable transaction-exchange impact on 2009 gross margin.

Selling, general and administrative expense in the quarter rose as a percent of revenue by 50 basis points versus 2008's third quarter. This was due primarily to higher year-over-year costs to implement restructuring initiatives as well as foreign exchange transaction impact.

Advertising for the quarter was $84 million, down $22 million from last year's period. The company was able to maintain its advertising presence at a level similar to a year ago, benefiting from improved buying productivity and general softness in media prices. Avon invested an incremental $7 million in the quarter on initiatives to further improve its Representative Value Proposition.

Net income in the third quarter 2009 was $156 million, or $.36 per share, compared with $223 million, or $.52 per share, in the year-ago quarter.

At quarter end, Avon's total debt had increased $272 million from the year-end level, to $2.8 billion, and cash had increased $189 million, to $1.3 billion. Net cash provided by operating activities was $247 million through nine months of 2009 compared with $303 million of cash provided by operating activities in the same period of 2008, with the change due primarily to lower net income offset partially by the timing of payments related to the company's restructuring programs.

Third-Quarter Regional Results Latin America's third-quarter 2009 revenue was 5% higher year over year, or up 18% on a local-currency basis. Local-currency revenue increased 22% in Brazil, 7% in Mexico and 24% in Venezuela, which, on a reported basis, were +7%, -18% and +24%, respectively. The region's Active Representatives grew 13%, and units sold were up 10%. Operating profit was 7% lower (but increased 4% in local currency) due primarily to the impact of unfavorable foreign exchange. Latin America's third-quarter operating margin was 17.3%. Third-quarter revenue in North America declined 8%, with no material impact from foreign exchange. Active Representatives were up 4% versus the prior-year quarter. Units sold were 5% lower versus the prior year. The region's revenue continued to be pressured by lower consumer spending and a continued double-digit decline in non-Beauty (Fashion and Home categories). North America's third-quarter operating profit decreased 19% (-15% in local currency) versus the 2008 quarter as $11 million in costs to implement restructuring initiatives offset profit growth that had been achieved through significant cost control. The region's operating margin was 4.5%. In Central & Eastern Europe, third-quarter revenue was 18% lower year over year but up 7% on a local-currency basis. Local-currency revenue increased 18% in Russia (-9% on a reported basis). The region's Active Representatives grew 8% in the quarter, and units sold were flat versus the prior-year's quarter. Operating profit decreased 21% (but increased 10% in local currency) versus the 2008 quarter, primarily due to the impact of unfavorable foreign exchange. The region's operating margin was 14.9%. Western Europe, Middle East & Africa's third-quarter revenue decreased 6% versus the prior-year quarter but rose 7% on a local-currency basis. Local-currency revenue increased 2% in the U.K. and 10% in Turkey, which, on a reported basis, were -13% and -12%, respectively. The region's Active Representatives grew 9% year over year, and units sold increased 22%. Operating profit decreased 36% (-9% in local currency) versus the 2008 quarter, primarily due to the impact of unfavorable foreign exchange, but also costs to implement restructuring initiatives. The region's operating margin was 4.0%. Asia-Pacific's third-quarter revenue increased 1% year over year (+2% on a local-currency basis). On a local-currency basis, 16% growth in the Philippines (+9% on a reported basis) offset continued weakness in Japan. The region's Active Representatives were 6% higher, and units sold were up 4% over the prior-year period. Operating profit decreased 5% (but increased 3% in local currency) versus the 2008 quarter, due primarily to the impact of unfavorable foreign exchange. The region's operating margin was 10.4%. Third-quarter revenue in China decreased 11% year over year, with no impact from foreign exchange. Units sold decreased 19%. Revenue from Beauty Boutiques decreased over 40% in the quarter, reflecting the continued complex evolution towards direct selling in this hybrid business model, which is unique to this market. Revenue growth from direct selling mirrored Active Representative growth at 7% in the third quarter. The timing of incentive programs and product launches dampened direct-selling revenue during the quarter. Representative recruiting remained consistently strong in the quarter and Avon said that it remains confident in the potential of direct selling in this market. China had operating profit of $3 million in the quarter compared with a loss of $7 million in the 2008 quarter, primarily due to focus on cost controls. The region's operating margin was 3.7%. Commenting on the company's overall performance in the third quarter, Andrea Jung, Chairman and CEO, remarked, "We are pleased with the third quarter's 7% local-currency-revenue growth, particularly in this economic environment. Our broad-based strength is proof that our strategies to focus on representative recruiting and Avon's "Smart Value" products are working. Active Representatives and Beauty revenue both grew strongly as we expanded Representative coverage and Beauty market share across our portfolio."Avon Products, Inc. (NYSE: AVP) today reported third-quarter 2009 total revenue of $2.6 billion, 4% lower than that of 2008's third quarter, but up 7% on a local-currency basis as foreign exchange pressured growth by 11 percentage points. Beauty sales in the third quarter of 2009 were 3% lower versus the prior-year period, but increased 8% on a local-currency basis. Active Representatives grew 10%, with growth in all regions. Units overall rose 5% versus the prior-year quarter and Beauty units increased 6%.

Avon's 8% local-currency growth in Beauty sales included gains in all categories: fragrance, color cosmetics, skin care and personal care grew 9%, 17%, 1%, and 7%, respectively. On a reported basis, these growth rates were -4%, +4%, -8% and -4%, respectively.

Third-quarter 2009 gross margin of 62.6% was 50 basis points below that of the prior-year quarter. Strong manufacturing productivity gains, benefits from the company's Strategic Sourcing Initiative, and strategic price increases offset most of 140 basis points of unfavorable transaction-exchange impact on 2009 gross margin.

Selling, general and administrative expense in the quarter rose as a percent of revenue by 50 basis points versus 2008's third quarter. This was due primarily to higher year-over-year costs to implement restructuring initiatives as well as foreign exchange transaction impact.

Advertising for the quarter was $84 million, down $22 million from last year's period. The company was able to maintain its advertising presence at a level similar to a year ago, benefiting from improved buying productivity and general softness in media prices. Avon invested an incremental $7 million in the quarter on initiatives to further improve its Representative Value Proposition.

As announced earlier this month, third-quarter 2009 expenses included costs associated with the company's 2005 and 2009 restructuring programs totaling $34 million pretax, or $.06 per share after tax. This compared with costs of $14 million, or $.02 per share, related to the company's 2005 restructuring program in the prior-year period.

Third-quarter 2009 operating profit was $259 million compared with $297 million in the prior-year quarter. The company's third-quarter 2009 operating margin was 10.1%, compared with 11.2% in the third quarter of 2008. Costs to implement restructuring initiatives lowered 2009's operating margin 130 basis points and lowered 2008's operating margin by 50 basis points. Additionally, unfavorable foreign exchange lowered operating margin by an estimated 270 basis points (approximately 180 of that from foreign-exchange transaction and approximately 90 from foreign-exchange translation) year over year.

Third quarter 2009's effective tax rate of 32.0% compared with third quarter 2008's rate of 19.5%, which included one-time favorable tax adjustments. These adjustments benefited the prior-year period by $.09 per share.

Net income in the third quarter 2009 was $156 million, or $.36 per share, compared with $223 million, or $.52 per share, in the year-ago quarter.

At quarter end, Avon's total debt had increased $272 million from the year-end level, to $2.8 billion, and cash had increased $189 million, to $1.3 billion. Net cash provided by operating activities was $247 million through nine months of 2009 compared with $303 million of cash provided by operating activities in the same period of 2008, with the change due primarily to lower net income offset partially by the timing of payments related to the company's restructuring programs.

Third-Quarter Regional Results

Latin America's third-quarter 2009 revenue was 5% higher year over year, or up 18% on a local-currency basis. Local-currency revenue increased 22% in Brazil, 7% in Mexico and 24% in Venezuela, which, on a reported basis, were +7%, -18% and +24%, respectively. The region's Active Representatives grew 13%, and units sold were up 10%. Operating profit was 7% lower (but increased 4% in local currency) due primarily to the impact of unfavorable foreign exchange. Latin America's third-quarter operating margin was 17.3%.

Third-quarter revenue in North America declined 8%, with no material impact from foreign exchange. Active Representatives were up 4% versus the prior-year quarter. Units sold were 5% lower versus the prior year. The region's revenue continued to be pressured by lower consumer spending and a continued double-digit decline in non-Beauty (Fashion and Home categories). North America's third-quarter operating profit decreased 19% (-15% in local currency) versus the 2008 quarter as $11 million in costs to implement restructuring initiatives offset profit growth that had been achieved through significant cost control. The region's operating margin was 4.5%.

In Central & Eastern Europe, third-quarter revenue was 18% lower year over year but up 7% on a local-currency basis. Local-currency revenue increased 18% in Russia (-9% on a reported basis). The region's Active Representatives grew 8% in the quarter, and units sold were flat versus the prior-year's quarter. Operating profit decreased 21% (but increased 10% in local currency) versus the 2008 quarter, primarily due to the impact of unfavorable foreign exchange. The region's operating margin was 14.9%.

Western Europe, Middle East & Africa's third-quarter revenue decreased 6% versus the prior-year quarter but rose 7% on a local-currency basis. Local-currency revenue increased 2% in the U.K. and 10% in Turkey, which, on a reported basis, were -13% and -12%, respectively. The region's Active Representatives grew 9% year over year, and units sold increased 22%. Operating profit decreased 36% (-9% in local currency) versus the 2008 quarter, primarily due to the impact of unfavorable foreign exchange, but also costs to implement restructuring initiatives. The region's operating margin was 4.0%.

Asia-Pacific's third-quarter revenue increased 1% year over year (+2% on a local-currency basis). On a local-currency basis, 16% growth in the Philippines (+9% on a reported basis) offset continued weakness in Japan. The region's Active Representatives were 6% higher, and units sold were up 4% over the prior-year period. Operating profit decreased 5% (but increased 3% in local currency) versus the 2008 quarter, due primarily to the impact of unfavorable foreign exchange. The region's operating margin was 10.4%.

Third-quarter revenue in China decreased 11% year over year, with no impact from foreign exchange. Units sold decreased 19%. Revenue from Beauty Boutiques decreased over 40% in the quarter, reflecting the continued complex evolution towards direct selling in this hybrid business model, which is unique to this market. Revenue growth from direct selling mirrored Active Representative growth at 7% in the third quarter. The timing of incentive programs and product launches dampened direct-selling revenue during the quarter. Representative recruiting remained consistently strong in the quarter and Avon said that it remains confident in the potential of direct selling in this market. China had operating profit of $3 million in the quarter compared with a loss of $7 million in the 2008 quarter, primarily due to focus on cost controls. The region's operating margin was 3.7%.

Commenting on the company's overall performance in the third quarter, Andrea Jung, Chairman and CEO, remarked, "We are pleased with the third quarter's 7% local-currency-revenue growth, particularly in this economic environment. Our broad-based strength is proof that our strategies to focus on representative recruiting and Avon's "Smart Value" products are working. Active Representatives and Beauty revenue both grew strongly as we expanded Representative coverage and Beauty market share across our portfolio."

Elizabeth Arden Signs On to Outsource Flexible Packaging

Jamie Matusow — Wed, 28 Oct 2009 13:57:00 -0500

In keeping with a growing industry trend, Elizabeth Arden Inc. is focusing more emphasis on its supply chain. The prestige beauty products company announced that it has signed a multi-year procurement outsourcing contract with Williams Lea, a global business process outsourcing company, which will manage sourcing activities for Elizabeth Arden's flexible packaging and print requirements. Williams Lea will deliver process expertise and strategic sourcing capabilities, which are expected to secure savings and operational efficiencies for Elizabeth Arden.

Pierre Pirard, SVP of global supply chain for Elizabeth Arden, said, "Focusing on our core business through simplification of our business processes and outsourcing of non-core activities is part of our global efficiency re-engineering initiative started in late 2007, and Williams Lea is fully aligned with this effort."

"We are pleased to be partnering with Elizabeth Arden, a leader in the cosmetics, fragrance and skincare industry. We have created a procurement model that is both aligned with Elizabeth Arden's global growth goal and will generate savings and efficiencies over the course of several years," said Justin Barton, CEO of Williams Lea Americas.

Borghese Expands Its Cura-C Range

Melissa Meisel — Tue, 27 Oct 2009 07:53:00 -0500

This fall, Borghese builds on its highly successful Cura-C Collection with the introduction of Cura-C Anhydrous Vitamin C Body Scrub. The crucial role of Vitamin C in cell activity has been known for decades. It is essential to collagen synthesis, as well as other immune functions. The technologies that paved the way for vitamin C performance and skin supporting function are applied to Borghese’s Cura-C Collection and Cura-C Anhydrous Vitamin C Body Scrub.

According to the company, Cura-C Anhydrous Vitamin C Body Scrub is a luxurious body scrub that works at a deep level as it eliminates dull surface cells. Water-free to deliver the purest form of Vitamin C, it leaves skin revitalized and moisturized. It is formulated with vitamin C, A and E plus CoQ10 and beta-carotene for anti-oxidant and nourishing benefits; plus shea butter, squalane, sunflower oil and carrot oil to soften and smooth the skin. The product is available now exclusively at Lord & Taylor for $49.

Alberto Culver Reports Solid Fourth Quarter and Fiscal Year

Melissa Meisel — Mon, 26 Oct 2009 09:36:00 -0500

Alberto Culver Company—manufacturer and marketer of personal care products including TreSemme, Alberto VO5, Nexxus, St. Ives and Noxzema—posted growth in organic revenue for the fourth quarter and fiscal year.

Net sales were essentially flat at $385.2 million compared to $386.0 million in the prior year quarter. In the U.S., reported sales grew 8.3% driven by the acquisition of Noxzema and strong growth in TreSemme and St. Ives, partly offset by lower Alberto VO5 sales, mainly due to discontinued styling items
Net sales for the fiscal year decreased 0.7% to $1.43 billion.

Commenting on the results, Alberto Culver President and Chief Executive Officer V. James Marino said, "Fiscal year 2009 was another very successful year for Alberto Culver. We generated strong organic sales and earnings growth in a very difficult environment, continued to strengthen our hair care market shares and we're exiting fiscal year 2009 in a very strong financial position."