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Profits soar but sales slow at Physicians Formula

By Guy Montague-Jones , 05-Nov-2008
Last updated the 05-Nov-2008 at 19:39 GMT

Physicians Formula has reported a substantial increase in profits for the third quarter although sales growth has stalled.

Net income grew to $1.7m from $102,000 for the corresponding period last year helped by a favorable change in product mix and beneficial tax changes.

Sales slowdown

However the sales figures were less spectacular. Turnover increased by 2.5 percent to $20.3m which was significantly down on the growth in previous quarters.

Sales for the first nine months rose 10.6 percent but the expected continuation of the consumer spending slowdown is likely to prevent the company from maintaining double digit growth for the full year.

The sales forecast for 2008 is set between $120m and $123m representing an 8 to 10 percent increase on last year.

“Given the very soft consumer environment, we are pleased with our double-digit net sales growth we have achieved in the first nine months of the year,” said Ingrid Jackel, CEO of Physicians Formula. “This growth represents the success of our 2008 new product introductions, as well as 2008 distribution gains.”

To maintain sales growth amid the anticipated weakness of the consumer environment in 2009 Physicians Formula plans role out a number of new products.

Jackel said the company will expand the Organic wear line, press on with innovation in the Mineral wear and bronzer category and continue the rejuvenation of our eye make-up products.

Focus on market share

Physicians Formula will be working to further increase its market share across various product categories to boost its top line.

The company published data from market research firm AC Neilson indicating that it is the leader in the bronzer category.

According to the research, Physicians Formula has also increased its share of the masstige market for the year ending October 4, by 0.3 percentage points to 8 percent.

In compiling the figures the masstige market was defined as products sold in the mass market channel under the following premium-priced brands: Physicians Formula, Almay, L'Oreal, Max Factor, Neutrogena, Revlon and Vital Radiance.

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