CCA Industries reports big fall in sales and profits

By Simon Pitman

- Last updated on GMT

Related tags: Generally accepted accounting principles

Niche beauty provider CCA Industries has reported a fall in profit and sales as costs mount in an increasingly tough retail environment.

The company, which markets shaving products, toothpaste, teeth whitening products and nail care treatments, said that it had been particularly hard hit by the need to increase its advertising budget.

Reflecting the US economic downturn

Net sales for the fiscal year ending November 30 2008, fell from $60.87m the previous year to $57.45m, a drop of 5.6 percent, while the figure for the fourth quarter fell 15.8 percent to $12.05m, reflecting the sharp downturn in the American economy.

Net income was also sent tumbling for the year, dropping from $5.53m in 2007, to $1.41m in 2008.

The fall in income was particularly pronounced in the fourth quarter, when the company registered a net loss of $822,000, compared to a net income of $1.70m last year.

Advertising costs hit profits

“In addition to the additional costs to operate in this economy, we increased our overall advertising expenses approximately $3,500,000 for the year, of which approximately $2,400,000 more was spent in the fourth quarter of fiscal 2008 than the fourth quarter of fiscal 2007, because we believe that a recession requires aggressive marketing,”​ said CEO David Edell.

The company stated that the rise in advertising expenditure was a necessity because it was essential to maintain consumer recognition of the company brands during the tough trading conditions.

CCA manufacturers and markets brands that include Plus+White toothpaste and tooth whiteners, Nutra Nail treatments and Sudden Change anti-aging skin care products.

Focus on costs while maintaining ad spend

Edell went on to state that the company was already implementing processes to cope with the economic downturn, including the streamlining of its operating costs during the rest of the financial year, as well as continuing with aggressive advertising campaigns to support the brands.

“Fortunately, our company has the capital necessary to meet our working capital requirements without the need of any outside financing. We therefore are confident that we will generate positive and profitable results by the end of our 2009 fiscal year,"​ Edell said.

Related topics: Business & Financial

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