Bare Escentuals warns of sharp sales decline in first quarter

By Guy Montague-Jones

- Last updated on GMT

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Bare Escentuals expects first quarter sales to fall significantly as retailers lower their inventories to cope with the increasingly uncertain economic environment.

In the latest quarter ending December 28, the mineral make-up specialists reported a 2 percent increase in sales to $147.1m but warned that turnover is likely to decline in the teens over the coming quarter.

Retailers cut inventories

Chief financial officer Myles McCormick said: “Due to the tightening of trade inventories across all consumer products, our first quarter shipments have been adversely impacted.”

Although no specific earnings guidance figures were given for 2009, McCormick said Bare Escentuals does not view first quarter net sales trends to be indicative of full year expectations.

Sales figures are expected to stabilize once retailers adjust to the new economic reality.

McCormick said: “We do expect that once our retail partners adjust to their more conservative inventory positions that shipments will again approximate the pace of retail sales.”

Nevertheless the figures for the year to come are unlikely to make for such a pleasant read as the financial results for 2008.

Strong growth in the full year results

For the full year Bare Escentuals performed well reporting a 9 percent increase in sales to $556.2m and an increase in net income of 11 percent to $88m.

This growth was achieved despite weakness in the final quarter of the year. Sales climbed by only 2 percent rise in the quarter while net income was down 9 percent.

CEO Leslie Blodgett said: “While we are pleased that we were able to deliver positive revenue growth in the quarter, particularly in light of overall declines in the prestige cosmetics market, it is clear to us and to everyone in our industry that consumers are under great pressure, and we expect that dynamic to continue for some time.”

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