Physicians Formula back in profit but sales slump
Net sales for the second quarter were down from 8.5 percent, from $22.9m in the same period for 2008, to $21.1m this year, whereas net income was $0.6m, compared to a net loss of $2.0m for the same period last year.
The company pointed out that it has jumped back into profit during the quarter despite an asset impairment charge of $1.1m.
The drop in sales was blamed on larger decline in gross sales, which the company said was offset by a lower returns provision, compared to the previous quarter in 2008.
De-stocking, loss of client and fewer launches
The company cited three main reasons for the decline in gross sales, namely the loss of a major client, reduction of promotional product launches and continued de-stocking by retailers.
However, CEO Ingrid Jackel said the company was specifically targeting the three areas that had caused the slump in sales and would be looking to increase its business activity in the next half of the financial year.
“The consumer environment will likely continue to be difficult through the end of this year, but we look forward to expected improvements in 2010 when our new product platforms will position us for strong success in the marketplace, “ said Jackel.
Net sales for the first six months were down by 24.3 percent to $41.2m, whereas net loss for the six month period was $1.1m, compared to a net income of $3.0m for the first six months of 2008.
Reduction in borrowing and looking to refinance
The company also said it has been working to reduce its borrowings and is also looking to refinance its existing credit facility as a means of facilitating further investments.
Jackel also said that the company had proven expertise in the complementary face make-up category, which is likely to become a greater point of focus as it concentrates on areas where significant potential for further growth exists.
Looking ahead to the rest of the year, the company is expecting continued ‘softness’ in sales and is predicting a net loss for the full year 2009, which will translate into a negative share dividend of $0.25 - $0.33.