Alberto Culver reveals flat sales and falling profit
Sales were almost flat, registering a small fall from $386.0m in the corresponding period last year, compared with $385.2 for the current quarter, while net profit was down 78 percent, from $147.10m to $31.66m.
The company said that sales were hit by currency translations, as the US dollar continues to be strong against international currencies, a claim that was substantiated by the fact that organic sales rose by 2.7 percent.
Noxzema brand boosts US sales
Reported sales for the quarter fell by 5.0 per cent, however in the US they were up by 8.3 percent, largely driven by the purchase of the Noxzema men’s skin care brand, together with strong Tresemme hair care sales as well as higher sales for the St. Ives brand.
The company pointed out that sales of its high-end brands, such as Alberto’s Nexxus have been hit by the slow retail environment, but conversely sales of its less expensive brands, which includes TreSemme, have continued to grow under these same conditions.
On a regional basis, sales in the US were particularly boosted by the purchase of the Noxzema brand, which the company bought from Procter & Gamble at the end of the year, while internationally TreSemme sales were strong, as were sales of Nexxus in Canada, on the back of its recent launch there.
Diversifying into skin care
Although Alberto Culver has made a name for itself in hair care, it has been increasingly diversifying into skin care in recent years, pushing its St. Ives skin care brands, alongside the newly purchased Noxzema brand.
Although there was a big drop in profits, the figure was not as bad as many analysts had expected. The profit result was boosted by lower costs for oil-derived materials as well as benefits from cost savings strategies.
The company said that the lower material costs as well as the benefits of its cost saving strategies, are likely to be felt well into the 2010 financial year.
Lower costs for oil-derived materials
“As expected, in the September quarter we saw the results of our cost saving efforts coupled with the benefit of lower oil derived raw material costs," said Alberto Culver CEO James Marino.
“While other non-oil based costs including tin plate and certain chemicals remain elevated, based on the current cost environment the Company expects cost trends to continue to be favorable as it enters fiscal year 2010”, he added.
For the full year the company reported net sales that were again almost flat, falling slightly from $1.44bn in 2008 to $1.43bn, while net profits were almost halved, falling from $228.15m to $119.37bn.