Ascendia files for bankruptcy, Scheyer resigns
HAMILTON, N.J. Ascendia Brands, a maker of branded bath, health and beauty care products, has filed for bankruptcy protection under Chapter 11 and expects to sell the business before Sept. 30.
In addition, Steven Scheyer has resigned as president and chief executive officer of the company and as a member of Ascendia’s board. The company has appointed Douglas Booth, a partner in financial advisory firm Carl Marks Advisory Group, as chief restructuring officer. Marks will have overall responsibility for finance, sales, marketing and operations and will also oversee negotiations regarding a sale of the company.
Ascendia has entered an agreement with its senior secured lenders to provide a debtor-in-possession financing facility and plans to continue to operate in the ordinary course pending a sale. It is in discussions with prospective buyers and expects to complete a sale before Sept. 30.
The company’s decision to file for bankruptcy is a result of financial pressures from tightening credit markets, a strain on material flows and the liquidity impact associated with the Healing Garden brand re-launch.
“While many of Ascendia’s core brands have a very successful 50-year heritage and serve an important market niche, we have recently faced considerable challenges. After careful analysis, the decision was made to restructure the business through a Chapter 11 filing in order to streamline operations, refocus on our core profitable products and sell the company in order to better position the business for the future,” stated Booth.
The company plans to discontinue unprofitable products in order to focus on strong brands and high margin products within those brands and consolidate distribution centers.
Bare Escentuals feels effects of economy even as it posts successful Q2
SAN FRANCISCO Bare Escentuals, a maker of mineral makeup, posted double-digit gains in second quarter sales and earnings but, according to at least one industry observer, is being impacted by the weak economy and lower-priced options available in the mass market.
Net sales for the second quarter ended June 29 were $138.5 million, an increase of approximately 12 percent from $124.1 million in the year-ago period.
Net income for the quarter was $24.7 million, or 26 cents per diluted share, an increase of 22 percent compared with $20.2 million, or 22 cents per diluted share, in the second quarter of fiscal 2007.
“The overall business is seeing pressure from the weak macro environment. Not only are Bare customers choosing lower priced kits and ‘open box’ products, the company is also seeing less success in attracting new customers who typically shop at the mass channel,” stated William Chappell, SunTrust Robinson Humphrey analyst, in a recent research note. “This second issue has been exacerbated by the high number of lower priced products which have hit mass shelves in the past six months.”
For fiscal 2008, the company now expects sales growth to be in the range of 15 percent to 20 percent compared to the prior year. This compares with it original guidance of between 20 percent and 25 percent growth. The company continues to expect diluted earnings per share for fiscal 2008 to be in the range of $1.13 to $1.18.
“We are clearly frustrated by the quarter and guidance. It feels like the company realized all the investor concerns (economic slowdown, increased competition, uncertainty of the Infomercial channel) in just one quarter,” added Chappell. “The tempered growth outlook will raise more questions as to whether the company is adequately supporting the brand versus competition (Bare doesn’t do traditional advertising) and the health of the infomercial channel. That said, we are not yet ready to throw in the towel on the stock.”
Chappell noted that, on the bright side, margins were better than expected (operating margin was 32.5 percent versus his 29.8 percent estimate) as the mix shift to smaller kits and open boxes provided a gross margin lift. Furthermore, the company continued to see solid growth internationally and management indicated that the sell through growth rates in the United States remain above 20 percent.
L’Oreal introduces mineral-enriched mascara
NEW YORK L’Oreal Paris has announced the launch of its new mineral-enriched mascara.
Bare Naturale Mineral-Enriched Mascara promises flawless lashes with a formula containing 86 percent natural-origin ingredients. Ingredients include aloe, jojoba oil and vitamin E as well minerals. The bristle brush is designed to provide flawless lashes with no clumps. The mascara is paraben-free and fiber-free.
The new product expands L’Oreal’s Bare Naturale mineral cosmetics collection, which also includes Bare Naturale Gentle Mineral Powder, Gentle Lip Conditioner and Gentle Mineral Eyeliner.
Starring in the advertising is actress and L’Oreal Paris spokesperson Penelope Cruz. The ad campaign featuring Cruz was shot in May. Pablo Iglesias styled her hair and Caroline Saulnier did her makeup.