BEAUTY CARE

P&G to gradually cut Gillette jobs as production moves out of Boston

BY Antoinette Alexander

BOSTON P&G is cutting about 215 jobs at its Gillette unit in Boston over the next five years as its moves production of older blades and razors to Poland and Mexico, according to published reports.

Most of the job cuts—which represent about 9 percent of the company’s Massachusetts employees—will be eliminated through attrition, retirement or voluntary separation packages, reports stated.

P&G, however, is not pulling out of South Boston, according to reports, but is investing $100 million there over the next two years as it upgrades the plant to be one of two flagship manufacturing sites for new technologies. The other site is in Berlin, Germany. Newer products, like Fusion, will remain in South Boston.

Meanwhile, P&G is winding down operations at a leased facility in Devens, Mass., where an outside contractor employs about 400 full-time employees. Within the next year, some packaging and warehouse operations will be moved to the Gillette plant in Andover, Mass.

In 2010, the rest of the Devens production will be moved to a new plant in Mexico, according to reports.

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Bare Escentuals feels effects of economy even as it posts successful Q2

BY Antoinette Alexander

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.

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L’Oreal introduces mineral-enriched mascara

BY Antoinette Alexander

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.

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