BEAUTY CARE

Revlon adds new member to board

BY Antoinette Alexander

NEW YORK Revlon has announced that Richard Santagati has joined its board of directors.

With the election, Revlon’s board of directors is now comprised of 12 members, eight of whom constitute independent directors under NYSE standards.

Santagati has served in senior executive capacities in business and higher education throughout his career, and most recently served as the president of Merrimack College in Massachusetts from 1994 to 2008. Prior to 1994, he held many senior management roles, including president and CEO of Artel Communications, partner of Lighthouse Capital, CEO of Gaston & Snow and president and CEO of NYNEX business Information Systems.

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Revlon posts loss in Q3

BY Antoinette Alexander

NEW YORK Revlon posted a decline in third-quarter sales and net income as it gears up for 2010 with new launches under its Revlon and Almay color cosmetics, Revlon Beauty Tools and Mitchum.

Net sales for the third quarter ended Sept. 30 totaled $326.2 million, down 2.5% from last year’s $334.4 million. Excluding unfavorable foreign currency fluctuations, third-quarter net sales declined 0.7%.

In the United States, net sales for the quarter decreased 3% to $183.7 million, driven primarily by lower net sales of Revlon color cosmetics and Revlon Beauty Tools, partially offset by higher net sales of Revlon ColorSilk hair color.

Net income totaled $23.1 million, or 45 cent per diluted share, compared with $29.2 million, or 57 cents per diluted share, in the year-ago period.

“We continued to execute our business strategy and delivered improved profitability and cash flow in the third quarter 2009. The organizational restructuring that we fully implemented earlier this year is delivering cost savings in line with our expectations and is enabling us to continue to strengthen our brands and become a stronger, more financially sound company. Additionally, we took steps to improve our capital structure by completing the exchange offer, which resulted in the extension of the maturity of oursenior subordinated term loan for a multi-year period,” stated Alan Ennis, Revlon president and CEO.

For the first half of 2010, the beauty company will launch new products under its Revlon and Almay color cosmetics brands, as well as new Revlon Beauty Tools and Mitchum products. According to the company, the new launches will include several first-to-market technologies including proprietary technology for pigment coatings that provide advance performance in multiple product categories, including lip and face, as well as on-trend shades. The first half 2010 product launches will be available in retail stores beginning in January 2010.

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Alberto Culver reports Q4 earnings

BY Antoinette Alexander

MELROSE PARK, Ill. Alberto Culver, whose brands include Nexxus, St. Ives and TRESemme, posted fourth-quarter sales that were essentially flat, compared with the prior year and earnings per share relatively in line with expectations — results that at least one industry observer viewed as “solid” in light of a tough comparison and heightened competitive activity.

Sales for the fourth quarter totaled $385.2 million, compared with $386 million in the year-ago period. Organic sales for the fourth quarter rose 2.7%.

Diluted earnings per share from continuing operations were 32 cents, compared with 20 cents in the year-ago period. Excluding restructuring and discrete items, earnings per share increased 6.5% to 33 cents per share in the current quarter.

“Fiscal year 2009 was another successful year for Alberto Culver. We generated strong organic sales and earnings growth in a very difficult environment, continued to strengthen our hair care market shares and we’re exiting fiscal year 2009 in a very strong financial position,” stated V. James Marino, president and CEO.

According to Morgan Stanley analyst Dara Mohsenian, earnings per share of 33 cents were a penny above consensus but in-line with Mohsenian’s estimate, with reinvestment of gross profit upside on higher than expected gross margins back into marketing.

“While near-term fundamentals have lowed with tough comparisons and a heightened promotional environment, we expect improving results in 2010 as Alberto Culver benefits from easier comparisons (post Q1), lower commodity costs and a margin benefit from its new Jonesboro [Arkansas] facility,” stated Mohsenian in a research note.

Mohsenian also stated that Alberto has “significant international expansion opportunity from both a geographic and a brand standpoint in its hair care business” and estimates that expansion into new international markets could drive 250 to 300 basis points of long-term revenue growth contribution.

Alberto competes in seven of the top 20 global hair care markets, which represent 30% of the roughly $64 billion global hair care market, or 16% of the international market excluding the United States.

Mohsenian also believes that hypothetical acquisitions could drive higher returns based on the company’s historical track record with acquisitions and a favorable merger and acquisition environment for acquirers.

“We have no knowledge of any potential acquisitions, and we are unaware of any comments by management regarding a sale of the company. That said, in November 2006, Alberto split itself into two companies, Sally Beauty Holdings and Alberto-Culver, and issued a $25 per share dividend to its shareholders. This split-up suggests to us that the company could be receptive to further consider strategic options at some point,” stated Mohsenian. “However, Alberto is installing SAP worldwide and recently opened a new manufacturing facility in Jonesboro, Ark., in early 2008, which suggests that it may not aggressively pursue strategic options near term.”

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