Shift to mass-market products paid off for growing Russian cosmetic industry
LONDON —Russia is one of the favorable destinations for cosmetic industry investments among emerging cosmetics markets worldwide, thanks largely to an economic recovery, rising consumption levels and a positive outlook on consumer purchasing power, according to a recent research report on the Russian market.
According to the “Russian Cosmetics Market Forecast (2008-2012)” report from CompaniesandMarkets.com, the Russian cosmetic and perfumery industry witnessed 10.3% annual growth in 2008, with total industry sales value surpassing US$9 billion for the first time.
It is expected that the cosmetic industry will see a slight slowdown in growth because of contracting purchasing power in 2009, but a shift to mass-market products will pay off.
“The shift in consumer preference from luxury and branded products to mass-market segment products will rescue the industry from negative growth and demand contraction. Consumers will diversify their single spending on luxury products to multiple mass-market products and will still continue with their preference for cosmetic products, despite the declining purchasing power,” the report stated.
By the beginning of the second half of 2010, the industry is expected to recover, driven by economic recovery, rising consumption levels and positive outlook on consumer purchasing power.
Physicians Formula looks to top-line growth in 2010
AZUSA, Calif. Physicians Formula, whose beauty products are sold in 23,700 stores operated by Walmart, Target, CVS and Rite Aid, narrowed its fourth quarter net loss and is optimistic about 2010 as it has rationalized 28% of its SKUs and has a “strong product mix” in the pipeline.
“Although our overall market share decreased as expected versus last year, mainly impacted by the loss of a major customer, we saw an increase in dollar sales for our strategic platforms, including our bronzers, Mineral Wear face powders, and natural and organic products,” stated Ingrid Jackel, chairwoman and CEO. “Having rationalized 28% of our SKUs and with the promising start of our 2010 new products, we believe that we have a strong product mix as we begin 2010 that will enable us to increase both the efficiency of our product set and our market share in our core categories. In fact, after seeing our early 2010 new product sales, we believe we are in a good position to grow our top-line in 2010.”
Net sales for the quarter ended Dec. 31 totaled $22.3 million compared with $28.2 million in the year-ago period. The decrease is primarily due to the previously announced loss of a major customer and lackluster retail POS trends for the masstige cosmetics market in both the United States and Canada.
Net loss for the quarter totaled $2.5 million, or a loss of 18 cents per share, versus a loss of $24.5 million, or $1.80 per share, in the year-ago period.
The current quarter’s net loss includes a $4 million charge from the company’s implementation of a SKU rationalization initiative designed to discontinue slower-selling products. The initiative, which concluded in late December after 2010 plan-o-grams were finalized with its retail partners, resulted in the discontinuation of about 28% of the beauty company’s products as of Dec. 31.
“We believe we adapted well to the challenges we experienced in 2009. Although our top line was negatively impacted during the year, we made significant progress on our business model redefinition by improving our manufacturing efficiencies and diligently managing our general and administrative costs,” stated Jackel. “As a result, we generated $9.4 million of net cash from operating activities for the full year and $3.6 million for the back half.”
Maybelline New York encourages customers to ‘Be Sensational and Win’
NEW YORK Maybelline New York has partnered with CVS/pharmacy for the “Chicago” “Be Sensational and Win” contest.
Between March 15 and April 15 consumers can log onto the micro-site www.besensationalandwin.com for a chance to win a walk-on role in the Broadway production of “Chicago.” Contestants must perform their favorite song from Broadway musical “Chicago” and download the audition video for a chance to win. Live auditions will take place on March 22 at the Ambassador Theatre in New York, home to “Chicago.” There at the 42nd Street CVS/pharmacy, Maybelline New York makeup artists will be on hand to help contestants and consumers get Broadway-ready with mini-makeovers. They also can receive CVS/pharmacy coupons for discounts on Maybelline New York products.
The walk-on role will include lines depending on the winner’s ability, singing and dancing. The winner also receives a trip for two to New York City, a makeup kit from Maybelline New York a CVS/pharmacy gift card valued at $100 and more. Public online voting takes place from April 19 to May 7. Voters can also win prizes.
During the month of April, Maybelline New York will support the contest through in-store displays in more than 7,000 CVS/pharmacy locations featuring Lash Stiletto mascara and new Color Sensational lip color.
“CVS/pharmacy is thrilled to be the retail partner for the Maybelline ‘Be Sensational and Win’ program,” stated Cheryl Mahoney, VP beauty at CVS/pharmacy. “We applaud Maybelline for giving beauty consumers a fresh and fun way to experience the Maybelline New York brand.”