BEAUTY CARE

Viviscal products to be sold at Rite Aid

BY Antoinette Alexander

SAN JOSE, Calif. Lifes2Good, the maker of the all-natural hair nourishment system Viviscal, has signed a distribution deal with Rite Aid to sell the product throughout 4,900 Rite Aid stores beginning in April.

Rite Aid will carry Viviscal Extra Strength supplements, as well as complementary shampoo and conditioner.

With the Rite Aid deal, Viviscal, which is designed to stop thinning hair while encouraging re-growth of existing hair, is sold in more than 7,000 stores across the United States.  The Irish company, with U.S. headquarters in Chicago, first established operations in the United States in 2007 and launched U.S. sales of Viviscal at New York area Duane Reade stores in 2009.

In a separate development, Lifes2Good has named Emmy Award-winning actress Finola Hughes as its U.S. brand spokesperson for Viviscal products.

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BEAUTY CARE

Physicians Formula looks to top-line growth in 2010

BY Antoinette Alexander

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.”

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Ulta to continue ‘successful game plan’ in 2010

BY Antoinette Alexander

BOLINGBROOK, Ill. Beauty retailer Ulta wrapped up a favorable fiscal 2009 and is upbeat about fiscal 2010 as it continues to expand its store base, reduce expenses and generate free cash flow.

“We are very pleased with our fourth-quarter performance. Our results surpassed the increased guidance we provided in January and included a 6.2% comparable-store sales increase, a 60 basis point improvement in merchandise margin and continued momentum of our cost management initiatives, all of which contributed to a 61.9% increase in diluted earnings per share — a strong finish to the year,” stated Lyn Kirby, Ulta’s president and CEO.

Net sales for the fourth quarter rose 16.1% to $396.4 millioQ4 n, compared with $341.4 million in the year-ago period.

Net income for the quarter rose 64.6% to $20.2 million from $12.3 million in the year-ago period.

Kirby noted that for fiscal 2009 it exceeded each of its three goals: growing profitable market share, achieving permanent cost efficiencies and delivering free cash flow. For the year, same-store sales rose 1.4% and store expansion continued with square footage increasing 12%. The company also achieved $19 million in permanent cost reductions and generated free cash flow of $104.7 million for fiscal 2009.

“As we begin fiscal 2010, we continue to build on our successful 2009 game plan. We are particularly optimistic about our opportunities for market share gains through comparable-store sales growth and new store expansion,” stated Kirby. “We expect to continue to generate free cash flow in 2010 while we increase our capital investment in support of our long term growth and believe that we will deliver another strong earnings performance in fiscal 2010.”

The company, which ended the quarter with 346 stores, plans to open roughly 46 new stores in fiscal 2010, remodel 13 locations and relocate six stores.

Additional plans for fiscal 2010 include:

  • Incur capital expenditures of about $100 million, compared with $68.1 million in fiscal 2009
  • Reduce inventory by about 5% on an average per store basis by year-end 2010
  • Permanently reduce expenses by $5 million
  • Generate free cash flow.

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