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Alberto-Culver cuts 160 jobs and reveals growth plans

By Guy Montague-Jones , 22-Jun-2009
Last updated on 26-Jun-2009 at 14:58 GMT

Alberto-Culver, owners of the Alberto VO5 and Nexxus brands, plans to cut 160 jobs and reorganize its facilities to boost productivity.

The hair and skin care company is shifting much of its manufacturing to a new plant in Jonesboro, Arkansas, in an effort to streamline the business.

According to AP, the layoffs resulting from the consolidation will be completed by the end of June 2010. Restructuring charges are expected to be around $8m, including about $5m in cash charges for severance, contract termination and other exit costs, said the news agency.

Margin growth plans

Last week, chief financial officer, Ralph J. Nicoletti, told investors at the William Blair & Company Annual Growth Stock Conference, that Alberto-Culver plans to increase its operating margins from about 12 percent now, into the mid-teens.

Shifting manufacturing to the new Jonesboro plant forms a key part of that strategy. Nicoletti said the facilities are not only more efficient but are closer to both suppliers and customers, saving Alberto-Culver on transportation costs.

Alberto-Culver intends to make more cost savings by reducing inventory levels and shifting its product mix in favour of big margin brands.

Sales growth target

At the conference in Chicago, Chief Executive, V. James Marino, also outlined Alberto-Culver’s growth plans. In the first half of the year sales increased 0.7 percent to $697.2, but Marino said that the company plans to achieve long-run sales growth of mid-single digits.

This will be achieved through innovation and support for existing brands but Alberto-Culver is also looking at other opportunities for growth.

Marino said the company is on the lookout for acquisitions that will fit neatly into its portfolio and help build the business in the long-run. He said the company has plenty of available cash and no debt burden, so is well placed to pick out good buys.

The company also plans to increase its top-line by expanding into new countries. Marino said Alberto-Culver is present in only a limited number of international markets and has a lot of scope for geographic expansion.

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