Alberto-Culver still bullish despite market uncerainty
quarter and fiscal year 2004 sales and profits results were in line
with expectation, placing the company in a good position to exceed
analysts estimates, despite a recent slump in its share price.
Tom Armitage reports.
In reaction to the trading statement, some market analysts have urged the company to ebb on the side of caution, following recent profit warnings from other personal care companies, including Colgate-Palmolive.
Howard Bernick, president and CEO of Alberto-Culver, appeared unfazed however, commenting that the results confirmed, "the 13th consecutive year of record sales and record earnings for the company."
In recent years, Alberto-Culver has invested considerable advertising resources in seeking to consolidate its core brand portfolio, among which includes St. Ives and TRESemmé, as well as Alberto VO5 - its flagship hair care product. The company envisages continuing growth both in the domestic US market, and also overseas.
Although no concrete sales figures were made available, the double figure rise in sales and profit growth has been attributed to the company concentrating on key, prominent brands, whilst slimming down its product range. Profit margins were also increased, despite there being 'raw material cost pressures and increased competition'.
Bernick also hinted that the company's fiscal objectives for 2005 would, "anticipate another year of sales growth, profit growth, and margin expansion, hopefully delivering to Alberto-Culver Company shareholders our 14th consecutive record sales and record earnings year."
But not everyone shares the same optimism. According to a report by Deutsche Bank, future profits could still be adversely affected following a flurry of recent hurricane activity in south eastern US states - home to a large concentration of Sally stores.
Procter and Gamble have also announced they will seek to directly distribute Wella and Sebastian products in North America as of 2005 - a move which will directly encroach upon traditional Alberto-Culver product territory.
One analyst, Linda Bolton Weiser, claimed that the Proctor and Gamble move, "could signal changing industry dynamics, potentially negative for BSG", and warned that a number of other personal care product companies were potentially able to follow suit. She also added that as a direct result of the move, 2005 fiscal year profits for Alberto-Culver could be hit by as much as US $35 million.
It appears, however, that Alberto-Culver subsidiaries, Sally and the Beauty Systems Group (BSG), are ideally placed to counter balance any future Proctor and Gamble action, claiming they will finish the fiscal year with a sales presence in over 3,000 locations, together with a team of 1,200 professional distributor sales consultants.
