Bare Escentuals buys UK distributor as part of growth plans

The company says it plans to acquire Cosmeceuticals Limited, which currently distributes Bare Escentuals products throughout the country to QVC UK - an online and television retail business. The deal is currently awaiting approval from trading authorities and the companies have not revealed the exact terms of the deal, which was given preliminary confirmation after a letter of intent was signed on Wednesday. Cosmeceuticals Limitied says that it will divest assets not related to the distribution of Bare Escentuals' brands prior to completion of the transaction. Completion of the contract is expected to be made by April 2, allowing Bare Escentuals to add the business trading to its results for the second quarter. Bare Escentuals said that, by making the acquisition, it is hoping to expand into new sales channels in the UK, including the fast-growing informercials segment. The company also has 1,500 accounts with UK-based spas, which it is also helping to build on through the distribution acquisition. Ultimately the company plans to tap into significant growth in the UK, which is currently the leading market in Europe for natural- and organic-based personal care products. Organic Montior estimates that sales of natural and organic personal care products doubled between 2002 and 2005 in the UK, helping to make it one of the largest markets in Europe, where annual sales are currently estimated to be €1bn. Last week the company reported that quarterly net sales for 2006 hit $110.5m, compared to total sales of $703m recorded in the same period last year, while quarterly net income increased from $4.8m in 2005 to reach $16.3m. The strong results came in the company's first full quarter as a public company, having listed itself on the Nasdaq Stock Market back in September 2006. Share prices responded positively to the announcement, jumping $1.20 to reach $35.99. For the full year net sales were $394.5m, representing an increase of 53 per cent on the figures for 2005, whereas net income was $50.2m, more than doubling the $23.9m achieved in 2005. The San Francisco-based company, which markets natural, mineral-based cosmetic and skin care products throughout the United States, beat its own forecasts and said that it was raising 2007 profit guidance as a result, hoping to raise net income by around 5 per cent in 2007.