Alberto Culver jumps back into profit

By Simon Pitman

- Last updated on GMT

Related tags Quarter Corresponding quarter Finance

As dividends from its restructuring program start to pay
off and quarterly sales show a big upturn, Alberto-Culver has
reported a swing back into profit.

For its first quarter ending December 31, the hair care specialist said that its net earnings increased to $30.9m, compared to a loss of $5.9m in the corresponding quarter of 2006. The increased profitability was also boosted by a steep rise in sales, up 14 percent to $400.7m, from $351.1m in the corresponding quarter a year ago. The figures comfortably beat average analysts' expectation. According to Thomson Financial forecasts, sales for the quarter were expected to be in the region of $380m. TremSemme and Nexxus drive sales​ Commenting on the company's performance, CEO James Marino attributed the dynamic sales growth to the continued success of the TreSemme brand in the major markets as well as the growth of the Nexxus brand. "In our beauty care markets outside the US, we generated strong sales and earnings growth,"​ he said. Marino also pointed to the fact that the earnings growth had been led by restructuring savings, which are expected to show dividends in the forthcoming quarter. Restructuring has been a painful and relatively expensive process for the company, but dividends are clearly paying off as the current program draws to its conclusion. This fact is demonstrated by the fact that restructuring charges for the most recent quarter were reduced to $4.8m, compared to $31.4m for the same period a year ago. Toronto manufacturing facility closure​ Most of the restructuring charges for the current quarter related to the closing of the company's manufacturing facility in Toronto, Canada. The closure was announced in October last year and recorded restructuring charges of $3.2m as a direct result. On the costs side, the company said that it had increased advertising spend during the quarter by 10.8 percent to $67.5m, while selling and administration expenses had been reduced to 24.4 percent of the quarterly sales, compared to the figure of 25.7 percent for the corresponding quarter in 2006. The results show that the company has come through a difficult period of restructuring, which also included the spinning off of its Sally Beauty business into a separate public company in November2006. Since the spin-off, the company has been trying to consolidate its financial situation through restructuring, while simultaneously trying to expand its market reach and sales.

Related topics Skin Care Hair Care

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