Bare Escentuals reports strong quarter but predictions fall short

By Katie Bird

- Last updated on GMT

Related tags Revenue

Bare Escentuals reported strong sales and net income figures for the second quarter however its outlook was lower than Wall Street’s predictions.

The mineral makeup company has reported second quarter sales figures of $138.5m, a 12 percent increase on last year’s figures.

Net income for the company benefited from the increased sales and the company reported a 22 per cent rise on last year’s figure taking the bottom line to $20.2m.

In addition, international sales were at an all time high this year accounting for 12 per cent of all sales revenues and CEO Leslie Blodgett made a special mention of the successful performance of the UK’s department stores and Japan’s infomercial partnerships.

However, the company’s predictions of fiscal 2008 growth of between 15 and 20 per cent sales growth, or earnings of $1.13 to $1.18 per share, fell below analysts’ predictions of $1.19 per share, according to Reuter’s news agency.

Although company CEO Leslie Blodgett mentioned a softening in consumer spending, she confirmed that the company had confidence in its potential for growth.

“While we remain mindful of trends surrounding consumer spending and are thus taking a more conservative view towards sales growth, we continue to have confidence in our ability to expand our product offering, develop more points of distribution and deliver earnings in line with our prior expectations,”​ she said.

Within the company’s retail division it was the infomercial distribution channel that suffered from a drop in consumer spending.

Struggling infomercial channel

The channel suffered a 22 percent drop in sales revenue that the company put down to the particularly price sensitive nature of the consumer base.

In the current economic times consumers are less likely to wish to part with a $60 kit without testing the products first, explained Blodgett in a conference call.

A new infomercial was launched mid July and Blodgett stated that preliminary results were positive. However, she said that given the current economic situation and the price sensitivity of these consumers the company did not expect results to rebound to prior year levels in the short term.

Bare Escentuals plans to continue with the channel however as the firm feels it represents a good way of pushing brand awareness.

Increasingly competitive market place

Introducing new customers to the flagship mineral makeup brand remains a priority for the company and an area where it feels an increasing level of competition, explained Blodgett.

The company still has dominance in the base category, according to Blodgett, but the race is on when it comes to acquiring new customers as competition in the field of mineral makeup is growing rapidly.

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