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Physicians Formula

This article was originally published in The Rose Sheet

Executive Summary

Firm booked $22.9 million in net sales for its fiscal 2008 second quarter, up 3.6% versus the prior-year period, according to August 11 release. Lackluster results reflect seasonally slower quarter, soft consumer retail environment and returns related to higher-priced promotional kits. Firm concludes that "in this economic environment consumers are more inclined to purchase lower-priced individual items compared to higher-priced promotional kits." Bare Escentuals noted a similar trend in reporting its second-quarter sales and earnings (1"The Rose Sheet" Aug. 11, 2008, In Brief). "We are already taking steps to revert to smaller and more traditional promotional events for 2009, which will enable us to minimize promotional returns as we have done historically," VP-Marketing Ingrid Jackel says. Net sales for first half of fiscal 2008 totaled $65.5 million, up 13.3% from the comparable period in 2007. Jackel said company is "generally satisfied with [its] business performance" and attributed 8% market-share gain to success of Mineral Wear line extensions, Shimmer Strips Custom Eye-Enhancing Shadow & Liner, and new Organic Wear offerings...

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Bare Escentuals

Mineral cosmetics firm books $138.5 mil. in sales for second quarter of fiscal 2008, up 12% versus the prior-year period, "significantly" outpacing 4% retail growth of prestige beauty market overall, according to July 30 release. However, "broader economic concerns, combined with added mineral competition in the mass market, is causing us to have to work harder to acquire the more price-sensitive consumer. Specifically we have seen a clear trend of consumers increasingly favoring lower-priced non-kit-products over higher-priced kits," CEO Leslie A. Blodgett notes during same-day call. In June Bare Escentuals indicated that it would count on updated, $60 Get Started Kit releasing this fall to hook new customers, recognizing that "the vast majority of customers that try bareMinerals stick with the brand" (1"The Rose Sheet" June 23, 2008, p. 10). Now firm is "seeing reduced volumes" in its infomercial channel, "as we believe this customer has become more reluctant to purchase a $60 kit without the benefit of experiencing the product first-hand," Blodgett said. Firm is toying with the infomercial's format to improve its effectiveness and remains committed to the channel, which together with QVC represents the second most common way users are introduced to its brands, the CEO noted. Meanwhile Bare Escentuals has expanded its sampling efforts and use of non-traditional marketing in increasingly competitive mineral cosmetics market...

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