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SAN FRANCISCO, Oct 30, 2008 (BUSINESS WIRE) -- Bare Escentuals, Inc. (Nasdaq: BARE) today announced financial results for the third fiscal quarter and nine months ended September 28, 2008.
Net sales for the third quarter of fiscal 2008 were $130.2 million, an increase of 3% from $126.6 million in the same period last year. Net income for the third quarter of fiscal 2008 was $22.9 million, or $0.25 per diluted share, an increase of 12% compared to $20.5 million, or $0.22 per diluted share in the third quarter of fiscal 2007.
For the nine months ended September 28, 2008, net sales increased 12% to $409.1 million from $366.4 million in the same period last year. Net income for the first nine months of 2008 was $73.4 million, or $0.79 per diluted share, an increase of 20% compared to net income of $61.1 million, or $0.66 per diluted share during the same period last year.
"While the challenging economic climate is clearly putting pressure on the consumer, we continue to grow although we recognize that we can do things better. We have a great brand, millions of loyal customers who are passionately engaged with our brand and products, and many exciting opportunities to reignite growth, even in this environment," said Leslie Blodgett, Chief Executive Officer. "We are taking proactive steps to further distinguish ourselves from competition, strengthen and grow our customer base, and extend our leading market share. We recently took actions aimed at rationalizing the operating and cost structure of the Company. The result is a leaner and more effective organization, which we believe is necessary to navigate the current difficult economic environment and best position the Company for sustained, profitable growth."
Guidance
Based on the Company's third quarter results and the impact of the challenging consumer environment on current business trends, the Company now expects sales and earnings growth for fiscal 2008 of approximately 10% compared to the prior year. Included in the fiscal 2008 guidance is approximately $0.01 to $0.02 per diluted share of one-time items associated with the Company's strategic restructuring in the fourth quarter.
Conference Call
Bare Escentuals, Inc. will host a conference call today, October 30, 2008 at 1:30 p.m. Pacific (4:30 p.m. Eastern). The call will be hosted by Leslie Blodgett, Chief Executive Officer; and Myles McCormick, Chief Operating Officer and Chief Financial Officer, and will be broadcast live over the Internet and will be accessible through the Investor Relations section of the Company's website at http://ir.bareescentuals.com. The webcast will also be archived online within one hour of the completion of the conference call and available at the Investor Relations section of the Company's website at http://ir.bareescentuals.com.
About Bare Escentuals, Inc.
Bare Escentuals, Inc. is one of the fastest growing prestige cosmetic companies in the United States and a leader in mineral-based cosmetics. The Company utilizes a distinctive marketing strategy and multi-channel distribution model to develop, market and sell cosmetics, skin care, and body care products under its bareMinerals, RareMinerals and namesake Bare Escentuals brands, and professional skin care products under its md formulations brand, through infomercials, home shopping television, specialty beauty retailers, department stores, company-owned boutiques, spas and salons, and online shopping.
(BARE-F)
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives and future operations, the impact of our restructuring and estimates of our financial results and capital expenditures for future periods. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "expect," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue" and similar expressions are also intended to identify forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in or implied by these forward-looking statements as a result of several factors. Factors that could affect future performance include, but are not limited to, changes in general economic or market conditions, including the adverse effects of a challenging and potentially worsening consumer and retail environment; our dependence on sales of our mineral-based foundation; our dependence on significant customers with whom we do not have long-term purchase commitments; the highly competitive nature of the beauty industry, and the adverse consequences if we are unable to compete effectively; the possibility that we might not manage our growth effectively or sustain our growth or profitability; the possibility that we might not be able to retain key executives and other personnel and recruit additional executives and personnel; the possibility that we might not be able to open and operate new boutiques successfully; our dependence on our suppliers to produce and deliver our products in a timely and cost-effective manner; the possibility that our media spending might not result in increased net sales or generate the levels of product and brand name awareness we desire; the possibility that we may be unable to repay or refinance our indebtedness, which was $244.5 million as of September 28, 2008; and other risk factors detailed in our Annual Report on Form 10-K for the fiscal year ended December 30, 2007, as well as our Quarterly Report on Form 10-Q for the quarter ended June 29, 2008, which are available at the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
BARE ESCENTUALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except percentages and per share data)
(Unaudited)
Three months ended Nine months ended
September 28, September 30, September 28, September 30,
2008 2007 2008 2007
Sales, net $ 130,199 100.0 % $ 126,635 100.0 % $ 409,075 100.0 % $ 366,392 100.0 %
Cost of goods sold 35,354 27.2 35,956 28.4 113,028 27.6 106,984 29.2
Gross profit 94,845 72.8 90,679 71.6 296,047 72.4 259,408 70.8
Expenses:
Selling, general and administrative 51,208 39.3 47,536 37.6 152,363 37.2 130,257 35.6
Depreciation and amortization 3,065 2.3 2,035 1.6 8,507 2.1 4,835 1.3
Stock-based compensation 1,533 1.2 1,800 1.4 4,413 1.1 5,190 1.4
Operating income 39,039 30.0 39,308 31.0 130,764 32.0 119,126 32.5
Interest expense (3,917 ) (3.0 ) (5,725 ) (4.5 ) (12,841 ) (3.1 ) (18,810 ) (5.1 )
Other income, net 24 0.0 471 0.4 691 0.1 1,299 0.3
Income before provision for income taxes 35,146 27.0 34,054 26.9 118,614 29.0 101,615 27.7
Provision for income taxes 12,247 9.4 13,579 10.7 45,240 11.1 40,520 11.0
Net income $ 22,899 17.6 % $ 20,475 16.2 % $ 73,374 17.9 % $ 61,095 16.7 %
Net income per share:
Basic $ 0.25 $ 0.23 $ 0.80 $ 0.68
Diluted $ 0.25 $ 0.22 $ 0.79 $ 0.66
Weighted-average shares used in per share calculations:
Basic 91,454 90,532 91,364 89,994
Diluted 93,207 93,208 93,282 92,939
BARE ESCENTUALS, INC.
NET SALES BY BUSINESS SEGMENT AND DISTRIBUTION CHANNEL
(in thousands, except percentages)
(Unaudited)
Three Months Ended Nine Months Ended
September 28, September 30, September 28, September 30,
2008 2007 2008 2007
Retail
Infomercial $ 23,218 17.8 % $ 29,411 23.2 % $ 78,585 19.2 % $ 95,268 26.0 %
Boutiques 28,156 21.6 21,881 17.3 81,165 19.9 58,411 15.9
Total retail 51,374 39.4 51,292 40.5 159,750 39.1 153,679 41.9
Wholesale
Premium wholesale 46,321 35.6 44,952 35.5 131,375 32.1 118,131 32.3
Home shopping television 9,174 7.1 11,785 9.3 51,103 12.5 41,749 11.4
Spas and salons 15,909 12.2 15,075 11.9 49,131 12.0 39,133 10.7
International distributors 7,421 5.7 3,531 2.8 17,716 4.3 13,700 3.7
Total wholesale 78,825 60.6 75,343 59.5 249,325 60.9 212,713 58.1
Sales, net $ 130,199 100.0 % $ 126,635 100.0 % $ 409,075 100.0 % $ 366,392 100.0 %
BARE ESCENTUALS, INC.
CONSOLIDATED BALANCE SHEET DATA
(in thousands)
September 28, December 30, September 30,
2008 2007 2007
(Unaudited) (Unaudited)
Cash and cash equivalents $ 23,038 $ 32,117 $ 26,301
Inventories 95,928 59,643 62,616
Accounts receivable, net of allowances 43,630 43,369 34,831
Total current assets 182,431 151,932 145,841
Total assets 272,492 223,905 213,863
Accounts payable 25,280 22,041 33,239
Accrued liabilities 14,561 25,141 21,945
Total current liabilities 57,057 67,731 70,315
Current portion of long-term debt 17,216 17,901 15,131
Long-term debt, less current portion 227,251 247,032 264,802
Total stockholders' deficit $ (24,771 ) $ (104,487 ) $ (132,147 )
SOURCE: Bare Escentuals, Inc.
Investor Contact: Bare Escentuals, Inc. Eric C. Wong, 415-489-5000 or ICR, Inc. Andrew Greenebaum / Christine Gleim, 310-954-1100 andrew.greenebaum@icrinc.com christine.gleim@icrinc.com
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