The problem-solution cosmetics company Physicians Formula Holdings Inc. reported a fourth-quarter net loss of $2.5 million, or 18 cents a diluted share, compared with an impairment-elevated loss of $24.5 million, or $1.80 a share, in the year-earlier period.
The company attributed the loss to its effort to trim older, slower-moving products from the assortment. The initiative, completed in late December after 2010 retail planograms were finalized, resulted in the discontinuation of about 28 percent of the Physicians Formula assortment.
The company’s effort did not result in lost retail display space, said chairman and chief executive officer Ingrid Jackel, noting that Physicians Formula’s 2010 product launches have partially filled the void.
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“The goal is to be more productive and give priority to the highest velocity items,” Jackel told WWD. Its 2010 lineup includes Bamboo Wear, a line of naturally sustainable Bamboo Silk Face Powder and Bamboo Silk Bronzer formulas. The company also has combined its Mineral Wear makeup franchise with its heritage in color corrective formulas to create items such as Talc Free Mineral Correcting Concealer.
Sales during the three-month period ended Dec. 31 declined 20.9 percent to $22.3 million from $28.2 million in the year-ago period, due largely to the loss of a major retail customer. Physicians Formula did not name which retailer it lost, but WWD previously reported Walgreen Co. stopped placing orders with the beauty firm as part of a storewide stockkeeping rationalization effort.
Physicians Formula does distribute to metro New York drugstore Duane Reade, which Walgreens last month said it plans to acquire for $1.08 billion. Physicians Formula has invested in new planogram fixtures at Duane Reade and described its business there as “strong.”
For the year, the company reported a net loss of $3.9 million, or 29 cents a diluted share, compared with a loss of $19.8 million, or $1.41 a share, in 2008. Net sales declined 31.8 percent, to $77.8 million from $114 million, due to the loss of a retail partner.