Alberto Culver sales beat Wall St view
CHICAGO (Reuters) - Alberto Culver Co (ACV.N) posted better than expected quarterly sales on Monday, helped by its mid-priced TRESemme hair care products and growth in Latin America.
The company posted a lower quarterly profit from continuing operations, but met Wall Street expectations, and shares rose as much as 8.7 percent.
"We really think our portfolio is well-positioned, not just for this economic time, quite frankly, for any economic time," Chief Executive James Marino said in an interview, referring specifically to the company's hair care products.
Alberto Culver's hair care products range from 99 cent bottles of Alberto VO5 shampoo to $15 Nexxus conditioner.
Alberto Culver said it sees "soft" hair care category trends in key markets such as the United States and United Kingdom. Still, it plans to raise prices on certain products, including TRESemme and Nexxus, as of January 1 to recover higher commodity costs.
The U.S. hair care category has been down by about 2 percent during the last 12 to 24 weeks, Marino said. Despite that sluggishness amid the economic downturn, the superpremium segment is showing the best growth, Marino said.
"Despite what one may imagine in terms of consumers trading down or cutting back, that doesn't appear to be the case," he said.
Still, any trading down could help Alberto Culver since many of its lines are less expensive than products from rivals such as Procter & Gamble Co (PG.N) and L'Oreal (OREP.PA) and store brands account for a small percentage of hair care sales.
SALES RISE, ACQUISITIONS POSSIBLE
Fiscal fourth-quarter profit from continuing operations was $20.2 million, or 20 cents per share, compared with $29.4 million, or 29 cents per share, a year earlier.
Excluding items, Alberto earned 31 cents per share, up from 26 cents a year earlier and in line with analysts' average forecast, according to Reuters Estimates.
Analysts were focused on continuing operations since the company sold its Cederroth International business to Nordic private equity firm CapMan.
Sales rose 7.3 percent to $386 million, topping analysts' average view of $379.25 million. Excluding the impact of foreign exchange rates, sales rose 8.4 percent.
The market's reaction to Alberto's results "could be a key indicator to see how the rest of the space will trade this week" as others report earnings, UBS analyst Nik Modi said in a research note.
Modi has a "neutral" rating on Alberto and said it was the first company he watches to post a sales hit from foreign exchange. Other industry players set to report this week include P&G.
Alberto bought Noxzema brand rights from P&G this month for $81 million and is still looking for more deals.
"If you look at our balance sheet we are very well poised to make additional acquisitions. We feel good about the liquidity that we have and we are continuously exploring any opportunities that may come up, not just in the U.S. but around the world," Marino said.
He said the company would look at buying a premium skin care brand to add to Noxzema and St. Ives, which is having marketing troubles in the United States. It is looking for companies that may give it help with international infrastructure.
"We're still sitting on a significant amount of cash and we have no debt whatsoever. We have a $300 million revolver that we've never used. So we're very well-positioned to make acquisitions going forward," Marino said.
Chief Financial Officer Ralph Nicoletti said that if the markets stay where they are he would expect to see more of a significant foreign exchange impact on Alberto's sales versus profit.
The company did not provide a profit forecast. It still expects sales to grow in a mid-single-digit percentage range.
Shares of Alberto were up 78 cents at $22.45 in afternoon trading. The shares fell just 11.7 percent this year through Friday's close, outperforming the Standard & Poor's 500 Index .SPX, which declined nearly 40.3 percent over the same period.
(Reporting by Jessica Wohl; editing by John Wallace, Derek Caney and Matthew Lewis)
