BEAUTY CARE

Spectrum Brands files for Ch. 11, proposes reorganization plan

BY Antoinette Alexander

ATLANTA Spectrum Brands, a consumer products company whose portfolio includes Remington shaving and grooming products, has filed for Chapter 11 to restructure its debt. The company’s non-U.S. operations are not included in the Chapter 11 proceedings.

The company stated that it has reached agreements with note holders representing, in the aggregate, roughly 70% of the face value of its outstanding bonds to purse a restructuring. A refinancing on the agreed terms would enable the company to reduce debt by about $840 million (or about one-third), eliminate about $95 million in annual cash interest payments for at least each of the next two years, and free up additional cash that can be reinvested in its business to support revenue and profit growth. The company has outstanding debt totaling about $2.6 billion.

Spectrum Brands included in the filing a pre-negotiated plan of reorganization, which does not propose to impact any existing creditors other than the note holders and equity holders. In other words, if the plan is approved as proposed, the company would continue to provide pay and benefits to its employees as usual, honor all obligations to its customers, and pay suppliers in full for their claims upon consummation of the plan.

The company stressed that all of its operating units in the United States and around the world expect to continue to meet their respective obligations, subject to applicable limitations, to their suppliers, customers and employees in the ordinary course of business during the restructuring process. The company expects to exit the restructuring process in about four to six months. When the refinancing is complete, Spectrum Brands expects to generate in excess of $100 million in annual free cash flow.

“We do not believe there is any current need — and we have no current plans — to make any significant operating changes to our three business units, which have been profitable and have generated positive cash flow, and are meaningful competitors in their respective industries,” stated Kent Hussey, CEO of Spectrum Brands. “We do plan to continue the initiatives already underway to make our operations even more efficient going forward, and we remain focused on driving increased sales and profitability over the long term.”

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BEAUTY CARE

Ulta lowers guidance, despite comps rebound

BY Antoinette Alexander

ROMEOVILLE, Ill. Ulta experienced a drop in customer traffic in the days leading up to Christmas and, despite a rebound to positive comps since the holiday, the beauty retailer has lowered its guidance.

“We were on track during the early weeks of the fourth quarter to deliver our guidance; however, we experienced a significant drop in customer traffic in the 10 key days leading up to Christmas,” stated Lyn Kirby, president and CEO. “We believe that the unprecedented level of discounting and promotion in the apparel category in the last days before Christmas resulted in consumers favoring apparel. Additionally, our customer traffic was negatively impacted by the unusually bad weather just prior to Christmas.”

 Kirby noted that the company will continue to work to bolster market share by investing in its stores, brand, marketing and talent. The company, which operates 304 stores across 35 states, has “the financial flexibility to invest in market share strategies and square footage expansion,” Kirby stated.

For the fourth, the company now estimates sales to be between $339 million and $343 million. Previously, the company expected sales to be between $354 million and $368 million. Same-store sales are expected to be between minus 6% and minus 5%, compared with its previous guidance of minus 2% and plus 2%. Income per diluted share is expected to range between 18 cents and 19 cents compared with its previous guidance of between 24 cents and 28 cents.

For the full year, the company now expects net sales to range between $1.082 billion and $1.086 billion compared with its previous guidance of between $1.1 billion and $1.11 billion. Same-store sales are expected to be flat to plus 0.4%. Income per diluted share is currently estimated to be between 41 cents and 42 cents. Previously, the company expected income per diluted share to be between 47 cents and 51 cents. The full year guidance excludes the 1 cent per share severance expense.

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Coty announces new CFO

BY Antoinette Alexander

NEW YORK Coty Inc. has confirmed that Michael Fishoff, Coty’s CFO, left the company at the end of December.

He will be replaced by Sergio Pedreiro, who most recently was CFO of the Brazil-based logistics company America Latina Logistica, known as ALL.

Pedreiro is scheduled to begin his new role at Coty on Feb. 1.

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