Ulta posts Q4 results, announces Barkus’ departure
ROMEOVILLE, Ill. Ulta announced on Wednesday its fourth-quarter and fiscal year 2007 results, as well as the departure of chief operating officer and assistant secretary Bruce Barkus.
Effective March 21, Barkus is leaving the beauty retailer. Members of the existing executive team will assume his responsibilities. There are no near-term plans to fill his position.
The news came as Ulta posted its financial results. For the fourth quarter, net sales increased 15.9 percent to $309.3 million from $267 million in the year-ago period. Same-store sales rose 4.5 percent.
Net income for the quarter ended Feb. 3 rose 40.8 percent to $13.6 million compared with $9.7 million in the year-ago period. Operating income rose 47.1 percent to $23.9 million compared with $16.3 million in the year-ago period.
For the fiscal year, net sales rose 20.8 percent to $912.1 million. Same-store sales increased 6.4 percent.
Net income for the fiscal year totaled $25.3 million compared with $22.5 million last year. Operating income was $46.7 million compared with $40.1 million in fiscal 2006.
For the full year fiscal 2008, Ulta estimates net sales to range between $1.12 billion to $1.14 billion. Same-store sales are expected to increase by 3 percent to 5 percent.
Income per diluted share is estimated to range between 52 cents and 57 cents, which represents net income growth of 25 percent to 38 percent compared with fiscal 2007.
Ulta ended the fourth quarter with 249 stores. In fiscal 2008, the company expects to open about 63 new stores and remodel eight locations.
Colgate to focus resources on ‘big hits’
NEW YORK —Product innovation and understanding what influences the shopper will sustain future growth at Colgate-Palmolive, said president and chief executive officer Ian Cook.
“The momentum that we have established over the last three years is indeed continuing,” Cook told attendees of the Consumer Analyst Group of New York Conference in late February. “We had established in 2005 some goals for the company through 2010, and they were to grow consistently the top line of the company between 5 percent and 8 percent in volume terms, [and] we were well within that range in 2006 and 2007, [and] that we would increase our gross margin year-on-year by between 75 and 125 basis points, which, again, we accomplished in 2006 and 2007. That puts us on our way to our goal of 60 percent gross margin for the year 2010.”
Helping the company achieve such goals has been, in part, such product innovation as the recent U.S. launch of its hybrid powered version of the Colgate 360-Degree Manual Toothbrush.
Going forward, innovation will remain at the forefront, as it is a vital part of continuing the volume growth of the company, Cook said. In fact, Colgate plans to sustain growth by focusing on “big hits”—products that in the first year of global sales can garner more than $100 million in sales.
To do this, the company has long-established category innovation centers, which are groups of marketers and consumer insight professionals that focus on unique consumer insights and market trends. These centers, which are not research and development centers, are located around the world, from China to Mexico, and report to each operating division. These centers focus on several categories, including oral care, and those new product concepts and technologies that can be launched within the next three years, Cook explained.
In addition, Colgate established in 2006 what it refers to as “long-term innovation groups.” These groups are located more centrally—which means in New York for the oral care and personal care businesses—and they report to the worldwide global marketing organization.
“While the category innovation centers are focused on readying products for commercialization in a three-year time frame, these long-term innovation groups are focused on new product concepts and technologies that can be launched in three to five years from now, taking a longer-term view,” Cook said.
That is just part of the behind-the-scenes at Colgate. Aside from innovation, understanding shopper marketing also is critical, as between 50 percent and 80 percent of final purchasing decisions, depending on the category, are made in the store, Cook said. In addition, retailers increasingly are seeking shopper knowledge and expertise from suppliers.
“The benefits we get from shopper marketing is to build stronger brands and category growth, to better capitalize on the new product opportunities that we have, strengthening partnerships with our customers and, again, helping to maximize the return on our commercial investments,” Cook said.
For example, in Mexico, shopper insight on oral care revealed that the shelf shopping experience is not as friendly or interactive as within the cosmetics category. Toothpaste is a regular planned purchase, but it does not lead to increased purchases of other oral care categories, such as toothbrushes. To drive sales, Colgate created an oral care boutique to enhance the shopper experience. It lowered the shelf to eye level, used lighting and interactive techniques to change the look and feel of the shelf, and used TV screens and posters to deliver therapeutic messages. It also created a separate, interactive children’s section.
Other areas of focus will be continuing to build a connection with professionals, such as dentists who can recommended Colgate products, and in getting its brand message out to consumers via such vehicles as the Internet.
“We will continue winning on the ground with our financial strategy, a stronger focus on innovation, improved go-to-market initiatives that will bring that innovation to consumers, and continuing our long history of efficiency and the values of the company,” Cook said.
P&G sees innovation, productivity as drivers to company’s success
CINCINNATI —Energy costs are on the rise and consumer confidence continues to wane amid a bleak housing market and growing credit crunch but Procter & Gamble executives are confident that the company is positioned for growth, and that a continued focus on innovation and productivity will be key to future growth.
“My message today is pretty simple and straightforward: We believe that P&G is designed to grow in good times and challenging times, alike. We have a proven track record in leading industry innovation and we have a long heritage of disciplined productivity improvement,” A.G. Lafley, P&G chairman and chief executive officer, told attendees at the Consumer Analyst Group of New York Conference in February. “This is important because innovation and productivity are the key drivers of profitable organic sales growth.”
According to Lafley, the company’s productivity has increased “significantly and consistently” over time. In fact, since 1980, the company’s productivity has increased nearly 5 percent every year, more than twice the rate of the U.S. economy.
In the last five years, P&G’s productivity has grown 6 percent despite a shift in the portfolio to more beauty, health and personal care, as well as the acquisition of Clairol, Wella and Gillette. Looking to the next three to five years, Lafley said the company can excel productivity 7 percent to 8 percent a year.
Going forward, P&G will increase its focus on its leading 41 brands—those brands with sales of $500 million or more that represent 80-plus percent of sales and 90-plus percent of profits.
However, Lafley said, the bigger challenge is managing the remaining 250 or so brands, which can be broken up into three categories: future stars (those with potential to become blockbusters), local jewels (those important to particular geographies) and underperformers.
“We will nurture future stars with the investment they need to reach their full potential. We will preserve local jewels as long as they have a meaningful role to play, and will consolidate, divest or discontinue the underperformers,” Lafley said.
Trial and marketing return on investment are additional examples of how greater productivity can drive top-line growth.
Trial, meaning new purchasers of P&G brands and products, is undoubtedly a great opportunity, but Lafley acknowledged that the company has, at times, fallen short of targets. No longer.
“More than half of first-year incremental volume on a new product comes from trial, and trial drives more than one-third of volume in the years following a launch,” he said. “P&G trial rates, fortunately, are among the highest in our industry. But we still too often fall short of internal targets.”
The company is working to close the gap, as achieving trial targets on the largest P&G initiatives in the market today is worth up to $2 billion in incremental sales, Lafley said. Knowing this, P&G has made trial a “key priority” and has developed tools to create a robust trial-building plan.
Lafley also told attendees that the company will continue to bring “disruptive innovation” to market, as it did with the blade and razor segment with Fusion and Venus—a strategy designed to keep a brand growing year after year. It also is accelerating the combined power of Gillette brand names and P&G technology, as evidenced by the launch of the new Oral B CrossAction Pro-Health toothbrush.
“Our choice is to lead innovation in every category where we compete. Our discipline is to manage cash and costs, and grow sales well ahead of head count. Our commitment is to strengthen our capability in both innovation and productivity. This is the basis of my confidence that P&G will continue to meet or exceed growth targets,” Lafley said.