BEAUTY CARE

Clorox’s Q4, fiscal-year growth driven by certain brands

BY Allison Cerra

OAKLAND, Calif. Clorox reported strong earnings growth for its fourth-quarter and fiscal 2010, citing robust gross margin expansion and top-line growth within the company’s targeted range for the year.

Clorox reported fourth-quarter net earnings of $171 million, or $1.20 diluted earnings per share, versus $170 million, or $1.20 diluted EPS, in the year-ago quarter. Earnings in the current quarter reflected higher sales and lower interest expense, offset by a higher effective tax rate and lower gross margin.

Selling and administrative expenses increased to 13.4% of sales from 12.3% of sales in the year-ago quarter, primarily driven by higher incentive compensation, and investments the company is making in facility and global IT improvements and the international expansion of the Burt’s Bees business. “We believe these are important strategic investments that, once completed, will further enable growth, future cost savings and new product innovation,” said CFO Dan Heinrich.

The company also said its sales were driven by an increased shipment of certain products, including auto care product ArmorAll, Pine-Sol, Burt’s Bees and Glad trash bags.

“I’m very pleased with our performance for the fiscal year,” said Clorox chairman and CEO Don Knauss. “We increased our total demand-building investment, driving higher all-outlet market share in the U.S. and share gains in international markets. I’m especially pleased we delivered 15% growth in economic profit, the metric we believe best aligns over the long term with creating value and generating shareholder return,” Knauss said. “Our organization continues to do a fantastic job of executing the day-to-day business in a very challenging economic environment.”

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Report: Carlyle to sell Philosophy skin care business

BY Antoinette Alexander

NEW YORK Private equity firm Carlyle Group is reportedly looking to sell skin care company Philosophy for about $1 billion, according to a Bloomberg report.

A spokesperson for Carlyle had declined to comment, the report stated.

Carlyle, which acquired the brand in March 2007, has reportedly hired Goldman Sachs Group to look into options. If no buyer emerges, an initial public offering is possible, Bloomberg reported.

Skin care entrepreneur Cristina Carlino founded Philosophy in 1996. The brand is sold at such retailers as Sephora, J.C. Penney, Nordstrom and Macy’s, as well as Philosophy retail shops.

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Personal Care Products Council responds to proposed Safe Cosmetics Act of 2010

BY Antoinette Alexander

WASHINGTON While there is a need to modernize the regulatory structure of the cosmetics industry, the newly proposed Safe Cosmetics Act of 2010 as written "is not based on credible and established scientific principles" and would place an "enormous, if not impossible, burden on the Food and Drug Administration," the Personal Care Products Council stated in response to the legislation introduced on Wednesday.

As reported by Drug Store News, Reps. Jan Schakowsky, D-Ill.; Ed Markey, D-Mass.; and Tammy Baldwin, D-Wis., introduced the Safe Cosmetics Act of 2010 (H.R. 5786) on Wednesday. The new bill in Congress would, if passed, reform law on ingredients in personal care products. Provisions of the proposed legislation include, but are not limited to, providing adequate funding to the FDA Office of Cosmetics and Colors to provide greater oversight over the cosmetics industry, creating a health-based safety standard and requiring full disclosure of ingredients, including the constituent ingredients of fragrances.

Responding to the legislation, Lezlee Westine, president and CEO of the Personal Care Products Council, issued the following statement: "We appreciate the interest of Reps. Schakowsky, Markey and Baldwin in cosmetic regulation, and we share their desire to ensure that existing FDA regulatory oversight is enhanced to take into account evolving science, the continued growth of our industry and the need to modernize the regulatory structure. Toward that end, our industry has lobbied for the last several years to obtain additional funding for FDA’s Office of Cosmetics and Colors. We also just last week proposed a number of new measures, including FDA ingredient reviews, that we believe would enhance FDA oversight and give the agency the information and flexibility it needs to continue to ensure consumer safety and safeguard public health," Westine said.

She added, "We are concerned that the Safe Cosmetics Act of 2010 as written is not based on credible and established scientific principles, [and] would put an enormous, if not impossible, burden on [the] FDA, and would create a mammoth new regulatory structure for cosmetics, parts of which would far exceed that of any other FDA-regulated product category, including food or drugs. The measures the bill would mandate are likely unachievable, even with the addition of hundreds of additional FDA scientists and millions more in funding, and would not make a meaningful contribution to product safety," Westine contined.

"We urge Congress to carefully consider our recently announced proposals to strengthen FDA cosmetics oversight, including FDA ingredient reviews, and encourage the passage of the FDA Globalization Act of 2009, sponsored by Rep. John Dingell, which also includes enhanced FDA regulations of cosmetics manufacturers. Our proposals and Rep. Dingell’s legislation constitute the strongest, most efficient and viable approach to modernizing the FDA regulation of cosmetics, increasing transparency and enhancing existing consumer safeguards as science and technology evolve," Westine added.

"Our plan includes the following five elements:

(1) Enhanced FDA registration. It requires that personal care products manufacturers that market their products in the United States [to] comply with the following:

  • Register with [the] FDA all facilities where those products are manufactured;
  • File with [the] FDA product ingredient reports disclosing all of the ingredients used in those products; and
  • Report to [the] FDA any serious, unexpected adverse event with a personal care product experienced by consumers.

(2) New process to set safety levels for trace constituents. When requested or on its own initiative, [the] FDA would be required to establish safe levels for trace constituents in cosmetic ingredients and products.   (3) New FDA ingredient review process. Once a request has been made, or [the] FDA unilaterally determines action is warranted, the agency would be required to review the safety of any ingredient intended for use in a personal care product and set safety use levels for such ingredient on a specified timetable.   (4) New FDA oversight of CIR findings. [The] FDA would be required to review current and future findings on the safety of cosmetic ingredients by the Cosmetic Ingredient Review expert panel and determine if these findings are correct. If there are instances in which it determines a CIR finding is not correct, [the] FDA would determine by guidance or regulations if, or under what conditions, the ingredient can be used safely in personal care products.   (5) FDA-issued Good Manufacturing Practices. [The] FDA would establish industry-wide ‘Good Manufacturing Practices’ requirements."

"Strong federal safety requirements already govern cosmetics and personal care products sold in the United States," Westine concluded. "The safety of cosmetic and personal care products in the United States is overseen by the U.S. Food and Drug Administration under the Federal Food, Drug and Cosmetic Act, which requires that all cosmetics be substantiated for safety before they are marketed [and] contain no prohibited ingredients, and that all labeling and packaging must be in compliance with U.S. regulations. Under the FD&C Act it is a crime to market an unsafe cosmetic product. Our proposed measures would further enhance the effectiveness of the FDA cosmetic regulatory structure."

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