Bare Escentuals slips in Q2

SAN FRANCISCO Bare Escentuals, a manufacturer of mineral-based cosmetics, posted a dip in second-quarter sales and profits.

Sales for the second quarter ended June 28 totaled $132.5 million, a decrease of 4% from $138.5 million in the year-ago period.

Net income for the quarter totaled $19.8 million, or 21 cents per diluted share, in line with at least one analyst’s estimate and a penny above the Street. This compares with $24.7 million, or 26 cents per share, in the year-ago period.

“Despite the overall revenue shortfall, we were actually impressed with the 5.2% year-over--year growth in the North American retail segment (59% of revenue).  Not only was this better than our estimate (essentially flat), but it was also substantially better than the 8% decline for the entire prestige cosmetics category during the quarter,” stated analyst William Chappell of SunTrust Robinson Humphrey in a research note. “We believe this growth was driven by: 1) the relative stability of the foundation segment of the category which represents a large part of Bare’s revenue base; 2) enhanced marketing programs such as 500K sample shipments during the quarter; and 3) the success of the lower price point kits which have gained traction with more price conscious consumers.”

As a result, Chappell raised the earnings per share estimates slightly by a penny for 2009 and 2010 to 86 cents and 96 cents, respectively.