Personal care products maker Alberto Culver Company (ACV) reported an increase in earnings from continuing operations for the fourth quarter, which beat analysts' estimates, helped by organic sales growth and favorable cost trends.
Earnings from continuing operations for the quarter rose to $31.4 million or $0.32 per share from $20.2 million or $0.21 per share in the corresponding period last year.
Excluding restructuring and discrete items, earnings per share from continuing operations increased 6.5% to $0.33 from $0.31 in the prior year. On average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the quarter. Analysts' estimates typically exclude special items.
Net earnings for the quarter, which includes discontinued operations, slid to $31.7 million or $0.32 per share from $147.1 million or $1.48 per share in the same period last year.
On July 31, 2008, the company sold its Cederroth International subsidiary for 159.5 million Euros. As a result of the deal, the results of operations of Cederroth are reported as discontinued operations.
Discontinued operations in 2009 include adjustments to increase the gain on the sale of Cederroth. In 2008, discontinued operations includes the initial gain on the sale of Cederroth and the results of the Cederroth business through July 31, 2008. Furthermore, both periods include favorable adjustments to self-insurance reserves for pre-separation Sally claims retained by Alberto Culver.
Net sales declined slightly to $385.2 million from $386 million in the corresponding period last year. Street analysts expected the company to report sales of $386.96 million for the quarter.
Foreign currency fluctuations negatively impacted sales by 5%. Excluding the effect of foreign currency fluctuations, the acquisition of Noxzema and the divestiture of a small distribution business in New Zealand, organic sales increased 2.7% in the fourth quarter.
In the U.S., sales grew 8.3% helped by the acquisition of Noxzema and strong growth in TRESemme and St. Ives, partly offset by a decline in sales of Alberto VO5, largely due to discontinued styling items.
Global reported sales declined 11.9%, although sales were flat when excluding the impact of foreign currency fluctuations. The international segment continued to benefit from the successful expansion of TRESemme, the launch of Nexxus in Canada and double-digit local currency growth in St. Ives. These increases were offset by a decline in Alberto VO5 sales due to the timing of promotional events and heightened competitive activity, particularly in Europe, and weakness in multicultural brands.
Operating earnings increased to $44.4 million from $42.3 million in the year-ago period. Gross profits advanced to $201.3 million from $199.5 million in the year-ago quarter. Gross profit margin increased to 52.3% from 51.7% due to cost savings efforts coupled with the benefit of lower oil derived raw material costs.
While other non-oil based costs, including tin plate and certain chemicals remain elevated, based on the current cost environment, the company expects cost trends to continue to be favorable as it enters fiscal year 2010.
For the twelve-month period, earnings from continuing operations were $117.8 million or $1.19 per share, up from $106 million or $1.05 per share in the prior year. Net earnings declined to $119.4 million or $1.20 per share from $228.2 million or $2.32 per share in the previous year. Net sales for the fiscal year decreased 0.7% to $1.43 billion from $1.44 billion in the prior year. Street analysts expected the company to earn $1.31 per share on sales of $1.44 billion for 2009.
Commenting on the results, Alberto Culver's president and chief executive officer James Marino said, "Fiscal year 2009 was another very successful year for Alberto Culver. We generated strong organic sales and earnings growth in a very difficult environment, continued to strengthen our hair care market shares and we're exiting fiscal year 2009 in a very strong financial position."
The company said its board has approved the regular 7.5 cents quarterly cash dividend payable on November 20 to shareholders of record on November 5.
ACV is currently down $0.01 or 0.04% and trades at $26.04.
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