Physicians Formula Holdings, Inc. falls on Q2 loss and lackluster outlook
Shares of Physicians Formula Holdings, Inc. (Nasdaq: FACE) plunged today after the cosmetics company reported it swung to a loss in the second quarter and downwardly revised its guidance for the remainder of the year.
For the three months ended June 30, the Azusa, Calif.-based company recorded a net loss of $0.04, while four analysts polled by Thomson Financial were anticipating a profit of $0.03 per share on average. Excluding a $0.02 per share charge for stock-based compensation and a $0.03 per share charge of one-time secondary equity offering costs, adjusted net income per diluted share would have been $0.01. Physician’s second quarter net loss compares with net income of $0.14 per share a year earlier.
Net sales declined 4.2% to $22.1 million, from $23.1 million in the same period a year ago. The Street was calling for revenues of $21.47 million.
Today Wachovia downgraded Physicians Formula to a rating of “market perform” from “market outperform,” while Piper Jaffray lowered its price target on the company to $15 from $22.
Piper Jaffray’s commented in a research note, “In what should have, in our view, amounted to an uneventful quarter--in-line second quarter results and a reiteration of guidance--we believe FACE shares will likely go lower on yet again, another earnings revision.”
The company also downgraded its guidance for the remainder of the year based on a continuation of softer consumer spending for the overall mass market “prestige” industry, or what the company terms “masstige industry.” Physicians Formula also downwardly revised its outlook on an unexpected change in the company’s “replenishment order patterns” of basic stock from its top chain drug retailers, which in the company’s view indicates a recent change in inventory management strategy by the retailers to which it sells.
Physicians Formula said it now expects to book a net loss for the third quarter in the range of $0.02 to $0.05 per share, down from a previously anticipated profit in the range of $0.01 to $0.04. For the full year, the company said it now expects earnings per share of $0.52 to $0.58, down from previously forecasted range of $0.58 to $0.67. Four analysts polled by Thomson Financial were on average expecting earnings per share of $0.03 and $0.66 for the third quarter and full year, respectively.
Shares of Physicians Formula lost $4.54, or 32.61%, to close at $9.38 on Tuesday.
