04.02.01
The Lamaur Corporation, Fridley, MN, reported significantly improved fourth quarter and year end results over the prior year. Lamaur develops, formulates, and markets personal hair care products to mass merchandisers, drug, and food chains under the brand names Willow Lake, Style, Salon Style and B in10se.
In the year ending December 31, 2000, Lamaur's net loss totaled $3.2 million compared to a net loss of $10.4 for the calendar year 1999. The improved performance reflects Lamaur's repositioning as a sales, marketing and product development entity with focus on sales of its trademarked brands to the country's largest chain retailers.
As previously reported, Lamaur divested its historically low margin custom manufacturing business and its manufacturing facility on December 22, 1999. At the same time, Lamaur entered into a three-year manufacturing agreement with the purchaser which guarantees a fixed manufacturing fill fee per unit for the life of the contract.
The benefits of this manufacturing agreement began to yield significant cost of goods savings in the third quarter 2000 compared to the prior year and represented a savings of approximately $0.8 million in the fourth quarter 2000. This agreement provides Lamaur with fixed costs for manufacturing its products through December 2002 and has enabled Lamaur to stabilize its cost of goods expense across all product lines.
Lamaur reported net sales of $24.8 million in year 2000 compared to $50.2 million in 1999. The sale of Lamaur's custom manufacturing division in December 1999 represents approximately $20 million of this net sales decline. The balance of the sales decline included discontinuation of certain unprofitable brands as well as elimination of certain unprofitable customer promotional arrangements, loss of distribution in certain accounts and periodic price concessions granted to certain customers to assure continued distribution.
Previously announced plans for a new styling aids brand culminated in the launch of Lamaur's new brand, B in10se, in January 2001. Initial shipping to key accounts will continue through the first half of 2001. Advertising will begin in May issues of magazines targeted to the fashion-conscious young twenties and older teen consumer, an audience not previously addressed by Lamaur's other brands. The B in10se line consists of highly innovative product formulations, is premium-priced, and provides a significantly greater gross margin than other Lamaur brands. "Development and sale of new products is critical to the future growth of the company,'' said Lawrence Pesin, chief executive officer, who joined Lamaur in December 1999.
While Lamaur expects sales of the Willow Lake product line to continue to decline, it forecasts increases for its Style and Salon Style lines as customer programs and new product plans begun in 2000 continue to develop. In July 2000, Lamaur aggressively positioned its Style brand to the fast-growing dollar store market by pricing selected aerosol hairspray products to meet the dollar store market's targeted price point. While Lamaur obtained lower than average margin on these sales, it achieved substantial distribution and sales and expects that this customer program will continue to grow in 2001. New products in the Salon Style line were introduced in the third quarter of 2000. Lamaur expects to benefit from 2001 sales of these items and from the planned introduction of new shampoo and conditioner formulas to the Salon Style line in 2001 as well. "Lamaur made significant progress in the year 2000, particularly compared to the performance of the past few troubled years," insisted Mr. Pesin. "Key customers have continued to support Lamaur's efforts including commitment to our new product plans. We believe Lamaur is well-positioned for improved growth and financial performance in the future."
In the year ending December 31, 2000, Lamaur's net loss totaled $3.2 million compared to a net loss of $10.4 for the calendar year 1999. The improved performance reflects Lamaur's repositioning as a sales, marketing and product development entity with focus on sales of its trademarked brands to the country's largest chain retailers.
As previously reported, Lamaur divested its historically low margin custom manufacturing business and its manufacturing facility on December 22, 1999. At the same time, Lamaur entered into a three-year manufacturing agreement with the purchaser which guarantees a fixed manufacturing fill fee per unit for the life of the contract.
The benefits of this manufacturing agreement began to yield significant cost of goods savings in the third quarter 2000 compared to the prior year and represented a savings of approximately $0.8 million in the fourth quarter 2000. This agreement provides Lamaur with fixed costs for manufacturing its products through December 2002 and has enabled Lamaur to stabilize its cost of goods expense across all product lines.
Lamaur reported net sales of $24.8 million in year 2000 compared to $50.2 million in 1999. The sale of Lamaur's custom manufacturing division in December 1999 represents approximately $20 million of this net sales decline. The balance of the sales decline included discontinuation of certain unprofitable brands as well as elimination of certain unprofitable customer promotional arrangements, loss of distribution in certain accounts and periodic price concessions granted to certain customers to assure continued distribution.
Previously announced plans for a new styling aids brand culminated in the launch of Lamaur's new brand, B in10se, in January 2001. Initial shipping to key accounts will continue through the first half of 2001. Advertising will begin in May issues of magazines targeted to the fashion-conscious young twenties and older teen consumer, an audience not previously addressed by Lamaur's other brands. The B in10se line consists of highly innovative product formulations, is premium-priced, and provides a significantly greater gross margin than other Lamaur brands. "Development and sale of new products is critical to the future growth of the company,'' said Lawrence Pesin, chief executive officer, who joined Lamaur in December 1999.
While Lamaur expects sales of the Willow Lake product line to continue to decline, it forecasts increases for its Style and Salon Style lines as customer programs and new product plans begun in 2000 continue to develop. In July 2000, Lamaur aggressively positioned its Style brand to the fast-growing dollar store market by pricing selected aerosol hairspray products to meet the dollar store market's targeted price point. While Lamaur obtained lower than average margin on these sales, it achieved substantial distribution and sales and expects that this customer program will continue to grow in 2001. New products in the Salon Style line were introduced in the third quarter of 2000. Lamaur expects to benefit from 2001 sales of these items and from the planned introduction of new shampoo and conditioner formulas to the Salon Style line in 2001 as well. "Lamaur made significant progress in the year 2000, particularly compared to the performance of the past few troubled years," insisted Mr. Pesin. "Key customers have continued to support Lamaur's efforts including commitment to our new product plans. We believe Lamaur is well-positioned for improved growth and financial performance in the future."