Better Results for Lamaur

The Lamaur Corporation announced improved second quarter and first half results.

Lamaur’s loss for the second quarter ended June 30, 2000, totaled $340,000 compared with a loss of $870,000 for the second quarter 1999. Net loss for the first half narrowed to $803,000 compared with $2,150,000 a year ago. The improved performance reflects the Company’s repositioning as a sales marketing, and product development entity with complete focus on sales of its brands to the country’s largest chain retailers. As previously reported, simultaneously with the sale of the manufacturing facility, Lamaur divested its historically low-margin custom manufacturing business to the purchaser of the manufacturing facility and completed a three-year outsourcing agreement with the purchaser which guarantees a fixed manufacturing fill fee per unit for the life of the contract. The company said that in the third and fourth quarters, significant cost of goods savings will be achieved over the prior year.

Lamaur reported net sales of $6.0 million for the quarter ended June 30, 2000, compared with $16.8 million for the same period in 1999, a decrease of $10.8 million. This decline in sales was due to $8.2 million reduction in sales of the former custom manufacturing group and a $2.6 million reduction in sales of the company’s retail business. For the first half, net sales totaled $14.0 million, including $1.8 million in residual contract sales, compared with $29.8 million in the prior year which included $13.7 million of contract manufacturing sales. These reductions were the result of the custom manufacturing group divestiture, along with the discontinuance of certain low margin and slow selling items.

“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. “Management has moved aggressively to introduce unique new products in the third and fourth quarter of year 2000 and a new styling aids brand in first quarter 2001. Line extensions to the Willow Lake and Salon Style brands have already been shipped. We anticipate improvement in gross margin as a result.”

According to Mr. Pesin, Lamaur has received a commitment from one of the largest television shopping networks for initial presentation of a new styling line in October. Initial sales to a new international distributor in South America commenced in the second quarter. Negotiations are well along for initial distribution to certain Western and Eastern European countries in the third and fourth quarter.

“We have changed our Canadian distributor in an effort to improve operating results in that market,” noted Mr. Pesin. “Significant progress has been made in negotiations with one of the largest warehouse club’s international division for distribution in Mexico. While at this time there can be no assurance that any of these actions will prove successful, we are encouraged by developments to date.”

Gross margin for the first half improved to 34.0% from 29.7% for the prior year period. Gross margin for the second quarter was 34.1% compared with 27.3% a year ago. This improvement is primarily due to the phase-out of the low margin custom manufacturing business compared to substantially higher retail brand margins.