Jafra Reports in Net Sales Up 10% Second Quarter

Jafra Cosmetics International reported a 10% rise in net sales and a 9% increase in consultants second quarter of 2004. Parent company Jafra S.A. was also acquired by Vorwerk & Co. eins GmbH, a German family-owned direct-selling company founded in 1883, in the quarter.

Net sales in Mexico increased 17% and 7% measured in local currency and U.S. dollars, respectively, in the second quarter. Net sales in the U.S. Hispanic division increased 4% in the second quarter. During the quarter, Jafra introduced the Daily Eye Treatment to complement the Jafra eye treatment used at night, as well as Anti-Age Lip cream for chapped lips.

Loss from operations was $8.1 million during the second quarter. Also, the company recorded $0.9 million of restructuring and impairment charges, consisting primarily of severance and asset impairment charges related to the implementation of its plan to relocate substantially all skin and body care manufacturing operations to its facilities in Mexico. In addition, Jafra recorded transaction fees of $26.1 million related to the acquisition.

The company reported a 9% increase in the average number of consultants during the first six months of 2004, resulting in a 12% increase in net sales. Net sales in the U.S. decreased approximately 4% due to a lower average consultant base, partially offset by an increase in consultant productivity. Income from operations was $2.3 million for the first six months, compared to $12.8 million in 2003.