Alberto-Culver Is Turning Heads

Freed from the distraction of its retail business, Alberto-Culver is the hair care marketer to watch, says Bill Schmitz, equity analyst at Deutsche Bank.

"Alberto-Culver ... has been flying below the radar screen of its much larger rivals," Schmitz wrote in a research report last week. Now that it has spun off its Sally Beauty Supply stores, Alberto will be able to focus better on its increasingly popular hair care brands--including Tresemme and Nexxus.* The company has been aggressively revamping dated products such as St. Ives under the leadership of a former Procter & Gamble marketing executive, and may have a restructuring plan and future acquisitions in the making.

Alberto-Culver reported an 11.7 percent increase in net profits in the last quarter. Sales in the U.S. reveal the company is gaining ground on its much larger rivals P&G, L'Oreal and Unilever, especially in the fast-growing hair styling aids categories.

In the hair spritz/spray category for example, Alberto-Culver has become the top vendor, with sales up 14 percent to $53 million, for the year ended Oct. 8, per IRI.



By comparison, the number two in the category--Unilever's old Helene Curtis brands--are down 14 percent to $44 million in sales. These brands include Salon Selectives, Rave and Finesse. Similarly, P&G's Pantene brands and the Clairol brands, ranking three and four, saw sales sink 3 percent and 6 percent, respectively, in the same period.

Another bright spot has been Alberto-Culver's higher-priced Nexxus brand. Earlier this year, Alberto launched the previously salon-only line in retail stores, including Target. That helped Nexxus bring in more than $100 million in sales in the current fiscal year, making it "one of the most successful high gross margin products launched in the industry this year," said Schmitz.

In recent years, the Sally Beauty business had become especially troublesome for Alberto, due to increased retail consolidation and channel conflicts. With Alberto in the unique position of being both manufacturer and retailer, it found itself in the situation of competing with other Sally vendors in its stores along with the brands sold at other retailers.

Earlier this fall, the company revamped its St. Ives skin care brand--an effort overseen by Alberto's chief marketing officer Richard Gerstein, an ex P&G marketer brought on in April 2005. Its decades-old St. Ives label has been one of Alberto's few brands with sliding sales. The total brand is down 12 percent to $87 million for the year ended Aug. 13, per IRI.

Trying to turn that situation around, in addition to new packaging and fragrances, Alberto launched a new St. Ives line, Mineral Therapy, which includes a body wash and moisturizer. That line is meant to further drive home the "natural" positioning of St. Ives, and pick up on the beauty-products-with-minerals craze. TV ads, via Campbell-Mithun, Minneapolis, began earlier this fall, while print broke in November issues of beauty monthlies.

* This sentence was corrected after the original story was posted.

Next story loading loading..