Cosmetic Center loses 1a share Columbia move, UPS strike blamed for 3rd-quarter woe; Earnings

Cosmetic Center Inc. said yesterday that problems in distributing its merchandise during the United Parcel Service strike in August and the consolidation of its warehouse facilities to Columbia caused a loss of 13 cents a share in the third quarter.

The Columbia-based company also said it had licensed its hair salon business to Creative Hairdressers Inc. of Falls Church, Va., which operates a chain of 600 Hair Cuttery stores. The Hair Cuttery will begin operating the salons in the next several months under their brand name and will eventually be located in every Cosmetic Center. The company would not disclose how much the licensing agreement with the Hair Cuttery was worth.


Cosmetic Center reported a loss for the quarter of $1.3 million, or 13 cents a share, compared with a profit of $500,000, or 6 cents a share, in the corresponding period last year.

After an April 25 merger with Prestige Fragrance & Cosmetics, Cosmetic Center now operates 262 stores, 64 under the name of Cosmetic Center and the remainder under the Prestige name.


The quarter's results for the merged company are compared to Prestige's earnings before the merger last year. Sales for the company were $45.4 million in the quarter ended Sept. 26, compared with $20 million in the year-earlier period. Sales increased, the company said, because they merged two chains. Same-store sales for Prestige before and after the merger were down to $16.1 million for the quarter compared with $19.7 million for the previous year. Same-store sales are considered a key indicator of the health of a retailer because they factor out store closings and openings.

The company said it lost $9.3 million, or $1 a share, in the nine months compared with a net loss of $3.4 million, or 41 cents a share, in the corresponding period of 1996.

The stock was down 25 cents to close at $3.625 yesterday.

Pub Date: 10/30/97