Playtex Profit Weighed Down by Restructuring Costs
ATLANTA – Playtex Products Inc. (PYX), which makes items ranging from tampons to Banana Boat sunscreen, posted a 25 percent drop in second-quarter profit Monday, weighed down by restructuring costs and lower sales.
Profit was $6.2 million, or 10 cents per share, compared with $8.3 million, or 13 cents a share, a year earlier.
Excluding one-time items, profit in the 2005 quarter was 14 cents a share. On that basis, analysts on average had expected 12 cents per share, according to Reuters Estimates.
Westport, Conn.-based Playtex unveiled a restructuring earlier this year that will result in cutting about 20 percent of its work force and outsourcing some manufacturing. It noted restructuring and related pretax expenses of $2.2 million for the 2005 second quarter.
"The company posted stronger-than-expected gross and operating margin, which we believe demonstrates good cost-management practices," SunTrust Robinson Humphrey analyst William B. Chappell Jr. said in a research note.
Sales fell 5 percent to $177 million. Feminine-care sales, which includes tampons, were flat, and infant-care sales fell 5 percent. Skin-care sales rose 2 percent on growth in Banana Boat (search) and Wet Ones (search) wipes, the company said.
Gross profit margins were about flat as restructuring savings were offset by higher raw materials costs. Playtex said it bought back $81.1 million in debt through the second quarter, in line with a plan to repurchase at least $100 million of debt this year.
The company said it was acquiring three Banana Boat distributors for about $32 million, and expects the move to add about 3 cents a share to 2006 earnings. Playtex said the purchases would give it full control of the sunscreen's distribution.
The company said it expects 2005 sales growth in the low-single digits excluding the divested Woolite brand.
Playtex shares were down 9 cents at $10.57 on the New York Stock Exchange (search).