Bare Escentuals, Inc. Reports Third Quarter Fiscal 2009 Results

Net sales for the third quarter of fiscal 2009 were $135.7 million, an increase of 4% from $130.2 million in the same period last year. Net income for the third quarter of fiscal 2009 was $22.6 million, or $0.24 per diluted share, compared to $22.9 million, or $0.25 per diluted share, in the same period last year.

Net sales for the nine months ended September 27, 2009, were $392.4 million, a decrease of 4% from $409.1 million in the same period last year. Net income for the first nine months of fiscal 2009 was $59.1 million, or $0.63 per diluted share, compared to net income of $73.4 million, or $0.79 per diluted share, in the same period last year.

"While the economic environment remains challenging, we are pleased with our third quarter performance and proud of the progress we're making against the strategic initiatives that we set for ourselves at the beginning of the year," said Leslie Blodgett, Chief Executive Officer. "Based on our compelling assortment, we believe that we are well positioned for the upcoming Holiday season."

Conference Call

Bare Escentuals, Inc. will host a conference call today, October 29, 2009 at 1:30 p.m. Pacific (4:30 p.m. Eastern). The call will be hosted by Leslie Blodgett, Chief Executive Officer, and Myles McCormick, Chief Operating Officer and Chief Financial Officer, and will be broadcast live over the Internet and will be accessible through the Investor Relations section of the Company's website at http://ir.bareescentuals.com. The webcast will also be archived online within one hour of the completion of the conference call and available at the Investor Relations section of the Company's website at http://ir.bareescentuals.com.

About Bare Escentuals, Inc.

Bare Escentuals, Inc. is one of the leading prestige cosmetic companies in the United States and an innovator in mineral-based cosmetics. The Company utilizes a distinctive marketing strategy and multi-channel distribution model to develop, market and sell cosmetics, skin care, and body care products under its bareMinerals, RareMinerals, Buxom and md formulations brands worldwide.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks, uncertainties and assumptions. These statements include, but are not limited to, statements regarding new product offerings and strategic product, marketing and geographic expansion initiatives, future sales and financial results, the potential of our brands, our future competitive position, potential growth opportunities and prospects, and our plans and objectives for future operations. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue" and similar expressions are also intended to identify forward-looking statements. These forward-looking statements are based upon our current understandings, estimates, and projections and should not be considered a guarantee of future performance. These statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside management's control, that could cause our actual results and the timing of events to differ materially from those anticipated in or implied by these forward-looking statements. Factors that could affect future performance or the timing of events include, but are not limited to, changes in general economic or market conditions, including the adverse effects of a challenging and potentially worsening consumer and retail environment; our dependence on sales of our mineral-based foundation; our dependence on significant customers with whom we do not have long-term purchase commitments; the highly competitive nature of the beauty industry, and the adverse consequences if we are unable to compete effectively; the possibility that we might not manage our growth effectively or sustain our growth or profitability; the possibility that we might not be able to retain key executives and other personnel and recruit additional executives and personnel; the limited experience working together of our current management group; the possibility that we might not be able to open and operate new boutiques successfully; our dependence on our suppliers to produce and deliver our products in a timely and cost-effective manner; the possibility that our media spending might not result in increased net sales or generate the levels of product and brand name awareness we desire; the possibility that we may be unable to repay or refinance our indebtedness; the outcome of recent securities class action litigation; and other risk factors detailed in our most recently filed Annual Report on Form 10-K, and any subsequently filed Quarterly Reports on Form 10-Q, which are available at the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release, and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

BARE ESCENTUALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except percentages and per share data)
(Unaudited)
                                                         Three months ended                               Nine months ended
                                                         September 27,            September 28,           September 27,            September 28,
                                                         2009                     2008                    2009                     2008
Sales, net                                               $  135,710     100.0 %   $  130,199    100.0 %   $  392,430     100.0 %   $  409,075     100.0 %
Cost of goods sold                                          34,819      25.7         35,354     27.2         103,689     26.4         113,028     27.6
Gross profit                                                100,891     74.3         94,845     72.8         288,741     73.6         296,047     72.4
Expenses:
Selling, general and administrative                         56,950      41.9         51,208     39.3         167,177     42.6         152,363     37.2
Depreciation and amortization                               4,609       3.4          3,065      2.3          12,950      3.3          8,507       2.1
Stock-based compensation                                    1,248       0.9          1,533      1.2          4,262       1.1          4,413       1.1
Operating income                                            38,084      28.1         39,039     30.0         104,352     26.6         130,764     32.0
Interest expense                                            (2,141  )   (1.6  )      (3,917  )  (3.0  )      (7,755  )   (2.0  )      (12,841 )   (3.1  )
Other income (expense), net                                 653         0.5          24         0.0          814         0.2          691         0.1
Income before provision for income taxes                    36,596      27.0         35,146     27.0         97,411      24.8         118,614     29.0
Provision for income taxes                                  13,948      10.3         12,247     9.4          38,312      9.8          45,240      11.1
Net income                                               $  22,648      16.7  %   $  22,899     17.6  %   $  59,099      15.0  %   $  73,374      17.9  %
Net income per share:
Basic                                                    $  0.25                  $  0.25                 $  0.64                  $  0.80
Diluted                                                  $  0.24                  $  0.25                 $  0.63                  $  0.79
Weighted-average shares used in per share calculations:
Basic                                                       91,911                   91,454                  91,814                   91,364
Diluted                                                     93,682                   93,207                  93,310                   93,282

BARE ESCENTUALS, INC.
NET SALES BY BUSINESS SEGMENT
(in thousands, except percentages)
(Unaudited)
                                  Three Months Ended                          Nine Months Ended
                                  September 27,         September 28,         September 27,        September 28,
                                  2009                  2008                  2009                 2008
North America Retail              $  88,284   65.0  %   $  80,524   61.9  %   $  239,423  61.0 %   $  232,676  56.9  %
North America Direct To Consumer     26,852   19.8         32,431   24.9         100,993  25.7        129,099  31.5
International                        20,574   15.2         17,244   13.2         52,014   13.3        47,300   11.6
Sales, net                        $  135,710  100.0 %   $  130,199  100.0 %   $  392,430  100  %   $  409,075  100.0 %

BARE ESCENTUALS, INC.
CONSOLIDATED BALANCE SHEET DATA
(in thousands)
                                        September 27, 2009   December 28, 2008*  September 28, 2008
                                        (Unaudited)                              (Unaudited)
Cash and cash equivalents               $         98,737     $      47,974       $      23,038
Inventories                                       74,334            92,576              95,928
Accounts receivable, net of allowances            47,425            42,304              43,630
Total current assets                              245,018           203,167             182,431
Total assets                                      350,182           299,781             272,492
Accounts payable                                  14,490            16,534              25,280
Accrued liabilities                               20,948            20,260              14,561
Total current liabilities                         52,654            57,063              57,057
Current portion of long-term debt                 17,216            17,216              17,216
Long-term debt                                    213,478           223,808             227,251
Total stockholders' equity (deficit)    $         65,766     $      (308    )    $      (24,771 )

* - The balance sheet data was derived from the audited consolidated balance sheet at December 28, 2008 included in the Company's Annual Report on Form 10-K.

SOURCE: Bare Escentuals, Inc.

Investor Contact: 
Bare Escentuals, Inc. 
Eric C. Wong 
(415) 489-5000 
or 
ICR, Inc. 
Laura Foster / Christine Gleim 
(310) 954-1100 
Laura.foster@icrinc.com; christine.gleim@icrinc.com