Alberto-Culver restructuring means job losses

Following the separation of its Sally Beauty business, hair care specialist Alberto-Culver is restructuring its operations to give way to greater efficiency, which will include the consolidation of its two marketing departments to create one division.

The company says that the move will mean the loss of 90 jobs from its 3,900 global workforce, which will be partly attributable to restructuring charges that will total $16m during the first and second quarter of 2007.

These charges are in addition to lump sum payments of approximately $14m to the former CEO of Sally Beauty, as well as a further $18m for the sale of shares relating to the transaction.

The consolidation of the company's marketing operation will also mean that certain marketing-related international services will be outsourced or combined into the operations of existing regional offices already established overseas.

Company CEO James Marino said that the company has always operated on lean principles, which explains why the restructuring is not drastic.

"This represents a right-sizing, looking primarily at those areas that related to services we were maintaining in support of Sally and corporate activities that could be scaled back to match the needs of a smaller company," he said.

Marino also added that the personnel affected by the reshuffle had already been notified and that the financial charges, mainly relating to redundancy pay offs, had been accounted for in the projected charges.

The move to spin off the Sally Beauty business is one that is estimated to be worth $3bn and on that aims to position the company well for further growth in the developing professional beauty products category.

Alberto-Culver pulled out of a proposed $2.6bn deal to buy hair care specialist Regis at the beginning of this year. Breaking the contractual agreement meant that Alberto-Culver incurred fines of $50m that had to be paid to Regis.

Further to this the company says that it is still on the acquisition train and has made it clear that, should the right opportunity arise, it is still in the market to broaden its business portfolio.

Recent initiatives at Alberto-Culver have included a policy to source raw materials from other cheaper countries, as well expanding its distribution through the opening of new retail stores. And despite the fact that Alberto-Culver has had to slightly down grade its projection for the full year, it is still in a strong position, with sales predicted to continue growing throughout the year.

Indeed, the company reported that sales for the fiscal 2006 first half grew by 6.6 per cent to $1.85 billion, while net earnings for the first half including non-core items increased 10.6 per cent to $109.0 million.