Bare Escentuals Inc.BARE

Morningstar Rating

Stock Research and Analysis

by Erin Swanson, CFA

Bare Escentuals has realized rapid growth over the past several years resulting from its distinctive product portfolio and unique distribution channels. While weak consumer spending and aggressive competition have pressured the firm's recent results, Read more

Bulls Say

Bare Escentuals is well-positioned in diversified and growing channels of distribution.

In our view, Bare Escentuals possesses significant opportunities to expand internationally, as the firm's international operations accounted for only about 12% of its sales in 2008.

Instead of spending money on celebrity endorsements, Bare Escentuals showcases real women in the QVC demonstrations and infomercials. Customers have also helped to name some of the company's new products, which has helped to foster loyalty to the brands. Read more

Bears Say

Competing in the intense beauty-care industry is challenging, particularly for a smaller player like Bare Escentuals.

Bare Escentuals' CEO Leslie Blodgett has been responsible for much of the firm's successful marketing and expansion efforts. However, it is a risky proposition for a company to be so dependent on one person.

While Bare Escentuals has been making strides to pay down its debt balance, the cost to operate such an excessive amount of financial leverage could prove to be high, as much of the firm's debt carries high variable interest rates.

Because of its rapid growth over the past several years, Bare Escentuals' operating structure has gotten too complex. As a result, the firm has taken some corrective actions, such as removing 10% of its workforce. Read more

Strategy

Bare Escentuals is attempting to better align unique mineral product offerings with consumer preferences, for example, by introducing new, lower-priced starter kits. In addition, the firm is expanding Read more

Management

Leslie Blodgett, 46, has served as CEO of Bare Escentuals and its predecessor since 1995. Prior to assuming her current role, Blodgett worked for Neutrogena, Johnson & Johnson JNJ, and Procter & Gamble PG. We contend that the vast knowledge Read more

Profile

Since opening its first boutique more than 30 years ago, Bare Escentuals has grown into a prestige cosmetic company. The firm develops, markets, and sells cosmetics and Read more

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