Cussons closes three Sanctuary spas

Sanctuary spaThe maker of Imperial Leather, Carex and Original Source is closing three Sanctuary spas five years after its £75 million purchase of the luxury skin and bodycare brand.

PZ Cussons said almost 20 jobs will be cut at the loss-making spas as it focuses on selling Sanctuary lotions, oils, scrubs and soaps through retailers. The group revealed the spa flop as it said the launch of new products such as its Mum & Me mother and baby range helped underlying pre-tax profits rise 16.5% to £107.5 million in the year to the end of May. Sales were 2.8% higher at £883.3 million.
Cussons bought the Sanctuary range, plus a spa in Covent Garden in central London, from private equity firm Hg Capital in early 2008 to boost its presence in the premium personal care market. Over the next three years it expanded Sanctuary by opening spas in Cambridge, Bristol and Richmond in London.

Cussons insisted the spas were only a trial and have boosted the Sanctuary brand. The closures will cost it £3.8 million, although it will retain the spa in Covent Garden. It said it relied on product revamps and launches rather than deep discounting seen by rivals to grow annual profits in a tough UK market. Its new Mum & Me range grew sales month-on-month, and is being extended with a new Little Explorers range.
Cussons has also renamed a baby bath brand Ma'am & Me to celebrate the birth of the Duke and Duchess of Cambridge's baby. It relaunched Imperial Leather with a "best-ever" shower formula, and its Foamburst range is being revamped with a new design and fragrances.

Cussons said its Original Source bath and shower products attracted new customers with limited edition ranges, while Carex extended its lead as the UK's best-selling antibacterial handwash with strawberry, chocolate, orange and cola bottle ranges for children. The group saw operating profits in Europe rise 2.9% to £52.6 million. Operating profits in Asia more than doubled to £18.4 million, and were 11.6% higher to £37.4 million in Africa. That was despite trading in Nigeria being hurt by lower fuel subsidies, heavy flooding and social unrest, which held back revenues.

Cussons said trading will remain difficult but it plans to continue innovating and revamping its brands, plus trimming costs.

Chairman Richard Harvey said: "Despite the challenging trading conditions in most markets, the group expects to deliver continued increases in profitability and cash flow driven by brand innovation and renovation, as well as further margin improvement projects."

It also booked another £8.9 million in exceptional costs for improving its supply chain, including closing factories in Australia and Ghana with a "few hundred" job losses, as well as other efficiency moves in Africa and Asia.

Earlier this month it also revealed a £42.2 million deal to enter the baby food market, buying leading Australian brand Rafferty's Garden from private equity. Cussons plans to expand Rafferty into Asia, where it hopes to capitalise on recent infant food scares in China. Shares in Cussons were up by about 4% today. Analysts at Shore Capital stockbrokers said it was a "good recovery" by the group.
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