UPDATE 3-Alberto Culver sees soft sales, shares slip

* Q1 adjusted shr $0.46 vs analysts’ view $0.43

* Sales up 2.9 pct at $363 mln, short of analysts’ view

* Board raises quarterly dividend 13.3 pct to 8.5 cts/shr

* Shares fall nearly 2 pct
(Recasts, adds CEO and analyst comments, updates stock move)

By Jessica Wohl

CHICAGO, Feb 1 (BestGrowthStock) – Alberto Culver Co (ACV.N: ) said
this year’s sales could fall short of its goal because of
stepped up competition in the hair-care aisle and a switch to a
new software system in the United States.

Alberto’s shares fell 2 percent, even though the shampoo
and lotion maker posted a higher-than-expected rise in
quarterly profit. Sales fell short of analysts’ estimates.

Sales growth will be “challenging” in the first half of the
company’s fiscal year, Chief Executive V. James Marino said
during a conference call.

Switching to software maker SAP (SAPG.DE: ) in the United
States in December has led to some out-of-stock situations and
other short-term issues as its employees use the new systems,
Marino said.

The company, best known for its low-priced Alberto VO5
shampoo, also raised its quarterly dividend payout 13.3
percent.

While its lower-priced TRESemme brand fared well as
shoppers look for value in the downturn, sales of higher-end
brands such as Alberto’s Nexxus have felt pressure as consumers
hold back on spending on shampoo and other hair care products.

The hair-care category remains soft, but trends are
starting to improve and Alberto keeps gaining market share,
Marino said. But those gains could be coming at a cost,
analysts suggested, as many shampoo makers offer deals to lure
shoppers.

The company’s revenue weakness in the fiscal first quarter
“is especially notable given that heightened promotional
activity means companies are spending more to gain share of a
declining market,” said Stifel Nicolaus analyst Mark
Astrachan.

Alberto shares were down 1.9 percent at $27.84 after
falling as low as $27.77 on the New York Stock Exchange.

LOWER SALES GROWTH SEEN

In October, Alberto forecast 2010 organic sales growth in a
mid single-digit range. Such sales exclude the impact of
acquisitions, divestitures and foreign currency (Read more about trading foreign currency. fluctuations.

On Monday, Marino said such sales could fall below that
range and did not give a specific forecast for sales or
profit.

Alberto earned $36.6 million, or 37 cents per share, in
its fiscal first quarter, ended on Dec. 31, up from $31.7
million, or 32 cents per share, a year earlier.

Excluding items, earnings from continuing operations rose
12.2 percent to 46 cents per share, topping analysts’ average
forecast of 43 cents, according to Thomson Reuters I/B/E/S.

Sales rose 2.9 percent to $363 million, missing analysts’
target of $370.7 million. Reported sales fell 2.5 percent in
the United States and rose 12.3 percent internationally, aided
by foreign currency (Read more about trading foreign currency. fluctuation. Organic sales were flat.

Alberto faces a new competitor in the upper end of its
lineup. Procter & Gamble Co (PG.N: ), which has much more money
to spend on advertising and promotions, is bringing its Fekkai
classic line into stores.

That line, with items such as $21 glossing conditioner,
could pressure Alberto’s Nexxus, which is priced at about $10
to $25 at stores such as Target (TGT.N: ).

While some analysts expressed concerns, Marino said he does
not see the Fekkai line “as a huge threat, quite frankly.”

In December, Alberto bought British-based Simple Health &
Beauty, extending its reach in two areas where it has been
looking to grow — skin care products and international
markets. Britain is Alberto’s largest international market.

Gross profit margin improved in the quarter, aided by lower
commodity costs. Advertising and other marketing spending rose
1.4 percent, to $50.1 million, as the company spent more to
promote TRESemme and its St. Ives skin care brand.

The increased dividend of 8.5 cents per share will be paid
Feb. 23 to holders of record as of Feb. 11, the company said.

Stock Market Basics
(Reporting by Jessica Wohl; Editing by Dave Zimmerman, Derek
Caney and Steve Orlofsky)

UPDATE 3-Alberto Culver sees soft sales, shares slip