Bare Escentuals Down but not Out

For years, Bare Escentuals has been a Wall Street darling posting astronomical double-digit growth each and every quarter. But after growth slowed to an anemic 3% in the third quarter, analysts started rushing for the door.

Not so fast, according to one company. BeyondProxy LLC suggests that the company still has plenty of room to grow. The company notes that 74% of Bare Escentuals' target consumers are aware of mineral makeup, but only 23% of those have tried it. 45% of consumers say they are likely to try mineral makeup in the next year, according to Bare.

BareMinerals core foundation products offer healthy, lightweight alternative to conventional liquid- or cream-based cosmetics while providing light to maximum coverage for all skin types. Furthermore, Bare Escentuals continues to gain share in the $3.6 billion U.S. facial makeup market, and currently holds 12% of the market.

The analysts insist there is a large opportunity in “extension” markets, with only 2% share of $4.9 billion U.S. color market and 1% share of $7.8 billion U.S. skin care market. Moreover, international only 8% of revenue, but Bare is pursuing growth in Europe, Japan, and Canada.

Bare Escentuals was the top-selling cosmetics brand at specialty retailers Sephora and Ulta in 2005, 2006 and 2007. The company has strong brand awareness and consumer loyalty. No-celebrity marketing lowers cost. Bare spends 7-8% of sales on ads and promotion, while L’Oréal and Estée Lauder spend ~30% and ~25% each.