By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, November 20, 2013

Analysts are entering this holiday shopping season with a conservative approach, concerned that the posturing in Washington over the budget, debt ceiling and healthcare are having an impact on consumer spending, which makes up the vast majority of gross domestic product. The Federal Reserve being somewhat indecisive about when it will start throttling back its monetary stimulus efforts is also weighing on consumer sentiment. While this can certainly have an impact on the top and bottom lines for retailers, for some smaller companies the impact may not be as drastic. Sure, it could curb growth to a degree, but with little to use for comparison in previous quarters or years, the influence may not be as magnified. In short, growth is growth, and that’s what investors want to see.

For example, take Boldface Group, Inc. (OTCQB:BLBK), a celebrity beauty licensing and branding company headquartered in Santa Monica, California. The principle offering of the company at this point are products being sold under the “Kardashian Beauty” the eponymous brand of the famous sisters, Kourtney, Kim and Khloe. The brand, once called “Khroma Beauty,” was forced to change its name after Boldface in May gave-up a legal battle with Kroma Makeup, which sought $10 million in damages.

Be that as it may, putting the Kardashian name on a product certainly isn’t a bad thing for brand recognition. The existing products were not forced to be pulled from shelves at retailers and, after some re-labeling, the new namesake product was rolled-out to more than 5,000 retailers, including, Ulta, CVS, Duane Reade, Ricky's, Walgreens, Meijer, Fred Meyer, Harmon, HEB, beauty.com and other beauty retailers.

Since then, Boldface has spread the cosmetics around the world, with the company’s European distributor inking a deal with feelunique, the largest online beauty retailer in Europe in July. The feelunique website receives more than 2.6 million visitors each month, leaving the company optimistic about growing sales from that channel.

Over the past few months, Boldface has also entered into the Australia, New Zealand and South African markets with Kardashian Beauty.

On Wednesday, the company released its results from the first quarter of fiscal 2014, showing investors the direction of sales in the latest quarter. For the quarter ended September 30, Boldface reported gross revenue of $1.55 million. Comparatively, the company did not have any revenue in the year prior quarter. Gross profit for the quarter was $512,000, or 40 percent of sales, including $50,000 in inventory reserves for future write-offs. Gross profits were also stung by costs associated with the Kroma lawsuit, including re-branding and re-labeling.

Boldface posted a GAAP net loss or $791,000, which includes stock-based compensation and other one-time items. In the year prior quarter, Boldface was purely developmental and reported a GAAP net loss of $1.08 million.

"To date, our holiday sales of Kardashian Beauty™ products have been incredibly strong with exclusive holiday items in Ulta Beauty and a diverse offering in CVS, Duane Reade, Fred Meyer, Meijer and many other of our retail partners," said Nicole Ostoya, chief executive of Boldface, in a statement today. "The consumer reaction has been equally as strong as our social media following has shown a lot of love for our products. As we turn the corner to spring, we look forward to sharing new product concepts and new items to get that coveted Kardashian Beauty™ look," she added.

A quick look around the web shows the product popping-up everywhere, with websites running articles about how and where to get the exact make-up that the Kardashian girls use.

So, it looks like the momentum is growing for Boldface on the Kardashian front. The company says that it is in the process of developing fragrances and men’s grooming products by celebrity Mario Lopez that are branded “MALO,” as well as beauty and personal care products by UGLYDOLL. As alluded to earlier, being an upstart can have some advantages in a suspect economy as it looks like Boldface could be at the start of a nice growth curve. Investors will, of course, be watching the numbers with some comparable quarters coming and looking for expenses to be controlled. With the lawsuit behind them and the Kardashian products going global, a profitable quarter may not be too far in the distance and the $2.8 million market cap may disappear. Proper due diligence is, as always, encouraged.

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