Cosmetic Group U.S.A. Inc. announces first quarter results.

LOS ANGELES--(BUSINESS WIRE)--May 16, 1995--Cosmetic Group U.S.A. Inc. (NASDAQ:CUSA,CUSAU;BSE:CGU) Tuesday reported revenues of $1,354,000 for the three months ended March 31, 1995, down from the $2,185,000 reported for the same quarter of last year.

The decrease in sales was attributable to a reduction of shipments to the company's major customer and a shortfall in the replacement of business with other customers in the 1994 period. Shipments have recently been resumed to the major customer and the company is beginning to manufacture new products for this customer and others which are scheduled for introduction during the second quarter of 1995.

For the first quarter of 1995 the company reported a net loss of $177,000, or $(.05) per share, compared to net income of $168,000, or $.07 per share, for the three months ended March 31, 1994. These results were due not only to the reduction in sales but also to the increased expenses incurred in connection with the development and launching of the new "Zegarelli" professional hair care line.

Alfred E. Booth Jr., chief executive officer of Cosmetic Group said: "I am confident that our 1995 results will significantly exceed those achieved in 1994 both in sales and earnings despite the decline reported for the first quarter. Based on a number of opportunities which currently exist we expect to significantly increase revenues in our contract packaging business."

Booth added: "Cosmetic Group's wholly owned subsidiary, Arnold Zegarelli Products Inc., recently announced that it has entered into an agreement with Sally Beauty Co. Inc. (a subsidiary of Alberto-Culver Co., NYSE-AVC) whereby Sally is the exclusive distributor for our Zegarelli line of professional hair care products to be sold throughout the U.S. in Sally's growing chain of approximately 1,500 beauty supply stores. The company will also have a group of 35 to 40 independent distributors selling to salons in their exclusive territories. Shipments of Zegarelli products are expected to commence in the second quarter.

Cosmetic Group custom develops, formulates and manufactures a wide range of color cosmetics and other personal care products for customers that market products for sale under their own brand names and its own line of professional hair care under the name "Zegarelli." -0-

                   COSMETIC GROUP U.S.A. INC.
                      SUMMARY OF EARNINGS

                               Three months ended March 31,
                                   1995          1994

Net sales                      $ 1,354,000    $ 2,185,000
Net income (loss)                 (177,000)       168,000
Net income (loss) per share          ($.05)          $.07
Average shares outstanding       3,591,716      2,545,646

CONTACT: Cosmetic Group U.S.A. Inc., Los Angeles

Jack Brehm, Chief Financial Officer

818/767-2889

or

Radcliffe & Associates, New York

Donald Radcliffe, Investor Relations

212/605-0348