Well, I hate to say "I told you so," but … well let's just say I was very bearish on Bare Escentuals (NASDAQ:BARE) in July, and the company's third-quarter results today seem to bear out the concerns I lined up.

True, the company did manage to grow net income by 12% to $22.9 million, or $0.25 per share. But its revenue grew a measly 3% to $130.2 million. That's a major deceleration from last quarter, when it grew revenue by 11.6%.

Given my bearishness in July, I suspected analysts might suffer overconfidence on Bare Escentuals. What I find more significant -- and disturbing – is that its inventory continues to far outpace sales, surging 53% in the quarter. And of course, it still has what many might consider an onerous amount of debt, which can be dangerous when sales slow down considerably.  

Striking even more fear into investors, Bare slashed its guidance, saying it now only expects 10% sales and earnings growth in 2008. That sounds like the growth rate for a fairly mature company, not the fast grower many expected Bare Escentuals to be.

Personally, I don't buy the argument that Bare can keep growing at a heady pace over the long term (and I mean even after consumer spending revives). It may have carved out a niche with mineral makeup, but the rest of the industry has absolutely caught on. Estee Lauder (NYSE:EL), Avon (NYSE:AVP), Mary Kay, Johnson & Johnson's (NYSE:JNJ) Neutrogena, and many, many more have mineral makeup now, available in a variety of locations with price points for every budget. (I wouldn't underestimate Avon or Mary Kay, either, especially in a down economy in which many women may try selling those cosmetics to friends to make some extra cash.)

Meanwhile, although Bare Escentuals does enjoy distribution through cosmetic retailers Sephora and Ulta (NASDAQ:ULTA), it's worthwhile to note that both also have their own brands of mineral makeup available, too.   

That's my biggest concern about Bare Escentuals: what I perceive as a major lack of a competitive moat. Come on, at the very least, some of those competitors -- many quite formidable -- can do mineral makeup just as well as Bare Escentuals can. And with the consumer suffering, I don't believe it's a sure thing that women will stay very brand loyal when they're on a budget. There are plenty of cheap stocks out there; Bare Escentuals still strikes me as way too risky despite its battered stock price. And last, I need to get this off my chest: Um, "Escentuals" is not a word.   

Buff on some related Foolishness:

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