Schiff Q2 results show units moving but profits flatter

SALT LAKE CITY Heavy national brand promotion may be moving units of joint care supplement products off of shelves, but dollar sales growth is harder to come by, commented Bruce Wood, president and chief executive officer, Schiff Nutritional, during a conference call concerning that company’s second-quarter results last week.

“For perspective, in the food, drug, mass market arena, as measured by IRI, this data excludes Wal-Mart and club stores, the joint care category was up almost 9 percent in unit volume but only 2 percent in retail dollars for the 12 week period ended Nov. 18,” Wood noted. “At the same time, private label joint care declined in the mid-single digits in both dollars and unit volume as its still-dominant share was eroded by heavy branded promotion activity.”

To help combat that heavy branded promotion, Wood announced that Schiff will begin shipping Move Free Advanced products featuring smaller tablet sizes beginning next month. “We are introducing our same proprietary … advanced formula in tablets that are now 26 percent and 14 percent smaller, respectively, on our two leading SKUs,” he said, citing consumer research, especially among baby boomers, for the small-tablet impetus. “We believe this internally-developed innovation will yield improved consumer acceptance now that we have the smallest joint care tablets on the market.”

Schiff will also be extending its Move Free Advanced line with a third SKU formulated with MSM and vitamin D. “These two additional ingredients, which have proven clinical benefits in joint care, will drive new consumers to try the Move Free brand,” Wood said. In addition, Schiff is test marketing a new omega-3 supplement at Costco called Schiff MegaRed Krill Oil. “Schiff MegaRed Krill Oil is priced at a significant premium to ordinary fish oil which is why we are market testing this product with one major customer,” Wood said. Although Wood did not identify the retailer, an online search for the product netted, where three-months worth of 300 mg tablets of krill oil was selling for $18.99. The test market, Wood said, is expected to guage “consumer acceptance of the price premium in this virtually unbranded category.”

Schiff Nutrition’s net sales for the second quarter endedNov. 30 were $39.5 million, compared to $38.8 million for the same period in fiscal 2007.

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