Chattem affected by decreased sales, Icy Hot recall
CHATTANOOGA, Tenn. Chattem’s second-quarter results continue to be dragged downward by the company’s voluntary recall in the first quarter of its Icy Hot Heat Therapy, the supplier reported Thursday, in addition to lower sales of Bullfrog, Dexatrim and Icy Hot Pro Therapy.
Total revenues for the second quarter ending May 31 were $116.7 million, a 3 percent increase. Excluding the impact of the Icy Hot recall and those products experiencing a downturn in sales would have netted a 6 percent increase in revenues, Chattem reported.
Chattem chairman and chief executive officer Zan Guerry on Thursday morning during a call with analysts suggested that its Icy Hot Heat Therapy and Icy Hot Pro Therapy lines have been more or less discontinued, “not quite discontinued, but both were money losers,” he said. The Icy Hot branded franchise, Chattem’s second-largest brand, is up 10 percent for the latest 13 weeks excluding sales results of Icy Hot Heat Therapy, Guerry reported.
And while Chattem’s “Big Six Brands” are doing well, Guerry said, the overall sales results continue to be impacted by a drag in performance of some of Chattem’s smaller brands. “Dexatrim, in particular, has been our largest decliner,” Guerry said, “but is now showing some period-to-period strength and has an excellent chance of being essentially flat by this fall versus being down 30 percent during the first part of this year.”
Dexatrim sales are off “due to increased competition in the diet aid category,” the company noted in its press release. That increased competition is most likely coming from GlaxoSmithKline’s alli, which posted $160.3 million in less than a year’s worth of diet aid sales across food, drug and mass outlets (with the exception of Wal-Mart) for the 52 weeks ending May 18, according to Information Resources, Inc. That compares to a decline of 11.6 percent in Dexatrim Max sales (the leading Dexatrim brand and the No. 9 brand overall) to $6.3 million in the same period.
Dexatrim, as a brand, may soon experience another negative hit. Bob Bosworth, Chattem president and chief executive officer, acknowledged that the company is currently facing 17 potential lawsuits related to Dexatrim with ephedrine and its potential link to heart conditions. Chattem discontinued the sale of Dexatrim with ephedrine in September of 2002, long before ephedra as an ingredient was banned for sale by the Food and Drug Administration. “If lawsuits are filed, and they have not been filed at this point, we do intend to defend these claims vigorously,” Bosworth said. “We do not believe … this will have a significant impact on our ongoing business.”
With regard to the Icy Hot recall, there have been two suits filed to date.
Bosworth also addressed the declining economy and its material impact on Chattem. While an increase in the cost of petroleum are certainly increasing production costs, he said, a recession economy doesn’t necessarily negatively impact many of Chattem’s core product categories. Those product categories, he said, are more need driven, providing solutions for itch, pain, dandruff and sleeplessness, he said, meaning that “they do not decline in a down economy.”
The increase in production costs have contributed to an approximate 5.4 percent increase in pricing across products those products that represented 15 percent of total revenue, which took place in mid-April.
GNC, WebMD ink multi-year partnership
PITTSBURGH GNC on Wednesday announced a multi-year marketing partnership with WebMD that is expected to help increase consumer awareness and understanding of the importance of vitamins and supplements to improve overall health and wellness.
“Given the strong leadership and commitment of our two companies to promote personal health and wellness, there is tremendous synergy in leveraging the strengths of two brand leaders to provide consumers with the personalized information that can help them live healthier lives,” stated Wayne Gattinella, chief executive officer and president, WebMD.
Under the terms of the agreement, a new “Live Well Topic Center” will be hosted on GNC.com and on WebMD, giving users access to WebMD content on health and wellness as well as direct links to GNC.com. Consumer education and product information will be distributed across GNC’s 4,900 U.S. retail locations in addition to the WebMD network of more than 50 million unique monthly users and GNC.com.
GNC will be featured in targeted areas on WebMD where consumers go most often for information on personal health, diet and nutrition information, including search, home page, and other highly visited healthy lifestyle areas. In addition, an interactive, personal health assessment will be available to help consumers easily establish their health goals and identify the nutritional supplements that would be most beneficial for them. GNC information and interactive tools will be featured across the WebMD network and GNC.com site. The partnership also allows GNC to license WebMD’s interactive tools as well as its content for use in GNC’s domestic retail network of 4,900 locations, including 978 franchise and 1,358 Rite Aid store-within-a-store locations.
CCA introduces Mega-T plus dietary supplement
EAST RUTHERFORD, N.J. CCA Industries on Wednesday introduced a line extension to its Mega-T brand—Mega-T Plus, a combination diet aid and cholesterol-lowering dietary supplement.
“Mega-T Plus is our new non drug dietary supplement, formulated with green tea and a clinically proven ingredient to lower bad cholesterol,” stated Dunnan Edell, CCA president. “Mega-T Plus will be targeted to the approximately 23 million overweight adults in America who, statistics indicate, might be suffering from high LDL cholesterol levels.”