Oral care gives retailers something to smile about
The economic turmoil has left retailers skittish and manufacturers cautious, but it also has opened the door for manufacturers to appeal to cash-strapped consumers by offering more affordable toothbrushes and convenient solutions. Such offerings will continue to appeal to consumers as the economic recovery continues and consumers remain watchful of their dollars.
According to data provided by Information Resources Inc., sales of mouthwash slipped 2.9% to $169.9 million for the 13 weeks ended Dec. 27 at food, drug and mass (excluding Walmart), while sales of manual toothbrushes rose 6.7% to $118.9 million, sales of power toothbrushes declined 6.1% to $67.3 million and sales of toothpaste dropped 1.3% to $313.5 million.
While total sales of the power toothbrushes category slipped, according to IRI, Church & Dwight had “a huge success” in 2009 with its Sonic battery-powered Spinbrush.
“Highly successful, the fastest-growing brush in the category,” Church & Dwight chairman and CEO James Craigie told analysts about the Spinbrush during the company’s fourth-quarter earnings call on Feb. 9.
“Great technology at a low cost had a great success in driving our Spinbrush business again. We were one of the only guys in the whole toothbrush category who were up last year in a down overall category,” Craigie added.
During the fourth quarter, Colgate saw its share of the manual toothbrush market reach a record 32.2% year to date, the company announced in late January. That’s up 5.2 share points versus a year ago, including the new Colgate Wisp mini-brush, whose market share reached 5% year to date and 6.3% for the fourth quarter. Its Colgate 360, ActiFlex, Colgate Max Fresh and Colgate Max White manual toothbrushes also contributed to the share gains.
For early 2010, Colgate developed the new Wisp Plus Whitening mini-brush.
Meanwhile, Procter & Gamble is launching in March its new Crest and Oral-B 3D White collection. In addition to whitestrips, toothpastes and rinse, the collection includes the new Pulsar Advanced Vivid Toothbrush with MicroPulse bristles that pivot and pulse, and the manual Advantage Vivid Toothbrush.
Physicians Formula looks to top-line growth in 2010
AZUSA, Calif. Physicians Formula, whose beauty products are sold in 23,700 stores operated by Walmart, Target, CVS and Rite Aid, narrowed its fourth quarter net loss and is optimistic about 2010 as it has rationalized 28% of its SKUs and has a “strong product mix” in the pipeline.
“Although our overall market share decreased as expected versus last year, mainly impacted by the loss of a major customer, we saw an increase in dollar sales for our strategic platforms, including our bronzers, Mineral Wear face powders, and natural and organic products,” stated Ingrid Jackel, chairwoman and CEO. “Having rationalized 28% of our SKUs and with the promising start of our 2010 new products, we believe that we have a strong product mix as we begin 2010 that will enable us to increase both the efficiency of our product set and our market share in our core categories. In fact, after seeing our early 2010 new product sales, we believe we are in a good position to grow our top-line in 2010.”
Net sales for the quarter ended Dec. 31 totaled $22.3 million compared with $28.2 million in the year-ago period. The decrease is primarily due to the previously announced loss of a major customer and lackluster retail POS trends for the masstige cosmetics market in both the United States and Canada.
Net loss for the quarter totaled $2.5 million, or a loss of 18 cents per share, versus a loss of $24.5 million, or $1.80 per share, in the year-ago period.
The current quarter’s net loss includes a $4 million charge from the company’s implementation of a SKU rationalization initiative designed to discontinue slower-selling products. The initiative, which concluded in late December after 2010 plan-o-grams were finalized with its retail partners, resulted in the discontinuation of about 28% of the beauty company’s products as of Dec. 31.
“We believe we adapted well to the challenges we experienced in 2009. Although our top line was negatively impacted during the year, we made significant progress on our business model redefinition by improving our manufacturing efficiencies and diligently managing our general and administrative costs,” stated Jackel. “As a result, we generated $9.4 million of net cash from operating activities for the full year and $3.6 million for the back half.”
Ulta to continue ‘successful game plan’ in 2010
BOLINGBROOK, Ill. Beauty retailer Ulta wrapped up a favorable fiscal 2009 and is upbeat about fiscal 2010 as it continues to expand its store base, reduce expenses and generate free cash flow.
“We are very pleased with our fourth-quarter performance. Our results surpassed the increased guidance we provided in January and included a 6.2% comparable-store sales increase, a 60 basis point improvement in merchandise margin and continued momentum of our cost management initiatives, all of which contributed to a 61.9% increase in diluted earnings per share — a strong finish to the year,” stated Lyn Kirby, Ulta’s president and CEO.
Net sales for the fourth quarter rose 16.1% to $396.4 millioQ4 n, compared with $341.4 million in the year-ago period.
Net income for the quarter rose 64.6% to $20.2 million from $12.3 million in the year-ago period.
Kirby noted that for fiscal 2009 it exceeded each of its three goals: growing profitable market share, achieving permanent cost efficiencies and delivering free cash flow. For the year, same-store sales rose 1.4% and store expansion continued with square footage increasing 12%. The company also achieved $19 million in permanent cost reductions and generated free cash flow of $104.7 million for fiscal 2009.
“As we begin fiscal 2010, we continue to build on our successful 2009 game plan. We are particularly optimistic about our opportunities for market share gains through comparable-store sales growth and new store expansion,” stated Kirby. “We expect to continue to generate free cash flow in 2010 while we increase our capital investment in support of our long term growth and believe that we will deliver another strong earnings performance in fiscal 2010.”
The company, which ended the quarter with 346 stores, plans to open roughly 46 new stores in fiscal 2010, remodel 13 locations and relocate six stores.
Additional plans for fiscal 2010 include:
- Incur capital expenditures of about $100 million, compared with $68.1 million in fiscal 2009
- Reduce inventory by about 5% on an average per store basis by year-end 2010
- Permanently reduce expenses by $5 million
- Generate free cash flow.