Prestige Brands: Looking forward to January cough-cold reorders after strong Q3
TARRYTOWN, N.Y. — Reporting on the third quarter ended Dec. 31, Prestige Brands' CEO Matthew Mannelly told analysts Thursday morning he is "cautiously optimistic" regarding cough-cold reorders given the high consumption levels at retail in late December through January.
"Cough-cold and flu incidence has [not] been rampant the entire season," Mannelly said. "It's really mid- to late-December through January that it's picked up. … You would have to be somewhat optimistic that with that pickup, in terms of consumer pull in mid- to late-December into January, that reorders would be coming in the fourth quarter."
Prestige provided some color as to just how strong that pickup in consumer consumption across the cough-cold category may be. For January 2013, the number of consumers impacted by a flu was up 27.6% as compared with January 2012, and up 21.4% as compared with a three-year average.
"As you can see in the beginning of the [third] quarter, [retailers] were heavy [in cough-cold inventory] because they all took in at the end of Q2 in advance of cough-cold," Mannelly explained. "But since they've been working those down, inventory late December was at normal levels, and there was not excess inventory out there at retail."
So a strong cough-cold season couldn't be the only factor driving strong third-quarter results at Prestige. The company reported revenues of $160.2 million for the third quarter ended Dec. 31, a 50.8% increase. "This was a tremendous quarter for us," Mannelly told analysts Thursday morning. "The bulk of our gains is really coming from increased velocity in terms of better merchandising performance," he said. "And also stronger consumer takeaway [from our] marketing spend that has [been] effective in driving people to shelves."
Prestige's core OTC consumption growth outpaced category growth, the company noted, up 6.9% for the trailing 12 weeks compared to category growth of 3.2%. Across Prestige Brands' OTC healthcare segment, revenues totaled $139 million, 63.7% higher as compared to the year-ago period.
“The health of our core OTC brands, well-executed advertising and promotional initiatives, and the strength of our balance sheet all contributed to the success of our third-quarter and nine-month results,” Mannelly said. “We delivered record third-quarter revenues, backed by solid performance in our core OTC brands."
Among the brands which reported consumption gains were BC and Goody's, PediaCare, Dramamine, The Doctors, Little Remedies, Clear Eyes and Chloraseptic, Prestige noted.
Find us on Facebook for more insight, analysis and the latest in drug store news.