Weak consumer spending hurts Prestige
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- May
- 14
Cutbacks in consumer spending in a slower economy contributed to lower sales and weaker earnings at Prestige Brands Holdings Inc., an Irvington consumer products company whose brands include Comet cleanser, Prell shampoo and Chloraseptic sore throat sprays.
The earnings report indicated that one of the worst recessions in decades is not only causing familes to postpone purchases of big-ticket items like cars and refrigerators but to also economize on less expensive household cleaning and health care products that are Prestige’s specialty.
Prestige estimated that revenue growth in fiscal year 2010 will trend below long-term goals of of 2 percent to 4 percent.
“We faced a challenging quarter and second half of fiscal 2009 as a result of the macroeconomic headwinds and associated pull-backs in consumer spending and retailer inventory reductions affecting each segment of our business,” Mark Pettie, chairman and chief executive officer, said in a written statement. Prestige reported a net loss of $211.1 million, or $4.22 per share, during its fiscal fourth quarter. The results included a charge of $249.6 million to reduce the book value of the company’s goodwill and intangible assets to estimated fair value. Excluding the charge, Prestige said that net income for the quarter would have been $9 million, down 13.5 percent from a year earlier.Revenues dropped 11.9 percent to $70.9 million, reflecting declines in each of Prestige’s three major businesses.
In the company’s over-the-counter health care unit, sales declines were driven by shortfalls on Chloraseptic, Compound W wart remover, Murine ear treatment and other products, according to the company. Partially offsetting these declines were sales gains for products that included Little Remedies, New Skin and Little Allergies Allergen Block products.
In Prestige’s household products business, revenues for the Spic and Span brand were even with the previous year but the Comet and Chore Boy brands suffered sales drops.
Despite the weaker results, Pettie said that Prestige is generating sufficient cash flow to pay down debt.
“We believe we are in a good position to weather the economic challenges faced by our industry, and plan to continue investing in our focus brands going forward,” he said.
This entry was posted
on Thursday, May 14th, 2009 at 1:05 pm by Jay Loomis.
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Category: Earnings
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