Schiff Nutrition CFO: Flat FY08 sales but improved gross margins
Schiff Nutrition International Inc. (NYSE: WNI) CFO Joe Baty said the maker of vitamins and nutritional supplements expects flat sales during fiscal 2008, due to competitive pricing pressures. Baty also said the company expects gross margins for fiscal 2008 in the range of 41% to 43%, from 39.8% in fiscal 2007. Baty made the remarks during a midday conference call.
The higher gross margins are due to lower joint care raw material costs, Baty said. He said the gross margins would be even better if the company did not have to engage in price discount promotions in response to competitive pressure.
Before the opening, Schiff reported first-quarter sales of $40.7 million, down about 11% from $45.7 million a year earlier. Schiff’s net income for the first quarter ended Aug. 13 was $1.6 million, or $0.06 a share, down 52% from $3.3 million, or $0.12 a share, in the year-ago period.
The nutrition company’s quarterly operating expense rose 14% to $14.6 million, from $12.8 million a year earlier. Schiff’s cost of goods sold, however, fell 15% to $24.3 million, from $28.5 million in the year-ago quarter.
The company’s first quarter results were hurt by a shareholder dividend payment of $1.50 per share, the company said in a statement. Schiff was also negatively impacted by a shift in the timing of customer promotions, the firm said. The promotions have been shifted to the second and third quarters, CEO Bruce Wood said.
“We believe our second and third quarter branded sales will be positively impacted by this timing shift,” Wood said.
Schiff continues to experience intense promotional activity from national competitors, the chief executive said. The company has developed a locally focused television, online and print marketing plan in light of the competition, he said.
The company expects to announce product improvements to its joint strengthening vitamin, Move Free, during the second quarter, Wood said. The company also plans other new products that will be announced during the third and fourth quarters, he said.
“We do expect fiscal ’08 to be a challenging year with respect to achieving top line growth,” Wood said. “However, we believe will continue to add to our strong liquidity position in fiscal ’08, which in turn gives us the ability to invest in long-term organic growth and also to explore acquisition opportunities.”
In midday trading, WNI shares are up 1.75%, or $0.09, at $5.24. Over the last 52 weeks, shares have ranged from $4.59 to $7.69.
