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LAVORIS' 50% SALES ADVANCE AND MARKET SHARE GAINS IN FY 1985

Executive Summary

LAVORIS' 50% SALES ADVANCE AND MARKET SHARE GAINS IN FY 1985, the mouthwash brand's first full year under new owner Jeffrey Martin, were attributed to boosted marketing support by the company's recently-released annual report for the year. Higher sales for Lavoris and a "strong increase" in Doan's Pills volume were the "primary contributors" to a 12% rise in corporate revenues to $65.6 mil. for the year ended July 31, the report stated. Jeffrey Martin acquired the nearly 84-year old mouthweash from Rich-Vicks in July 1984 for $8.5 mil. in cash and "substantially expanded" the brand's advertising and distribution during the year, the firm said. Jeffrey Martin spent a total of $21.5 mil. on network TV ads and $8.9 mil. on radio ads in calendar year 1984. Those outlays made the firm the "ninety-third biggest TV advertiser" and the "third largest radio advertiser," the company maintained. However, the higher advertising expenses, combined with increased distribution costs and amortization related to the acquisition of Lavoris, pulled net income down 29.4% to $4 mil., Jeffrey Martin said. Marketing and distribution outlays for 1985 rose 21.6% to $37.4 mil. mostly because of the investments in advertising, but also due to a new contract warehousing and distribution agreement signed late in the fiscal year, the report noted. Sales of Cuticura Medicated Soap, Ointment and Acne Cream experienced "modest declines" for the year as did Porcelana Medicated Face Cream, the report said. Nevertheless, Jeffrey Martin began a new TV campaign for Porcelana in August and is "hopeful it will reverse the recent sales trend." Increased competition in the dentifrice market led to a decline in Topol Smoker's Toothpolish sales in FY 1985, according to the company. While a "significant year-to-year decline in the product's sales has continued into the early months of fiscal 1986," Topol continues to be Jeffrey Martin's highest volume product, the report notes. Jeffrey Martin extended the Topol franchise in June with a Smoker's Mouth-wash. The sell-in of the product contributed $3 mil. to fourth quarter coffers, according to the company. A re-launch of Topol Smoker's Toothpolish in the United Kingdom almost tripled unit sales in three months as both revenues and net income surpassed the previous year's figures, the report states, adding that Topol toothpolish now holds "30% of the stain-removing toothpaste sector in the U.K." Jeffrey Martin's three principal foreign markets were all profitable for the first time in fiscal 1985, the report said. Besides the United Kingdom, the company markets products in Canada and Venezuela. Sales rose "significantly" in Canada but net income declined "substantially" as the company acquired the Doan's trademark and launched three products, including Topol Smoker's Gel and renewed support for Lavoris. Venezuelan operations showed "slight" decreases in both sales and earnings, the firm pointed out. The company continues to look for new acquisitions and has approximately $8.6 mil. in cash and short-term investments available, the report noted. "While we have not made any major acquisitions since Lavoris, it is not for lack of persistence in finding the right transaction," Exec VP and Chief Operating Officer Frank DiPrima commented. Chart omitted.
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