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MENLEY-JAMES SALES INCREASE 2.7% IN FISCAL 1992 DESPITE FOURTH QUARTER DIP

This article was originally published in The Tan Sheet

Executive Summary

MENLEY-JAMES SALES INCREASE 2.7% IN FISCAL 1992 DESPITE FOURTH QUARTER DIP, aided by last year's introduction of the Garfield line of children's vitamin products. "Our introduction of Garfield Children's Vitamins, which commenced in the third quarter, continues to be very encouraging," the company said in an announcement of operating results for the three months and full year ended Dec. 31. At a Jan. 13 conference sponsored by Hambrecht & Quist, Menley-James reported that Garfield vitamins claimed a 6% share of the children's vitamin market by fall 1992. Although the company managed a slight volume gain, President and CEO Larry White acknowledged that "results for the year were below our expectations." He noted that "the benefits of our programs to reposition certain of our established primary brands have not been realized as rapidly as we had anticipated." He maintained that "the poor economic environment and a mild cough/flu season" contributed to the disappointing results. Overall, the firm's 1992 sales climbed to $ 28.4 mil., compared to $ 27.7 mil. for 1991. Net earnings were $ 1.4 mil. before an extraordinary item for early extinguishment of debt, which brought the figure down to $ 701,000, the firm reported. Fourth quarter sales dipped 7.5% to $ 7.1 mil. from $ 7.6 mil. in the same period in 1991, while net earnings of $ 343,000 were off 27% from $ 472,000 in the comparable quarter in the prior year. Menley-James' expenses for selling and general administration in fiscal 1992 rose to $ 12.3 mil. from $ 9.7 mil. in 1991, and the firm commented that "the company remains committed to our programs to support our key brands." In February the firm launched a nationwide on-shelf promotion in support of its HOLD cough drop brand ("The Tan Sheet" March 1, "In Brief"). The firm noted that last year it retained PaineWebber, Inc. to "assist in exploring a range of strategic alternatives." Menley- James Chief Operating Officer Greg Kearl explained at the Hambrecht & Quist investment conference that PaineWebber was helping it identify potential acquisitions. Another Menley-James 1992 highlight was a marketing agreement with Kabi Pharmacia to increase detailing on Serutan laxative, the company said. Jones Medical Industries sales totaled $ 24.1 mil. for 1992, marking a 17.3% increase over the 1991 figure of $ 20.5 mil. announced in February. The St. Louis, Mo.-based company also announced earnings of $ 3.7 mil., a 13.3% increase from 1991. Fourth quarter sales grew as well, to $ 6.8 mil. from $ 6 mil. the year before, but fourth quarter earnings declined 3.7% to $ 1.2 mil. The firm's fourth quarter "normally would have been even stronger, except for the fact that wholesalers did not place large year end orders, as has been our industries' experience in the past," Jones Medical explained. The company stated that some of the increase was due to sales of the company's branded vitamin products. Jones Medical recently acquired the Derma System Professional Skin Care line from Tsumura Medical. Comprised of Derma Scrub, Derma Cidol, Derma Soothe, Derma Stat and Chlorostat, sales of the line have exceeded $ 2.4 mil. annually for several years, with a 75% gross margin, according to Jones. American Stores' 1992 sales totaled $ 19.1 bil., an 8.5% drop from 1991 sales of $ 20.8 bil., while sales from ongoing operations rose slightly to $ 18.8 bil. from $ 18.6 bil. in 1991. The firm divested 74 Jewel Osco combination food and drug stores last year, American Stores said. Earnings for fiscal 1992 were $ 206 mil. compared to $ 199.4 mil. for the year before, when allowing for the accounting adjustment of disposed operations. American Stores President and CEO Victor Lund said the firm was "extremely pleased" with its performance, adding that "higher operating profits in our drug store operations played a significant role in our excellent performance." In fiscal 1992, operating profits for drug store operations increased 14.1% over the prior year. The company also began a three-year, $ 2 bil. capital spending program in 1992, acquiring 63 CVS outlets in southern California and 30 Thrifty and Rx Plus drug stores in Arizona. The firm also opened 36 new stores and obtained rights to operate an additional 22 CVS outlets during the year. Chart omitted.

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