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NEUTROGENA FY 1993 U.S. SALES GROW 8% BOOSTED BY NEW PRODUCTS

This article was originally published in The Tan Sheet

Executive Summary

NEUTROGENA FY 1993 U.S. SALES GROW 8% BOOSTED BY NEW PRODUCTS launched during the fiscal year ended Oct. 31, the firm announced Dec. 1. Domestic sales reached $ 216.9 mil. in the fiscal year and now account for 77% of Neutrogena's worldwide sales. Chairman and CEO Lloyd Cotsen said the U.S. growth reflected "excellent consumer acceptance of many of our new products, especially in shower care, sun care and acne care." The company estimated that new products introduced last year contributed about $ 23.5 mil. in sales in the U.S. During fiscal 1993, Neutrogena introduced On-the-Spot Acne Treatment and Oil- Free Acne wash as well as several sun care products, including Chemical-Free Sun Blocker, Sunblock Stick SPF 25, and a sunless tanning lotion and spray. However, the company noted sales of existing product lines decreased $ 7.6 mil. in FY 1993 due to unit volume declines and the discontinuation of two cosmetic eye products. Overall, worldwide sales in fiscal 1993 grew 5.3% to $ 281.7 mil. while not income increased 8.3% to $ 26 mil. For the fourth quarter, sales rose 7.8% to $ 83.2 mil. Net income in the three- month period ended Oct. 31 jumped 41.40% to $ 10.6 mil. International sales decreased 3% in fiscal 1993 to $ 64.8 mil. and now comprise 23% of sales versus 25% of sales one year ago. Neutrogena attributed the decline to a stronger U.S. dollar, "unusually warm winter weather" and distribution conditions in Europe. In the first quarter, the company discontinued business with its Spanish distributor for "performance reasons." Sales in Latin America "continued to grow," the firm said, noting that "this region is fast becoming one of the important building blocks in our strategy to fully realize the global brand potential of Neutrogena." Marketing and selling expenses declined 1.3% to $ 150.8 mil. in fiscal 1993 and declined as a percentage of sales to 53.5% compared to 57.1% in fiscal 1992. Neutrogena slowed its marketing expenditures during the second half of the fiscal year, spending $ 30.5 mil. and $ 37.7 mil. in the third and fourth quarters, respectively, compared to $ 41.3 mil. in each of the first two quarters. The higher spending levels for marketing during the first half -- when most of the company's new products were introduced -- supported a TV ad campaign that ran in April and new print ads. Commenting on plans for fiscal 1994, Cotsen said that, given the "breadth" added to Neutrogena's product lines in recent years, the company plans "to be more selective regarding new product introductions in the future." Chart omitted.
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