Twinlab Sales Affected By Product Returns, Inventory Reduction
This article was originally published in The Tan Sheet
Executive Summary
Product returns from "major customers" and "inventory reduction" in the herbals and sports nutritional markets has forced Twinlab to lower its projections for fiscal 2000, the firm announced Nov. 15.
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Product returns from "major customers" and "inventory reduction" in the herbals and sports nutritional markets has forced Twinlab to lower its projections for fiscal 2000, the firm announced Nov. 15. The Hauppauge, N.Y.-based supplements maker revised its FY 2000 revenue projections to take into account the lower herbal expectations in announcing its third quarter results. Sales in the Twinlab division fell 3.5% to $53.8 mil. compared to the year-ago period. Although the company would not identify which customers have been reducing their Twinlab stock, the firm's sales to GNC have been steadily declining. In the second quarter, sales to GNC were down $10 mil. (1 (Also see "NBTY Internet Sales Increase Over Three-Fold In 3Q, U.K. Site To Launch" - Pink Sheet, 31 Jul, 2000.)). Leiner noted Royal Numico's buyout of the retailer as well as Rexall Sundown has put pressure on the rest of the industry (2 (Also see "Leiner Nature's Origin Brand Presented As Numico Alternative" - Pink Sheet, 20 Nov, 2000.)). Overall company sales - including the Twinlab, Alvita herbals and teas and Changes International direct sales divisions - were down 6.7% to $76.4 mil. for the quarter. General softness in the market was cited as the reason for slackening revenues. In response to the market trend, Twinlab plans to "discontinue the production and/or active marketing of certain herbal products." Possible targets could be products in the Nature's Herbs and TruHerbs lines, which includes time-released botanicals. Twinlab reported TruHerbs has "experienced disappointing sales." Sales for the nine months totaled $215 mil., down 5.5% from the comparable 1999 period. However, earnings information was not available, as Twinlab announced the filing of its 10-Q with the Securities & Exchange Commission has been delayed due to inventory discrepancies. In its Nov. 15 announcement, Twinlab said it "became aware of certain inventory variances that prompted it to conduct a physical count of herbal inventories at its Utah location." The count "indicated shortages totaling approximately $8 mil.," the company said. The firm is requesting more time to gather information needed to formally file its financial results. |