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Sales & Earnings In Brief

This article was originally published in The Tan Sheet

Executive Summary

NBTY's net income plummets: Dietary supplement manufacturer and marketer NBTY's net sales grew 12 percent to $596 million in its second quarter, but higher material costs and the impact of a stronger U.S. dollar drove the firm's net income down 91.3 percent to $23 million. According to an April 23 earnings release, the Ronkonkoma, N.Y.-based firm's wholesale/U.S. nutrition division saw sales growth of 35 percent to $349.8 million. NBTY's European retail business dropped 15 percent to $134.4 million, its direct response and online sales were down 6 percent to $59.4 million and its North American retail sales were flat at $51.9 million as the LeNaturiste Canadian retail chain lost $800,000 in the January-March period. The sales total included $23 million from Julian Graves, although NBTY's acquisition of the U.K. retailer continues to be the subject of an inquiry from the U.K. Competition Commission for potential antitrust implications. NBTY also owns the Holland & Barrett retail vitamin and supplement chain in the U.K. Chief Financial Officer Harvey Kamil said NBTY has not proposed a plan to U.K. regulators for changing the Julian Graves operation. "Our goal is to keep the chain and operate the chain just like all the other chains that we have," Kamil said in an April 24 earnings call. Leiner Health Products, which NBTY acquired in July 2008, has been fully integrated into the firm and its sales are no longer separately broken out

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Sales & Earnings In Brief

Merck consumer sales dip: Merck Consumer Care experienced a drop in first-quarter sales compared to a year ago, when, as a unit of Schering-Plough, it benefited from the launch of Claritin Liqui-Gels (1"The Tan Sheet" April 27, 2009). In the first three months of 2010, Whitehouse Station, N.J.-based Merck reported consumer sales of $379 million, down 1.3 percent. Claritin OTC sales sank 26.2 percent to $110 million in the quarter, Merck said May 4. The firm's overall quarterly results reflected effects and costs attributable to the Schering merger; net sales rose 112.1 percent to $11.42 billion, but net income dropped 77.3 percent to $330.2 million. Diluted earnings per share were off 86.6 percent to 9 cents. Merck said it expects in 2012 to begin realizing $3.5 billion in annual synergy savings

Sales & Earnings In Brief

Merck consumer sales dip: Merck Consumer Care experienced a drop in first-quarter sales compared to a year ago, when, as a unit of Schering-Plough, it benefited from the launch of Claritin Liqui-Gels (1"The Tan Sheet" April 27, 2009). In the first three months of 2010, Whitehouse Station, N.J.-based Merck reported consumer sales of $379 million, down 1.3 percent. Claritin OTC sales sank 26.2 percent to $110 million in the quarter, Merck said May 4. The firm's overall quarterly results reflected effects and costs attributable to the Schering merger; net sales rose 112.1 percent to $11.42 billion, but net income dropped 77.3 percent to $330.2 million. Diluted earnings per share were off 86.6 percent to 9 cents. Merck said it expects in 2012 to begin realizing $3.5 billion in annual synergy savings

Sales & Earnings In Brief

Costs eat into NBTY income: Despite a 21.9 percent increase in net sales to $651.7 million in the April-June period, NBTY reports flat net income due to higher costs and expenses. Net income in the firm's fiscal 2009 third quarter was $45.9 million, compared to $45.5 in the year-ago period, NBTY said July 27. The supplement manufacturer and retailer experienced a significantly higher cost of sales - up 36.9 percent to $359.2 million - and a $10.1 million charge for discontinued information technology projects "determined to be ineffective and uneconomical" and $4 million in legal expenses from the antitrust case associated with NBTY's purchase of U.K. retailer Julian Graves. However, advertising, promotion and catalog costs fell 34 percent to $23.6 million. CEO Scott Rudolph said in a same-day earnings call that he expects the private-label share of NBTY's sales to increase. "Because private-label sales traditionally have lower gross profits, our overall gross profit margin should decrease," he said. President and Chief Financial Officer Harvey Kamil said the gross margins and increased productivity in the third quarter appear to be sustainable and are more indicative of the Ronkonkoma, N.Y.-based firm's future performance than the first half of fiscal 2009, when net income growth suffered. High material costs hurt NBTY's bottom line in previous quarters, though Rudolph said the volatility in material pricing is beginning to stabilize (1"The Tan Sheet" April 27, 2009). The Julian Graves acquisition has been provisionally approved, but the execs said that following the U.K. Competition Commission's final decision - expected by Sept. 3 - it could take up to nine months to integrate the chain (2"The Tan Sheet" July 27, 2009, In Brief)

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