Chattem Launching ACT, Icy Hot Line Extensions, Raises Guidance
This article was originally published in The Tan Sheet
Executive Summary
Chattem says planned launches of line extensions for ACT,Icy Hot and other products in part prompted it to set its fiscal 2009 guidance at 60 cents to 75 cents per share above its 2008 guidance
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Chattem says planned launches of line extensions for ACT , Icy Hot and other products in part prompted it to set its fiscal 2009 guidance at 60 cents to 75 cents per share above its 2008 guidance. "The weak economy and the consumer confidence erosion have not had a significant impact on our business. We remain confident about where we are and where we are going and feel that is going to be the case in 2009 as well," according to Chattem President and Chief Operating Officer Bob Bosworth. At the Morgan Stanley Global Consumer & Retail conference Nov. 18, Bosworth explained the firm expects to reach between $4.80 and $5 in earnings per share for its fiscal 2009, which begins Dec. 1. The Chattanooga, Tenn.-based firm's fiscal 2008 guidance is $4.20 to $4.25 per share. Chattem's guidance for an earnings increase comes as some OTC and personal care firms are lowering their guidances, due to increased ingredient, manufacturing and transportation costs and slower consumer spending. The increase is possible in part because the firm has a "diverse group of products," which serve as "both an offensive and defensive weapon," Bosworth said. He explained the firm's diverse portfolio "insulates us from competition in any specific category and any specific year," including economically tumultuous ones, and "also provides us with a lot of different opportunities across categories." "The star" of the 15 product launches Chattem plans in 2009 will be ACT Total Care mouthwash. Set to ship in the first and second quarters of 2009 in the firm's largest launch, ACT Total Care "will be the first product that comes to market with plaque and gingivitis claims, fresh breath claims and fluoride treatment in one presentation," Bosworth said. Chattem will begin advertising Act Total Care in second quarter with Christy Brinkley as the product spokeswoman. Brinkley's "image is consistent with a fresh, clean, efficacious product. She is going to be a real asset to this business," Bosworth said. The Icy Hot line extensions include the Medicated Roll, which allows users to put the pain-relief medication on adhesive strips that they apply to their smaller joints, the COO said. A "no mess" applicator for Icy Hot also is coming, he added. Other Icy Hot extensions include the Vanishing Scent Gel and the PM Medicated Patch and Lotion, according to firm's Web site. Innovative application methods like these helped Icy Hot grow from a "poor No. 5 [brand] in 1991 in the analgesic market to No. 1 today," ahead of Wyeth's Thermacare , said Bosworth (1 'The Tan Sheet' Sept. 8, 2008, In Brief). Innovation also helped the Icy Hot brand reach about $60 million in revenues this year despite a voluntary recall in February of Icy Hot Heat Therapy disposable pain patches due to first-, second- and third-degree burns and skin irritation caused by the use and possible misuse of the product (2 (Also see "Chattem To Consider New Icy Hot Heat Therapy Product In Wake Of Recall" - Pink Sheet, 18 Feb, 2008.), p. 5). Chattem also will expand its largest brand, Gold Bond skin care, into the growing lotion category with two products: Ultimate Protection and Ultimate Soothing, Bosworth said. In addition, Chattem will launch its Selsun Blue Itchy Dry Scalp shampoo in 2009 in an effort to expand the faltering brand's consumer base. Revenues from the line for 2008 are low-single-digits below the 2007 level, Bosworth said. The company expects the Selsun extension "will bring in consumers who might not have the disease state of dandruff, but who have itchy, dry scalp," he said, but acknowledged that Selsun is a relatively slow growth business in part because of poor Selsun Salon sales. Among the other products Chattem plans to launch in 2009 are two new Cortizone 10 anti-itch products, two Bull Frog sunscreen products and a reformulated version of its weight-loss brand Dexatrim (3 (Also see "Chattem Launches Reformulated Dexatrim To Revitalize Declining Brand" - Pink Sheet, 29 Sep, 2008.), p. 6). - Elizabeth Crawford ([email protected]) |