Prestige Brands Misses Earnings Ests, Shares Down - Analyst Blog
Prestige Brands Holdings, Inc. 's ( PBH ) earnings (excluding special items) of 30 cents per share in the third quarter of fiscal 2014 missed the Zacks Consensus Estimate of 38 cents as well as the year-ago figure of 37 cents.
Revenues of $146.2 million were down 8.7% from a year ago and missed the Zacks Consensus Estimate of $156 million.
Fiscal Third Quarter In Detail
Third quarter results were impacted by return of competing brands in the market (that were recalled), a weak cough/cold season and softness in the retail environment which led to retail inventory reductions. Prestige Brands had earlier stated that 2014 will be a transitional year for the company due to the return of competing brands.
Excluding an estimated impact of approximately $10 million of retail inventory reductions concentrated in the mass channel, sales in the third quarter would have decreased 2.5%. The acquisition of Care Pharmaceuticals added $4.6 million to the top line.
We remind investors that Prestige Brands acquired Australia-based Care Pharmaceuticals Pty Ltd. in Jul 2013. Effective from Jul 1, 2013, this privately held marketer and distributor of over-the-counter (OTC) healthcare products became a part of Prestige Brands.
Gross margin increased by 60 basis points to 56% driven by favourable over-the-counter mix and the impact of ongoing cost-saving initiatives.
Advertisement & Promotion costs increased by 8.6% to $25.6 million in the reported quarter.
On Jan 31, 2012, Prestige Brands acquired 15 OTC healthcare
brands, including related contracts, trademarks and inventory
) and its affiliates. The other two brands, namely, Debrox and
Gly-Oxide, were acquired on Mar 30, 2012.
Prestige Brands expects a continued reduction on foot traffic and potential additional retailer inventory reductions. The company expects earnings in fiscal 2014 to range between $1.48 and $1.52. The Zacks Consensus Estimate currently stands at $1.67.
Prestige Brands carries a Zacks Rank #4 (Sell). Third quarter results missed our expectations on all fronts. Shares were down 9.08% due to weak third quarter results. The weakness is expected to extend in the fourth quarter as well and negatively impact results going forward.
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