Prestige outlines its e-commerce opportunity

Prestige outlines its e-commerce opportunity
Prestige Consumer Healthcare sees e-commerce as a "long-term opportunity rather than a threat", says president and chief executive officer Ron Lombardi

12 November 2018 - Deborah Wilkes

Prestige Consumer Healthcare's online sales doubled in the financial year ended 31 March 2018 and "continue to grow rapidly", according to president and chief executive officer Ron Lombardi.

Lombardi said the US-based company's e-commerce sales had doubled to around USD20 million in the year ended 31 March 2018, and were expected to reach USD32 million in the current financial year.

Prestige was "well-positioned to capture online growth", maintained Lombardi, adding the company viewed online as a "long-term opportunity rather than a threat".

Noting that many of Prestige's products were "needs based" and often had an "unpredictable purchase pattern", Lombardi said the company still expected "consumers to gradually show up in increasing numbers to shop online".

One key element of Prestige's strategy, he said, was simply to be "available in the channel when a consumer goes to shop for their trusted brand".

Three different examples

He pointed out that some brands, such as the NasalCrom allergy remedy, might be hard for consumers to find in a physical store, while others, such as Dentek oral-care products, could be bought by consumers with predictable frequency and were well-suited to e-commerce delivery.

Meanwhile, the vaginal thrush treatment Monistat could benefit from e-commerce, continued Lombardi, as consumers might be uncomfortable learning about the product in the presence of others.

"These are all very different examples," commented Lombardi, "but they are all unique opportunities for us to win with online over time."

Lombardi stressed the importance of investing in the e-commerce channel. Prestige had made "smarter investments" around online over the past few years, he said, adding "we make sure our brand pages are informative" and "content on retailer websites gives consumers the ability to identify and understand the value of our trusted products quickly and easily".

He also pointed out that Prestige made sure the profitability structure for online sales was similar to our bricks-and-mortar partners. 

Financial results released

Lombardi's comments came as Prestige reported sales of USD239 million in the three months ended 30 September 2018, which is the second quarter of its 2019 financial year. This represented a fall of 7.2% as reported but sales were up by 1.6% once the impact of divesting the Household Cleaning business was stripped out.

Prestige said organic growth had been driven by "continued strong consumption levels across the company's core brands".

New packaging for BC and Goody's

However, this had been partially offset by a previously-announced change in accounting policies and the shipment timing of new packaging for the BC and Goody's brands in the US. Prestige said these factors had knocked around one percentage point off organic growth.

Nearly all of Prestige's major customers were now converted and ordering the new BC and Goody's products with easier-to-use packaging, said Lombardi, adding that marketing efforts had started in late October. The rollout should be "largely complete" by the end of March 2019, he added.

Sales at Prestige's North American OTC Healthcare business were up by 0.3% to USD216 million, accounting for 90.2% of Prestige's total sales.

Lombardi said consumptions trends "remain healthy in North America", with sales growth led by the gastrointestinal and earcare/eyecare categories. He added that the motion sickness medicine Dramamine had recorded a very long run of high levels of growth.

Sales at the International OTC Healthcare business increased by 11.7% to USD23.4 million, accounting for 9.8% of the company's total sales.

Lombardi said the strong double-digit top-line growth had been led by Prestige's businesses in Australia and Asia-Pacific.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) were down by 7.3% to USD80.1 million, giving a margin of 33.5%.

Prestige is now a pure consumer healthcare company following the divestment of its Household Cleaning business on 2 July 2018 (click here to read the News story).

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