VitaSkin Consumer Takeaway Results In Quick Market Share Presence

Initial sell-in of Banana Boat VitaSkin helped Playtex' sun care business achieve 5% sales growth in the fourth quarter, CEO Michael Gallagher reported to analysts Jan. 31.

"We were most pleased to see the newest entry in our line-up - VitaSkin - was successful in its first shipment period," Gallagher stated, noting the sunscreen "actually achieved a 1.1% share" of the sunscreen category in late 2001.

In "some accounts," the exec added, VitaSkin products were the "leading SKUs for the entire category."

Playtex began shipping the Banana Boat extension in December. The product, containing Parsol 1789 (avobenzone) and vitamins/antioxidants, is positioned as a sun protectant and moisturizer suitable for daily use (¹ , p. 8).

Sun care sales reached $19.8 mil. in the fourth quarter compared to $18.8 mil. in the year-ago period, Playtex said in its ² Jan. 30 financial report. For the year, segment revenue fell 1.1% to $124.7 mil.

The firm's share of the U.S. sun care market was 15.3% in the fourth quarter versus 14.1% a year ago. The business ended 2001 with a 21.1% share, "exactly even" with 2000, Gallagher noted.

Within the in-sun/after-sun segment of the category, Playtex recorded a 23.7% share compared with 22.6% in 2000. Consumer consumption of the firm's in-sun/after-sun offerings rose 10.4%, nearly double the 5.4% retail growth industry-wide.

Overall consumption of Banana Boat products was up 8.8%, slightly less than the 9.2% industry increase. The brand's shortfall reflects its current lack of a sunless tanning product, although Playtex is addressing the weakness with the early 2002 introduction of Banana Boat Indoor.

"We had a very good sun care season in 2001 after a very slow start in heavy competitive activity in the sunless segment," Gallagher commented.

Noting the fourth quarter is "primarily a set-up period to begin the new year and consumption is very low," Gallagher maintained the firm's market share gains, early success with VitaSkin and the pending launch of the indoor product "are good augers for a very good year in 2002." Playtex predicts low single-digit growth in its sun care business this year.

Commenting on how Kmart's recent bankruptcy filing will impact Playtex, CFO Glenn Forbes said the firm is assessing the situation but the "magnitude of our exposure is not expected to be significant." Any impact will be reflected in Playtex' pending 10K filing.

"Fortunately for us, this action occurred during the low-point of Kmart receivables prior to our significant build-up of the Banana Boat season," Forbes noted.

Consolidated sales increased 3.9% to $197.6 mil. and net earnings doubled (up 100.1%) to $3.5 mil. in Q4. For the year, revenue was essentially flat at $830 mil., while net earnings fell 67.5% to $11.5 mil., reflecting the firm's efforts to pay down debt.

Schering-Plough worldwide sun care sales fell 1% to $34 mil. in the fourth quarter, but increased 10% to $220 mil. over the full year.

The firm attributed the gain to its introduction of sunless tanning products in the U.S.; S-P launched Coppertone Endless Summer Sunless Tanning Lotion, formulated with dihydroxyacetone and "color activator" Hydrosil , in early 2001 (³ (Also see "Schering Enjoys Endless Summer Of Sunless Tanning Revenue" - HBW Insight, 30 Jul, 2001.), p. 3).

Sun care was the only segment in S-P's consumer health division to record positive revenue gains last year. Foot care was down 7% due to competition, and OTC drug sales were off 2% as a result of Schering's ongoing manufacturing problems.

Consolidated sales were up slightly (2%) to $2.47 bil. in the fourth quarter but flat for the year at $9.8 bil. Net income fell significantly in both periods: 20% to $1.94 bil. for the full year and 75% to $143 mil. in Q4.

The declines reflect a $500 mil. provision for a consent decree payment to FDA to settle good manufacturing practice compliance issues at its New Jersey and Puerto Rico plants. The firm continues to negotiate the decree with the agency.