Vendor results solid for quarter and year.
Vendor results solid for quarter and year
CDR Roundup - While many industries saw profits shrink in the quarter and year recently ended, most major manufacturers of drug store merchandise realized improved performances.
In general, earnings were propelled by healthy sales of new or recently introduced products, price increases, reduced operating costs in the wake of recent restructuring efforts, and the positive impact of favorable currency exchange on overseas results.
Chain Drug Review's quarterly survey of results from 25 major drug store vendors found that after-tax earnings from continuing operations advanced 19.8%, on average, in 1990's final three months over the year-ago period. This compares with a 4% decrease in fourth quarter, after-tax earnings from continuing operations at 617 companies of all types tracked by The Wall Street Journal.
The group average excludes five companies that swung from either losses to profits or vice versa. Also excluded were Marion Merrell Dow Inc., where the huge increase reflected the December 1989 merger of Marion Labs and Merrell Dow Pharmaceuticals, and Upjohn Co., whose geometric rise was skewed by the presence of a big restructuring charge in the 1989 period. With the latter two companies included the average bottom-line increase for the quarter amounted to 64.8%.
Notably, all but one of the 25 companies (Scott Paper Co.) realized profits from ongoing operations in the period. Twenty of the 24 concerns showing profits posted improvements over the 1989 period. Among the 20 for whom percentage changes could be calculated, four registered single-digit gains, nine were up in the 10% to 19.9% range, one had an increase in the 20% to 29.9% range, and six had jumps in excess of 30%.
Sales growth for the group averaged 14.1% in the quarter, excluding Marion Merrell Dow. With that company's 86.9% jump factored in the group average rose to 17%.
Twenty-four of the companies rang up sales increases in the period. Three of them showed single-digit gains, 18 advanced in the 10% to 19.9% range, two were up in the 20% to 29.9% range and one surpassed 30%. American Home Products Corp., the lone company on the downside, saw sales volume dip 1.6%.
Net margins for the group averaged 11.3% in the quarter.
As for the 21 vendors in the group whose year ended on December 31, earnings from continuing operations rose at an average rate of 6.1% over those of 1989. The year's average excludes the merged Marion Merrell Dow and a restructured Tambrands Inc., where 1989 income was severely depressed by a large restructuring charge. With those two companies factored in the group's average increase soared to 317.2%.
Full-year earnings increased for all but one (Scott Paper) of the 21 manufacturers. Four posted single-digit improvements, eight grew in the 10% to 19.9% range, two grew from 20% to 29.9%, and six advanced at a better than 30% rate.
On the sales side, the group's average gain amounted to 10.2% with Marion Merrell Dow factored out. Including that company the average increase rose to 15.8%.
Of the 20 vendors reporting sales increases for 1990, seven had single-digit increments, 11 were up in the 10% to 19.9% range, one had an advance in the 20% to 29.9% range, and one topped the 30% mark. Bic Corp., the only company with a decrease, was down 0.3%.
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|Title Annotation:||drug store suppliers and manufacturers|
|Publication:||Chain Drug Review|
|Date:||Apr 8, 1991|
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