Schiff Nutrition: Taking stock in life's latter years
Sixty is the new 40, and 70 is the new 50.
Those assertions from an aging and persistently health-conscious baby-boomer generation have driven advances in the nutritional products industry and in companies such as Schiff Nutrition International Inc. (NYSE:WNI).
Consistent use of nutritional supplements can factor into offsetting heart disease, bone-mass loss and other health issues that mid-life adults face, according to a report by the Council for Responsible Nutrition. About half of all Americans use nutritional supplements, the CRN said.
That bodes well for Schiff, which nearly doubled its quarterly profit and beat analysts’ earnings-per-share and revenue forecasts. The Salt Lake City, Utah-based company reported on Sept. 18 fiscal 2009 first-quarter net income of $3.2 million, or $0.11 a share, compared with $1.6 million, or $0.06 a share, a year ago. Revenue increased 17.4% to $47.8 million. Analysts had predicted EPS of $0.09 on revenue of $45.2 million.
Ian Corydon, research analyst for B. Riley & Co. LLC, said Schiff’s focus on its private-label lines helped the favorable Q1 2009 results. Schiff’s private-label sales increased about 80% year over year, Corydon wrote in a Sept. 19 report.
Corydon adjusted his estimates accordingly, increasing his second-quarter EPS forecast to $0.14 from $0.09 and his fiscal year 2009 EPS forecast to $0.52 from $0.50. He expects Schiff’s annual revenue to grow more than 13%, up from his previous estimate of 9.5%, due to “further gains in the private-label business.”
Schiff has concentrated much of its marketing efforts on joint-care supplement Move Free Advanced, sports nutrition bar Tiger’s Milk and cardiovascular supplement MegaRed.
The Move Free brand, a joint-care product containing glucosamine and chondroitin, is Schiff’s top seller, accounting for nearly half the company’s total net sales the past two years. “The cost-conscious baby-boomer segment is committed to this product,” Schiff spokeswoman Cathy Mattison said in a phone interview with SmallCapInvestor.com.
Tiger’s Milk dates back nearly 50 years as “America’s original nutrition bar,” according to Schiff. The bar contains 16 vitamins and minerals, about 10 grams of protein and is a good source of calcium and antioxidants. Schiff is promoting it as a healthy alternative to traditional Halloween and holiday candies.
MegaRed is Schiff’s newest product and another likely factor in analysts maintaining a “buy” rating on the stock, which closed at $5.84 on Tuesday. MegaRed, a gelcap that contains krill oil, claims to be three times more effective than fish oil in support of cardiovascular health. It is currently distributed through Costco, Walgreen’s and Longs Drugs, and it has Corydon’s attention.
“While we acknowledge that it will take time for this new and relatively untested product to gain traction in the market, we are encouraged by the results to date and expect MegaRed to contribute materially to revenues during FY 2009,” he wrote in his report.
Schiff dates back to the 1930s when Hungarian immigrant Eugene Schiff, a drug store owner, pioneered the use of whey for human consumption. That sparked his interest in developing vitamins and minerals from natural resources. In 1989, Schiff merged with Weider Nutrition International Inc., another pioneer in the nutritional supplements industry. When the company sold off much of its Weider brands in 2005, the name was changed to Schiff.
Today, Schiff employs about 430 workers and continues to progress in a $228 billion worldwide industry, as it should with both age and youthful exuberance on its side.
About the Author
Stephen Ellison is a freelance writer and editor based in San Jose, Calif. He was a copy editor, Web editor and writer for a Silicon Valley business weekly and is a regular contributor to a Northern California law magazine.
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