Private Label Buyer

Schiff Nutrition To Walk Away From 'Crazy' PL Bidding

July 25, 2011

Salt Lake City-based Schiff Nutrition International expects to see its private label sales drop by 25 percent in its fiscal 2012 as the company steps away from bidding on some retailer private label contracts, chief executive officer Tarang Amin said during an analysts’ conference call last week.

 

“We’ll continue to bid on private label business that makes sense where we can make money. What we're going to step away from is the stuff that's crazy and where no one can make money,” he said.

 

On the branded side of its supplements business, Schiff expects to shift marketing dollars from promotions such as buy-one-get-one free to consumer advertising in an effort to bolster the premium image of its brands, Schiff Move Free and Schiff MegaRed.

 

“The concentration of our retailer base actually does help us a lot here, with our key customers being Costco, Wal-Mart, Sam's…they're looking for manufacturers to step up and put more against the consumer from an advertising standpoint, and stop some of the heavy high-low discounting. We think, in our particular case, that actually has a great advantage,” Amin told analysts.

 

The company’s decision to step away from some private label business could benefit it in the long run, one analyst tells PLBuyer’s eReport.

 

“Too many companies are afraid to give up volume, even though they are losing money on virtually every unit sold. At the end of the day, it’s all about delivering gross margin dollars,” says Paula Rosenblum, managing partner at Miami-based Retail Systems Research (RSR Research).

 

Schiff on July 21 reported fiscal 2011 fourth quarter net income of $3.1 million, after $1.2 million in pre-tax expenses related to an acquisition, compared with net income of $2.4 million for the same period of 2010.

 

Net income for all of fiscal 2011 fell to $12.6 million compared with net income of $18.4 million in fiscal 2010.