This company, primarily a marketer and distributor of consumer packaged personal care products including skin care, oral care, and perfumes, has been grouped into personal care sector in personal care industry.
It seems that demand for products of companies in this sector has been very strong in the past three years as indicated by continuing increase in both sales volume and price for the typical companies ( sales volume growth rate : 0.8-1.5%; organic sales growth rate: 1.7%-3.3%). While sensitive to price, the developing markets contribute significantly to the growth in sales. However, those growths have not completely been reflected in companies’ performance as a result of unfavourable US dollars. We have seen strongest growth in demand in oral product category.
It seems that the distribution channels, probably determined by brands and market concentration, matter in the currently unfavourable retail industry environment. Sales decreased significantly for some less recognised brands, which usually have less control on distribution of their products.
Sales increase has resulted in improved margins according to some typical company’s data. The typical companies’ gross margin is about 51% in 2017. With a slight increase in SG&A as percentage of sales (about 30% in 2017), the typical operating margin went up to about 21% in 2017.
The typical average stock price/cash flow ratio is about 23.
It seems that the demand for products of this company has been weak and there is an apparent downturn trend in sales in most of its categories as reflected by both price and volume.
The fiscal 2017 compared with the 2016
Net sales increased 1% primarily due to increase in international sale volume of perfumes offset by the lost and decrease in sale volume of oral care products.
The fiscal 2016 compared with 2015
Net sales decreased 19% primarily due to lower price and decreased volume in skin care category and due to lost and decrease in sale volume of oral care products.
Fiscal 2015 compared with 2014
Net sales decreased 21% primarily due to cease of nail product line and due to lost and decrease in sale volume of oral care products.
Its gross margin has increased from around 55% in 2014 up to about 62% of 2017 primarily due to lower sale allowance ( real cost sale was improved slightly ). Its operating margin went up from -5% to about 18% in 2017 primarily due to largely improved SG&A as percentage of sales ( down from about 59% to 44% in 2017) as a result of lower personnel expenses.
Stock performance
This stock currently has a stock price/cash flow ratio of 11. We think that its stock is being relatively fairly valued compared with its peers.
