Some of the questions raised by Alyce Lomax when she covered Energizer's
Strong battery sales and the acquisition of Schick/Wilkinson Sword in March 2003 helped drive quarterly revenues up 42% year over year, to $812 million. Earnings per share jumped 39%, a remarkable figure to be sure, though if you back out tax credits and the impact of Schick/Wilkinson Sword, the figure was more like 14%.
Taking a closer look at the quarter, domestic battery sales growth and profit margins improved, but the international business wasn't nearly as strong. New products in the razor and blade business, meanwhile, are seen driving sales growth in the second quarter, and they're sure to cannibalize sales of traditional products somewhat.
As a result, investors should watch the profit line for the razor and blade business segment closely. The tradeoff the company accepts by hurting existing sales (and boosting advertising costs) in order to launch new products is renewed sales growth and higher long-term gross margins. (Rick Munarriz took another look at this business, which includes razor and battery competitors Rayovac
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Dave Marino-Nachison can be reached here.