Dark clouds hung over BriteSmile
Management blamed the decline on "temporary softening in overall retail consumer demand." But apparently the worst may not be over, as it also expects fourth-quarter sales growth to decline. So how temporary is this softened demand? Hopefully it won't take as long as waiting for a scheduled dentist appointment.
Despite my engineering background, I am a strategy kind of guy. You have to understand how the business competes before you start crunching through its numbers. Otherwise, you may draw some incorrect conclusions (which I have done in the past).
That said, one part of the press release really intrigued me. Sales from in-house procedures fell. Sales from procedures performed by associates were 5% higher. But the do-it-yourself products grew 31%. That's some illuminating information.
It reminded me of Saturday's trip to Target
Cannibalization immediately comes to mind. Despite BriteSmile wanting to position itself in the high ground, I think too much demand is being pulled to the low end. I cannot see a large portion of the population wanting to go in for a whitening procedure, unless there is another series of the reality show "The Swan" on Fox
I am very curious to see what BriteSmile does. It plans to open up three more centers over the next three quarters. But I will be most interested to see whether it continues to develop new products in the lower-end price range of its product line. There seems to be a brighter future in the low country. Hopefully, it can live in the shadows of those giants.
Fool contributor David Meier needs to own shares in a conditioner manufacturer. He does not own shares in any of the companies mentioned.
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