Monday, April 25, 2005

STOCK OF THE WEEK : WNI

Weider Nutrition International

Without the necessary vitamins, minerals, and nutrients our bodies fall into a degenerative state, known as aging. You need the necessary amino acids, minerals, proteins, and vitamins to revitalize proper cell regeneration and without them, the body falls faster into disrepair. A little over fifty years ago, Denham Harman, a researcher at the University of California at Berkeley, realized one reason why people get old. Free radicals, molecules that can attack cells, are responsible. He theorized that substances found in our bodies and in food called antioxidants might just slow the damage.

Harman's free radical theory of aging was initially greeted with a mix of apathy and criticism. Industrial chemists had long known about free radical reactions--for example, free radicals make iron rust--but most scientists had doubted that they occurred in living creatures. That was then; this is now. Nutrition.

Today, thousands of studies have corroborated Harman's theory. "Antioxidant" has become a household word, and, according to the Nutrition Business Journal, Americans spend billions of dollars on antioxidants each year. Antioxidants can reduce your risk of heart disease, cancer, and Alzheimer's. They might even increase your life span.

While research shows that exercise and a nutritionally balanced diet can help improve our health, it also shows that our food supply is not what it used to be. Commercial practices such as over-harvesting are thought to contribute to the problem. The considerable evidence shows that supplements can help.

The Nutrition Industry facts reported sales of $63 billion dollars just 2 years ago and they project a steady climb in growth over the next 5 years.

Weider Nutrition International (WNI), located in Salt Lake City, UT develops, manufactures, markets, distributes and sells branded and private label vitamins, nutritional supplements and sports nutrition products. Weider distributes its products to over 60,000 retail locations. Using health food stores, drug stores, supermarkets, gyms and mass volume retailers like Costco and Wal-Mart, which account for about 50% of their sales. Their portfolio of recognized US brands include Schiff®, Weider Sports Nutrition, and Tiger's Milk® Protein Bars.

The Group is organized into three business units: The Schiff Specialty Unit which markets a complete line of specialty supplements, vitamins, and minerals under the Schiff brand as well as private label products. The Active Nutrition Unit develops and markets sports nutrition, nutritional bar and weight management products primarily under Weider and Tiger's Milk brands. Tiger's Milk, introduced in the 1960s, is known as America's first nutrition bar. Last but not least, another division called Haleko develops, manufactures, and markets nutrition products primarily under the Multipower and Multaben brands. Weider operates in the United States, Germany and South America.

History:Joe Weider is credited as the founder of the Sports Nutrition Industry in 1940. The company has a rich history as a leader in the nutritional supplements industry. Weider Nutrition began as the nutritional products division of Weider Health and Fitness. In 1989, Weider Health and Fitness established its three principal business divisions (Sporting Goods, Nutrition and Publications) as independent subsidiaries. The 418,000 square foot Salt Lake City manufacturing facility, opened in 1997, provides Weider with the capacity to quadruple its current annualized sales. In June 1999, Bruce Wood joined Weider as President and Chief Executive Officer. Mr. Wood brings over 25 years of food industry experience, primarily with divisions of Nabisco, Inc.

The Weider Group feels the key to the long-term growth has been the success of core brands. Weider is focused on supporting and building the strongest brands and developing and marketing high quality, innovative new products that meet consumer needs and demands.

As part of brand building and product development efforts Weider announced the sale of certain assets of its Active Nutrition Unit to Weider Global Nutrition, on April 1, 2005. A wholly owned subsidiary of Weider Health, a privately held company in California and the majority stockholder of the company. Bruce Wood, president and CEO, stated, “The sale of the Weider branded business enables us to focus on our core businesses: the Schiff Nutritional Supplements Brand and the Germany based Haleko business.”

Weider knows that anticipating and meeting customer needs is critical. The company has a track record of developing first-to-market products. To continue to seize these opportunities, the R&D and marketing teams are working closely together to develop and carefully test highly-targeted products. Each new product has anticipated measurable return on investment goals.

On November 11, 2004 The Schiff Group introduced a new joint care supplement called Lubriflex3™ that provides fast-acting joint comfort and promotes better joint health. The product’s triple action formula combines Uniflex™, Lubriflex a powerful antioxidant that protects cartilage and joints, with Joint Fluid, a compound that helps joints glide easily and smoothly, and Glucosamine, an ingredient well-known for supporting joint cartilage and maintaining healthy joint function. The net result is a faster-acting supplement that can provide improved flexibility and joint function in just a few days.

By adding Uniflex™ and Joint Fluid to Glucosamine, Schiff® is breaking new ground in the supplement industry. Emerging results from an ongoing study show that in the very first week of use Schiff® Lubriflex3™ was dramatically more effective than Glucosamine alone in improving overall joint function. In fact, 83% percent of users reported that they experienced improved joint comfort. 78% said that they could even function better during daily activities and 72% showed improvement in physical functioning scores.

“The wonderful thing about Lubriflex3™ is that it can do what traditional pain relievers don’t by addressing the root cause of the joint discomfort,” said Luke Bucci, Ph.D., vice president of research for Schiff®. “Glucosamine has earned its reputation as a truly effective supplement when it comes to building joint cartilage. By adding the comforting properties of Uniflex™ and the protective actions of Joint Fluid lubrication to the equation, we’ve found a powerful, faster way to provide joint comfort.” Suggested retail price of $22.99-$25.99 for a 60-count package.

The stock traded at its 52 week high ($7.15) on April 4th, 11 days ago. The stock is currently trading at $4.20 (written on April 22). We remind you that Jack and I are amateur investors and do not recommend stocks for purchase. We enjoy researching these stocks for our own pleasure and the benefit of our families.

Reporting a loss in 3rd quarter sales over the same period last year hurt the stock. Bruce Wood explained it this way, “We experienced a modest decrease in third quarter sales over the year-ago period. The reduction is primarily a function of a decline in domestic private label sales, as well as weakness in our Haleko business unit’s. We also experienced a reduction in our gross margin and operating margin percentages. Operating results were negatively impacted by volatile raw material costs in our joint care business, increased marketing spending in support of new products, and disappointing Haleko branded sales.” He goes on to say that he expects higher raw material costs and a challenging competitive environment in Germany to continue. “Nevertheless, we remain committed to a long-term strategy of strengthening our brands in what continues to be a very competitive and compressed margin marketplace, and our strong balance sheet provides us with resources to support this strategy.”

Thankfully, I have not had to use their Joint Care Supplement yet, but after my research and 777,000 hits from my internet on sites that recognized their name, I realize they are one of the most trusted and respected brands due to their focus on research, innovations and delivery of high quality supplements. They emphasize the use of the finest natural ingredients to ensure that its products meet strict standards for labeled potency, purity and stability.

They know growth relies upon sales and sales upon quality product and superior distribution. They have always perceived their customer relationships as huge resources and growth contributors so they will continue to model successful marketing programs to enhance communications and responsiveness to relationships with greater potential.

Bottom Line- Weider Nutrition International is a company worth watching. I keep getting older every day. Can vitamins help me regain my youthful look? You decide.


Comment from Jack: my sister and my basketball team member swears by the combination of Glucosamine and other ingredients. My sister's doctor says that many a joint replacement surgery could be avoided by the regular use of these products. There is also evidence that bone desease is attacking men almost to the degree of women. There are 55 million baby boomers in America. We look for long-term buys and this good be another good one.

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