NOW THIS IS FUNNY->"and 60-second ads playing on Good Morning America,"
The Arizona Republic
Dec. 11, 2002
Matrixx sniffing out market
Firm doesn't want to be left out of colds
By Yvette Armendariz
Matrixx Initiatives wants you to know what it is.
The Phoenix-based company, formerly known as Gum Tech, recently launched a $10 million, six-month marketing campaign to promote its Zicam brand products, including five new cold relief and sinus medications. It's also working to get the attention of about a dozen analysts in an effort to spur interest in its stock, which has been trading between $8 and $10 for much of the past three months.
The company credits the marketing effort for helping to improve sales of its Zicam homeopathic products, which include remedies promising to shorten the duration of a cold. The medicine conforms to Food and Drug Administration regulations.
"We're extremely pleased," Chief Executive Officer Carl Johnson said. "Major retailers that share scanner data are seeing pretty good movement." Matrixx wants a larger portion of the $310 million over-the-counter nasal products market. A report from Chicago-based Information Resources Inc., a consulting firm that tracks the industry, shows Zicam's share of the market has grown to 7 percent as of Nov. 3, up 13.5 percent over the same period last year. Top competitors in the market are private-label sprays and Afrin, each with 19.8 percent market share. Zicam falls in the middle of the pack. FYI What: Matrixx Initiatives. Based: Phoenix. Employs: 14. 2001 annual sales: $16.1 million. Product lines: Zicam Cold Remedy; Zicam Allergy Relief; and five recently introduced products, Zicam Cold Remedy Swabs, Zicam Kids Size Cold Remedy Swabs, Zicam Extreme Congestion Relief, Zicam Sinus Relief and Zicam Nasal Moisturizer. To add market appeal, Matrixx redesigned the Zicam boxes, using more eye-catching color.
Then came the first wave of advertising in mid-October, with 30- and 60-second ads playing on Good Morning America, The Today Show and nine cable networks. Those ads are set to run through February, covering most of the cold season, which typically ends in March.
The spots also focus on how Zicam shortens the length of a cold, which distinguishes it among brands offering just symptom relief. A study published in Ear, Nose and Throat Journal in October 2000 showed the zinc in Zicam's nasal gel shortened a cold's duration by about 6.7 days, compared with a control group, if taken within 24 hours of the onset of symptoms.
The second marketing push came in the form of a dollar-discount coupon in Sunday newspaper inserts that ran nationwide on Nov. 3. A second coupon is planned in February.
Getting the word out is key because Matrixx is essentially a new company. In July 2001, the company got out of the business of making nicotine and other medical gums when it sold its gum assets to Chicago-based Wm. Wrigley Co. for $25 million. Gum Tech, as it was known then, owned 60 percent of Gel Tech, which made Zicam Cold Relief and Zicam Allergy Relief. The gum sale made it possible to acquire the rest of Gel Tech last December.
The new company focus was the impetus for a new name, which became effective in June.
Analysts have yet to cover the stock, but company pitches and a strong turnaround in financials have gotten the attention of at least one analyst. "I have really become enamored with this company," said Marc Robins, an independent analyst in Portland, Ore., and founder of Red Chip Review. "It's probably early by three years, but these kinds of over-the-counter health firms really have the potential of becoming huge hits."
The company's most recent quarter showed an 87 percent jump in sales to $5.08 million and net income from continuing operations of $1.02 million. The company showed $17.3 million in net income in third quarter 2001, but that included the sale of its gum operations. Without that, the company posted a $101,000 loss.
For the first nine months, the company has seen a financial turnaround. Net income has come in at $1.08 million on sales of $11.97 million. That compares with a loss of $1.9 million on sales of $10.56 million the same period in 2001. The fourth quarter is on track for further sales gains. In all, Johnson anticipates revenues increasing 25 percent to 30 percent this year over last, and 30 percent in 2003.
Robins believes the only negative for would-be investors is that some of Matrixx's stock potential is factored into the stock price. The stock closed at $7.80 a share Tuesday, down 20 cents.
Another potential negative, which Matrixx addresses in its 10-Q filed Nov. 4, is inadequate production capacity. If product doesn't meet demand, sales could be hurt, the report said.
Matrixx got a taste of that glitch in the third quarter. It couldn't produce enough of its swab products to meet demand.
Still, sales were strong.
"We have not lost any customer orders as a result of the backlog. None of our other products are currently in a backlog situation," it said in its filing. Its manufacturer doubled production capacity to address the backlog. |
