Optimal Robotics Enjoys Meteoric Rise To Head Of Self-Checkout Line
Tuesday, December 7, 1999 12:48 PM
NEW YORK -(Dow Jones)- Eight months ago, Optimal Robotics Corp. was just another high-tech wannabee. Today, it is changing the way people pay for groceries and other retail goods.
The company's U-Scan Express self-checkout system, billed as a speedier alternative to traditional express lanes, is easily the dominant system on the market, according to industry analysts.
"I think, in general, people are looking for a self-service option as part of their everyday life," said Neil Wechsler, co-chairman and chief executive of Montreal-based Optimal (OPMR, news, msgs). "People are in a hurry."
Some of the largest superstore retailers and supermarket chains would appear to agree. Kroger Co. (KR, news, msgs), the largest retail grocery chain in the U.S., has U-Scans in 200 of its 2,200 stores, and 200 more are on order. Great Atlantic & Pacific Tea Co. (GAP, news, msgs), which operates A&P stores, recently ordered 100 systems. Superstore discount retailer Meijer Inc. (X.MJS, news, msgs) owns 90 U-Scans, while Wal-Mart Stores Inc. (WMT, news, msgs) owns 15.
In all, Optimal has 360 systems in use in 30 states, and a 330-system order backlog, Wechsler said.
Optimal was founded in 1991. It spent its first four years perfecting U-Scan before going public on Nasdaq in October 1996. Its initial public offering was priced at $5 and the stock currently trades around $34.
Most of the gains have come in the last eight months, starting with the beginning of its second quarter, its first taste of profitability. Optimal was in the black again in the third quarter, with net income of 13 cents a share compared with a year-earlier loss of 14 cents. Sales rose to $10.7 million from $2.7 million a year earlier.
Each U-Scan system contains four checkout stations. All are equipped with built-in scanning devices and an elaborate scale designed to thwart would-be larcenists. An overhead camera monitors each station and an automated voice system guides the uninitiated through the checkout process.
U-Scan also reduces retailers' labor costs, the company's Wechsler said. One system can cut 120 to 150 hours of labor costs each week, he said. On average, it takes retailers nine-18 months to recoup their $100,000 investment in a U-Scan system, he said.
Typically, about one-third of supermarket patrons use U-Scan, Wechsler said. The company is attempting to adapt the system to conventional checkout lanes, and it is also trying to create a system for smaller retail stores. "There will be product migration," he said. "We will be the self-checkout-system solution for retailers."
Even if the product migration fails, Optimal's foreseeable future looks bright.
Competition is minimal and the market for self-checkout systems in the U.S. alone is between $2 billion and $3 billion, said Scott Ciccarelli, analyst at Gerald Klauer Mattison & Co. "I'm very bullish on the company and its prospects," he said.
Neal Johnson, analyst at Robinson-Humphrey Co., lists NCR Corp. (NCR, news, msgs) among Optimal's more potent challengers. However, the giant maker of ATMs and cash registers has a long way to go before it can be considered a serious self-checkout player, he said.
Productivity Solutions Inc. and Symbol Technologies Inc. (SBL, news, msgs) are among Optimal's other main competitors, Johnson said.
He is forecasting sales of about $28 million and net income of $1.5 million for Optimal in 1999, and sees sales of $50 million and net of $5 million in 2000.
Ciccarelli of Gerald Lauer is predicting revenues of $28 million and net of $1.35 million in 1999, rising to $54 million and $6 million, respectively, in 2000.
Wechsler said he was comfortable with the estimates. |
