Source: LOHAS Weekly Newsletter
Published: Thursday, October 01, 1998

SALT LAKE CITY—In another example of Wall Street keeping close tabs on the financial health of the dietary supplements industry, shares of Weider Nutrition International Inc. (WNI) dropped by more than half after the company reported less-than-expected earnings for its 1Q99.

Citing higher-than-expected sales returns and credits due to problems with opening its new Salt Lake City manufacturing plant, among other things, WNI announced on Sept. 23 lower-than-expected EPS, flat net income, but a net sales increase for 1Q99 ended Aug. 31. Net sales increased to $67.9 million compared to $53.5 million in 1Q98. Net income was unchanged from 1Q98 at $1.7 million or $.07/share.

Analysts had expected a company EPS for the quarter of $.12/share. On the news, WNI stock dropped nearly 58% to $4.25/share, and Sutro & Co. downgraded the company from Buy to Hold.

WNI also announced it will consolidate its Irwindale, CA, capsule and tablet manufacturing facility into its Salt Lake City facility by the end of FY99. A positive impact on gross margin is expected in FY2000. During the two-quarter transition, Weider expects to incur $3 million in excess overhead costs and $5 million in additional close-down costs, to be partially offset by proceeds from the potential sale of the Irwindale facility and assets.