Cetalon Plans to put Dietary Supplements into U.S. Sears Locations
Published: Thursday, November 01, 2001
The publicly held company, which acquired 44 Sears Health Food and Fitness Shops in Canada from Claydan Enterprises Inc. this past April, now owns 46 Canadian and 10 U.S. outlets selling health, nutrition and personal care products to mainstream consumers in Sears outlets. And its aggressive growth plans have resulted in some high-profile partnerships to help it achieve its goals.
Only weeks after it purchased the Canadian stores, the company, incorporated in Nevada in 1996, announced an agreement with Sears to open 10 store-within-a-store vitamin, mineral and supplements outlets within various Sears locales in California.
Claydan Enterprises had owned and operated the 44 Canadian shops within Canadian Sears stores for 18 years, and it made sense to take the concept to the U.S. However, Cetalon doesn’t plan to wait another 18 years before making a name for itself in the U.S. market.
Beginning in January 2002, Cetalon plans to begin opening stores within U.S. Sears operations at the rate of four or five a week. Currently, Cetalon is contracted to open 119 stores but hopes to expand beyond that number as time passes. The goal is to eventually establish a store within every single one of Sears’ 850 outlets nationwide. Sears has a customer base of 64 million credit card holders.
In a statement, Cetalon Chairman Anthony Bryan said, “The association with Sears, a well-established U.S.-based retailer with excellent locations, a large customer base, and strong reputation for quality and service, is a great platform for merchandising our vitamins, minerals and supplements, as well as our health information technology products.”
Nature’s Sunshine Products Inc. (NATR) is clearly a believer. On May 16, the company purchased $1.5 million in Cetalon shares priced at $3.27/share. Then, on July 24, NATR dropped another $500,000 into CETA, exercising a previously arranged option to purchase additional shares at the same price.
Despite the events of Sept. 11, CETA returned a sales increase of 60 percent for the month, the best September the Canadian stores have seen since four years ago, when Claydan was still in charge of them. Net loss for FY01 was $2.7 million or $1.65/diluted share vs. a loss of $600,000 or $2.30/diluted share for FY00. Sales were $3.9 million vs. $6.7 million a year ago. However, these figures are the result of a reduction in inventory due to cash flow restraints and do not account for increased expenses in the general, administrative, and sales divisions.
Cetalon also recently completed the acquisition of two of its Canadian franchisees.
Beyond the stores, Cetalon has entered into a joint venture with the Los Angeles-based Basic Media Group to establish an education program, featuring educational literature written by health professionals and designed to alert consumers on a wide variety of health topics. The first initiative will focus on anthrax and should be available free to consumers by press time.
For more information, visit www.cetalon.com.