Greenberg: SodaStream Story Goes Flat
The press release starts with: "Despite achieving all-time record sales, we failed to deliver our profit targets and are disappointed in our fourth quarter performance." Boom.
It continues: "These preliminary results reflect a challenging holiday selling season in the U.S...." In other words, SodaStream is now an all-in product, where nearly everybody who is going to get or give a SODA machine has done so or will.
It continues: "...Several factors, mostly from the second half of the quarter that negatively impacted our gross margin. These include lower sell-in prices and higher product costs, a shift in product mix versus plan, and unfavorable changes in foreign currency exchange rates." This is stunning. In effect, the company is conceding that it has been forced to give retailer deals in hopes of making it up on volume. This is confirmation of saturation.
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It continues: "While we expect some of these headwinds to continue into the first half of 2014, we are moving quickly to implement the necessary measures to restore margins to historical levels in the coming year." Interpretation: Boy, are they loaded with inventory.
Reality and my take: The Soda story has lost its fizz and is unlikely to get it back.
-- Written by Herb Greenberg in San Diego