NEW YORK (
battery business decline might have slowed and the company might be boasting buoyant prospects in its personal care business, but, according to Morningstar, there's one little nick on the face of the company: its new razor products.
Energizer, at an annual analyst conference last Friday, announced the launch of the new Schick Hydro razor. One Hydro has three blades and the other comes with five blades. The three-blade razor is less expensive than the company's Quattro brand, while the five-blade razor is Schick's highest-end shaver.
Energizer says it has invested more than five years of research and $150 million in these products.
Still, Morningtar analyst Lauren DeSanto is worried about the timing of the company's launch, given that consumer goods giant
Procter & Gamble
will be launching its own new razor just a few months later. The result could be "disruptive," DeSanto warned.
Overall, the company seems more upbeat about its personal care division, though the feminine and infant care businesses are still struggling. Meanwhile, Energizer is seeing some stabilization on the battery side of its business.
"Decline has slowed; there's some uptick in unit sales, though not in dollars," DeSanto said, who notes that the sales have the benefit of not being driven by promotions.
"We've been typically the least-promoted in terms of percent of volume on deals, percent of non-promoted volume for us tends to be higher," Energizer's CEO Ward Klein said during the conference, as noted in a transcript.
Right now, volumes for Energizer are flat to slightly up for the company's alkaline batteries. The business' woes has been blamed on the technology revolution, as the spread of cell phones and internal rechargeable batteries, including newer smart phones like the iPhone, made the disposable alkaline battery less relevant. Others say that consumers have increasingly gotten into the habit of buying everything in bulk -- including batteries -- which have eroded the company's margins.
One area of growth and hope for Energizer's battery business currently is, as DeSanto says, its "fast growing" lithium unit; very few companies are manufacturing lithium batteries for items like digital cameras; Energizer happens to be one of them.
Despite the company's struggles, Energizer has still been able to generate significant cash, Desanto notes. It has traditionally preferred to use this cash for share repurchases or acquisitions. Its third preference for cash utilization has been paying down debt.
Energizer stock is currently trading up 0.5% at $58.30. Other companies in the battery business are seeing their shares fall Friday morning.
stock has edged 0.5% lower to $4, while
China BAK Battery
has fallen 2.2% to $2.30. Procter & Gamble has edged 0.5% lower to $63.40.
-- Reported by Andrea Tse in New York
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