Prestige: Cough-cold category down 15%

TARRYTOWN, N.Y. — Cough-cold suppliers are presently operating in a challenging environment, noted Matthew Mannelly, Prestige Brands CEO, president and director, during a conference call Thursday. The return of Tylenol to the cough-cold aisle and the accompanying media splash from McNeil Consumer isn't the only competitive factor impacting the cough-cold category, Mannelly said. The season is down more than 15% versus last year. And that lack of consumption, coupled with an overall soft retail environment, is forcing retailers to significantly cut back on inventories. 

"While we had a record cough-cold season last year and we didn't anticipate to repeat that, we didn't anticipate cough-cold would be down as much as it's been down this year," Mannelly said. "When you take those three factors and combine them, that in aggregate, that's what's had a significant impact on our business."

The most significant challenge is the retailer inventory reductions, Mannelly noted. "We heard retailers talk about this three or four months ago, and it was really in November, late November and in December that we really saw it come to fruition as a result of what's going on at retail. … The one that's driving [category challenges] the greatest is the inventory reductions, which is something that really has just started in the last 60 days," he said. 

"From a cough-cold standpoint, if you recall, last year cough-cold really ranged from mid-December up until the beginning of February. I think at this point, if you look at retailers and other manufacturers, the season is not panning out," Mannelly noted. "Candidly, I think the retailers are not reordering and are now gearing up for the allergy season in anticipation of that."