Twinlab hit by sales downturn

Related tags Marketing

Supplement maker sees sales slide in Q2, but the benefits of a
litigation settlement help reduce losses.

Twinlab Corporation, the US manufacturer and marketer of dietary supplements, has recorded sales of $42.7 million for the second quarter of the year, a decline compared to the $49 million registered in the same quarter a year earlier. For the first six months of the year, sales were $90.9 million compared to $101.7 million.

However, the news was not all bad, as Twinlab continued its recovery at the profit level, reducing its second quarter losses from $7.1 million to $3.6 million and edging into the black for the six months with profits of $0.1 million compared to losses of $23.0 million.

Results were helped by the proceeds of a litigation settlement and related tax refunds, but were also impacted by costs relating to the court case. The company has been streamlining its business over the last two years, selling off various subsidiaries and substantially reducing its workforce in order to improve its profitability.

Ross Blechman, Twinlab​'s chairman, president and chief executive officer, said: "We continue to experience unfavourable sales comparisons to prior year comparable periods primarily as a result of lower sales to one major customer. However, completed cost reductions, while still not fully reflected in our results, have contributed to continuing positive cash flow from operations and we were able to repay $17 million of outstanding debt during the quarter.

"We expect additional annualised cost reductions in excess of $6 million, commencing in the first quarter of 2003, as a result of the consolidation of our manufacturing and distribution facilities announced​ last week."

Blechman added: "Although we have a great deal of work ahead of us to complete the facility consolidation, we believe our cost cutting and business rationalisation decisions are substantially behind us. We are now refocusing on driving revenues through targeted marketing activities, strategic investments in product development and an expansion of our sales force."

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