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Prestige Consumer (PBH) Looks Poised on E-Commerce Strength

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Prestige Consumer Healthcare Inc. (PBH - Free Report) appears to be in good shape, thanks to its solid market share brand positions, efficient marketing efforts, diverse brands and strong e-commerce initiatives. Management on its last earnings call said that these factors are expected to be drivers in fiscal 2022 and beyond.

However, in fourth-quarter fiscal 2021, Prestige Consumer’s top and bottom lines declined year over year.  The year-over-year downside in revenues resulted from lower consumption for some brands amid the pandemic, which also included tough year-over-year comparisons related to the stock-hoarding trends in the same period last year. Management stated that its fiscal 2021 sales were affected by pandemic-related disruptions on cough cold, travel and head lice categories, stemming from increased stay-at-home trends and mask usage. Nevertheless, an encouraging guidance for fiscal 2022 and strength in e-commerce raise hopes.

Prestige Consumer in Good Shape

For fiscal 2022, Prestige Consumer anticipates organic growth to be in tandem with its long-term expectations for its leading brand portfolio, barring some categories that are hurt by the pandemic. However, even in these disrupted categories, management expects a relatively stable performance compared with fiscal 2021. Further, the company expects its robust financial status to facilitate an increase in cash flow in fiscal 2022, which along with stringent cost management is likely to result in a robust low-double-digit increase in earnings.

In fiscal 2022, the company anticipates revenues of nearly $957-$962 million. Organic growth is projected to be 1.5-2%. Finally, the company envisions adjusted earnings per share to be $3.58 or more. In fiscal 2021, revenues and earnings came in at $943.4 million and $3.24 per share, respectively.

Notably, the company has been making multi-year e-commerce investments for a while now, which continued to yield results in the fourth quarter of fiscal 2021. In fiscal 2021, e-commerce sales doubled and constituted nearly 11% of the company’s revenues, which can be attributable to consumers’ growing shift to online shopping. Courtesy of its constant investments, the company has a greater share in the e-commerce channel compared with brick and mortar. Well, a number of consumer-focused companies such as Spectrum Brands (SPB - Free Report) ), Helen of Troy (HELE - Free Report) and Newell Brands (NWL - Free Report) are benefiting from their online operations.

Meanwhile, with more consumers shifting to the online mode of shopping, especially amid the pandemic-led social distancing, the e-commerce channel is likely to remain strong and Prestige Consumer’s investments in this arena are likely to keep it well placed.

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