Gum Tech International, the maker of Zicam Cold Remedy and Zicam Allergy Relief, announced a drop in net sales for the first quarter to $5.06 million (€5.69m), compared to $6,472 million in the same period last year.
Negative sales were blamed on overall weak cold season sales for the industry during the October 2001 to March 2002 period, and expenses related to the acquisition of the remaining 40 per cent of Gel Tech in February 2002.
Net income for the quarter was $929,000, and earnings per share on a continuing operations basis increased to $0.10 in the first quarter of 2002 from $0.01 the prior year.
``We are very pleased with the high level of profitability achieved in the first quarter,'' said Carl J. Johnson, president and chief executive officer of Gum Tech. ``It demonstrates the significant opportunity we believe exists in the Zicam brand, and underscores our commitment to long term growth in shareholder value," he added.
He also said that the decline in sales from the prior year reflected the impact of a very weak cough and cold season, and the company's decision to adjust the advertising strategy to reduce expenditures in the first quarter and conserve resources for the upcoming 2002-2003 cold season.
Johnson referred to the strong sales increase in the fourth quarter of 2001, and said that the first quarter results suggested that the Zicam brand continued to gain greater acceptance among consumers on the momentum of the new ''helps you get rid of your cold three times faster`` advertising introduced in autumn 2001.
"Favourable feedback from our retail customers indicated that compared to last year, the market share for Zicam products in the 2001-2002 cold season increased,'' he said.
The CEO stressed that Gum Tech was committed to maintaining growth of the Zicam brand, while working to provide shareholders with increased value. However he noted that Gum Tech products are highly seasonal and said that the results were impacted by heightened product marketing and the desire to strengthen the Zicam franchise.
According to William Hemelt, executive vice president and chief financial officer, investors should expect variability in quarterly earnings results as a result of strategies which place emphasis on growth of products using proprietary technologies.
Gum Tech International is an innovative nutrient and drug delivery technology company involved in the manufacture and marketing of delivery systems for bioactive compounds. Gel Tech, its wholly owned subsidiary, produces, markets and sells Zicam Cold Remedy nasal gel, a patented, homeopathic remedy and Zicam Allergy Relief nasal gel, a homeopathic remedy designed to provide relief to allergy sufferers.