LaCroix maker National Beverage Corp. fell more than $9 million short of analysts’ projections in its second quarter earnings report, which was released yesterday afternoon.
The filing, which showed year-over-year revenue dropping 9.9% to $263 million, marked the Florida-based company’s fourth consecutive quarter in which it underperformed analyst expectations. Although net sales improved over the first quarter of 2019 (up from $239 million), the diminished year-over-year results reflect a subdued summer for LaCroix.
National Beverage reported a $96 million gross profit in the quarter, down from $115 million last year. The company also showed $202 million in cash on hand, up from $156 million in April. Earnings per share were $0.74, missing analyst projections by $0.01 but showing improvement from the first quarter results of $0.56.
Through 2017 and the beginning of 2018, sales of LaCroix sharply increased, signifying high consumer demand for the sparkling water category and boosting National Beverage’s stock price to a September 2018 high of more than $124 per share. But as the sparkling water category expands with new entrants, competition from companies such as PepsiCo, Polar Seltzer, and Nestlé has increased. Since September, LaCroix’s sales have fallen and the company’s stock has suffered. Prior to the opening of the stock market today, National Beverage was trading at $39.79 per share.
According to Nielsen all-channel data through August 10, 2019, LaCroix dollar sales have declined 3.9% year-over-year and unit sales have dropped 6.6%. Comparatively, dollar sales of PepsiCo’s Bubly brand grew 172.1% in the same period while unit sales improved 164.9%.
In a press release, National Beverage noted that the improved net sales between the first and second quarters show LaCroix’s “significant stair-step influence returning to a more positive directional position.” However, Nielsen data shows that the brand’s dollar and unit sales both declined 16.6% in the four-week period ending August 10.
The press release also highlighted recent marketing efforts, noting that a LaCroix sampling campaign across 13 U.S. markets generated more than 25 million impressions. A social media campaign for the brand’s Hi-Biscus line created over 187 million impressions on Instagram, and the line’s grapefruit-flavored Pamplemousse SKU received mass exposure through a media placement campaign that included call outs on The Tonight Show with Jimmy Fallon.
Earlier this year, the company authorized a stock buyback program to repurchase 1.6 million shares of common stock. According to a June filing with the U.S. Securities and Exchange Commission (SEC), as of April 27 the company had bought back 502,060 shares, with more than 1 million still available.
Looking forward, National Beverage stated in the press release that the company plans to increase international distribution in Canada, the U.K., Ireland, and European territories, noting that “international customers are piggyback targets providing growth.”