A year ago, SodaStream International Ltd. (SODA) climbed to a six-month high in New York after unveiling plans for its debut Super Bowl commercial.
No such luck this year. The home-soda machine maker plunged 26 percent in its first day of trading after saying it tapped Hollywood actress Scarlett Johansson for a spot during the football game as investors focused on the company’s worse-than-forecast earnings.
SodaStream reported preliminary adjusted net income of $52.5 million for 2013, below the $65.4 million median estimate in a Bloomberg survey of four analysts. Chief Executive Officer Daniel Birnbaum said after the earnings were released yesterday that he expects some “headwinds” to extend into this year, overshadowing the Jan. 10 announcement that Johansson will become the face of SodaStream’s new marketing campaign.
“They’re up against a more difficult comparison this year,” Philip Terpolilli, an Independence, Ohio-based analyst at Longbow Research who downgraded the stock to neutral from buy on Dec. 6, said by phone yesterday. “This year there will be a celebrity in it, but at the same time people are more aware of the product than they were last year.”
Shares of the Lod, Israel-based company plunged to $36.94 in New York yesterday, the biggest decline since August 2011. The stock gained 11 percent last year. SodaStream has declined 40 percent since Oct. 29, the day before the company reported third-quarter sales that fell short of analysts’ estimates, the first miss on record. The stock rose 2.5 percent to $37.87 at 1:27 p.m. in New York after earlier falling as much as 2.3 percent.
SodaStream forecasts annual revenue of $562 million, which compares with a $564.1 million projection.
“We failed to deliver our profit targets and are disappointed in our fourth-quarter performance,” Birnbaum said in a statement released yesterday after the results were published. “These preliminary results reflect a challenging holiday selling season in the U.S.”
Johansson, a Tony winner and four-time Golden Globe nominee, will be part of SodaStream’s commercial during the Super Bowl next month.
“We are confident and believe that these issues that came up in the quarter are temporary and they are 100 percent addressable with process improvements,” Yonah Lloyd, SodaStream’s chief corporate development and communications officer, said at a consumer products conference in Orlando today.
On Dec. 4, 2012, the soda producer’s stock climbed to a five-month high after news it would run its first-ever Super Bowl commercial the following February. A week before the game, the stock was at its highest in 17 months.
“We expected some weakness in U.S. sales but are surprised by the magnitude of the company’s gross margin and earnings miss,” Jim Chartier, an analyst at Monness Crespi Hardt & Co. who downgraded the stock to neutral from buy, wrote in a note to investors yesterday. “While we continue to believe in the story longer term, we are moving to the sidelines until we have greater clarity on the company’s gross margin issues.”
SodaStream benefits from the so-called razor-blade model of retailing where profits rely on customers repeatedly buying complementary products such as carbonation cannisters and flavors. Surveys of SodaStream products among U.S. retailers from Wal-Mart Stores Inc. to Costco Wholesale Corp. showed modest sales growth from the prior year during the holidays, according to Longbow.
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