SodaStream International Ltd., the Israeli maker of home soda machines, fell the most since 2011 in New York after the company reported preliminary earnings that missed analyst estimates.
Shares of Lod, Israel-based SodaStream dropped 22 percent to $39.07 at 11:52 a.m. in New York, the biggest decline since August 2011. The stock gained 11 percent last year.
SodaStream, which announced on Jan. 10 that Scarlett Johansson will become the face of its new marketing campaign, said lackluster holiday sales reduced earnings. The company expects preliminary adjusted net income of $52.5 million for 2013, below the $65.4 million estimated by four analysts surveyed by Bloomberg. Chief Executive Officer Daniel Birnbaum said he expects “some of these headwinds” to continue into the first half of 2014.
“I think they discounted at a higher rate than they expected,” Philip Terpolilli, an analyst at Longbow Research LLC who downgraded the stock to neutral from buy on Dec. 6, said by phone from Independence, Ohio. “It probably had a greater effect than they thought it would.”
SodaStream forecasts annual revenue of $562 million, which compares with a $564.1 million projection.
‘Failed to Deliver’
“We failed to deliver our profit targets and are disappointed in our fourth-quarter performance,” Birnbaum said in a statement released today after the results were published. “These preliminary results reflect a challenging holiday selling season in the U.S.”
SodaStream has declined 38 percent since Oct. 29, the day before the company reported third-quarter sales that fell short of analysts’ estimates, the first miss on record.
“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 today. “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.
Sales will expand at the slowest pace in five years in 2014, according to the mean estimate of 10 analysts surveyed by Bloomberg.