{ "docId": "019dd923-622c-750b-8b98-ef240a9cc70a", "docSlug": "c3be1f268cc3", "documentTitle": "Prestige Consumer Healthcare Inc. (PBH)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-06-30 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 56, "pageCount": 122, "prevPage": 55, "nextPage": 57, "slideType": "testimonial", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide uses expert/insider testimony to validate the thesis that PBH lacks pricing power.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-ef240a9cc70a/56", "deckHref": "/decks/019dd923-622c-750b-8b98-ef240a9cc70a", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ef240a9cc70a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ef240a9cc70a#slide-56", "components": [ { "bbox": null, "kind": "callout", "text": "Given Walmart is PBH's largest customer and the choice for the most cost-conscious customer, we believe there is significant pressure on PBH's prices.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b63-72e1-b60f-30552fe3bdc4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.18 }, "kind": "paragraph", "text": "Based on our research, PBH's products are at a competitive disadvantage to store brands (e.g. CVS, Walgreens, Walmart's Equate) based on pricing and product placement. Analyzing prices across many of the Company's largest distribution channels, we believe the level of competition results in no pricing power for PBH. We found prices differ across retailers, with Walmart having the lowest prices across the board. Given Walmart is PBH's largest customer and the choice for the most cost-conscious customer, we believe there is significant pressure on PBH's prices. Historically, PBH would balance price pressure from big box customers by passing it onto smaller customers. As larger customers account for a greater percentage of PBH's sales, this practice may no longer be able to offset the pressure and margins will decline.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9722c2a6-9b49-454f-b328-1bdcc96d50ef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.8, "x": 0.15, "y": 0.88 }, "kind": "quote", "text": "The challenge comes when its more than 50% savings. When a product comes in a 50% savings, that's when you lose much more.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0bc26d65-1c9e-445a-9075-832e2ba84ef2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.15, "y": 0.45 }, "kind": "quote", "text": "The biggest risk is pricing pressure. I would say big pricing pressure from the retailers. Also, supply chain distribution is another risk. I would say price pressure will eat up their margin because they are over exposed to big box retailers.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "28d28240-b135-485d-a1ea-90d1e9f92802", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.15, "y": 0.55 }, "kind": "quote", "text": "As far as the big box stores, the pricing for the past 10 years has been very flat. There has been some growth in certain segments, such as C stores where they have seen some growth on the pricing side. But for the big box stores, the price changes were very flat because of reason like allowances, they would give a lot of concessions.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "59ce175f-59ef-4b7a-9400-dba23538512d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.8, "x": 0.15, "y": 0.68 }, "kind": "quote", "text": "I am worried about the supply chain disruption because sometimes they can absorb the price increase from the suppliers. but sometimes retailers cannot pass on the consumer. I would think that for the big box retailers, they'll have a lot of price pressure. They will have to come up with some creative strategy to pass it on to other channel that are not as price elastic. I don't think they will have a lot of price increase they can pass on to the big box retailers because they will come up with private brands. They will grow and put intense pressure. The only way is to go after the smaller players.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8a386c83-eb73-4b6e-9c44-064a05903d73", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"The biggest risk is pricing pressure. I would say big pricing pressure from the retailers. Also, supply chain distribution is another risk. I would say price pressure will eat up their margin because they are over exposed to big box retailers.\" — Former PBH Employee; \"As far as the big box stores, the pricing for the past 10 years has been very flat. There has been some growth in certain segments, such as C stores where they have seen some growth on the pricing side. But for the big box stores, the price changes were very flat because of reason like allowances, they would give a lot of concessions.\" — Former PBH Employee; \"I am worried about the supply chain disruption because sometimes they can absorb the price increase from the suppliers. but sometimes retailers cannot pass on the consumer. I would think that for the big box retailers, they'll have a lot of price pressure. They will have to come up with some creative strategy to pass it on to other channel that are not as price elastic.\" — Former PBH Employee; \"I don't think they will have a lot of price increase they can pass on to the big box retailers because they will come up with private brands. They will grow and put intense pressure. The only way is to go after the smaller players.\" — Former PBH Employee; \"The challenge comes when its more than 50% savings. When a product comes in a 50% savings, that's when you lose much more.\" — Senior Manager Large PBH Customer", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-2b63-72e1-b60f-340ade657572", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.15, "x": 0.02, "y": 0.97 }, "kind": "source-note", "text": "Source: Spruce Point research", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "33da0492-6d7e-4ad3-b48f-c3b8244fe29e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.4, "x": 0.305, "y": 0.05 }, "kind": "title", "text": "Product Prices Are Not Competitive", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7314365e-f9ff-4332-8318-94fa80079d89", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 122, "from": 11, "beatId": "fc4ac38d-48bf-454d-9d50-344d1705ba33", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The majority of the document is dedicated to exposing contradictions and concerns in Prestige Brands' financials, operations, and governance.", "position": 1, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null }, { "to": 122, "from": 10, "beatId": "91479d45-6cb5-49fc-9f03-ea82d8e93c6b", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Evidence", "beatSlug": "evidence", "evidence": "The document provides extensive evidence to support its claims, including financial data, comparisons to peers, and testimonials.", "position": 3, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }