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How UrgentRx Crashed the Party at the Cash Register

August 7, 2013 by

At a time when it can seem as if all retailing is migrating online, many consumer staples still live or die based on their placement in the detailed schematics that stores like Duane Reade use to maximize the profitability of their shelf space. For an upstart brand with no track record, securing any spot in these schematics, or plan-o-grams, as they are known, is difficult. To stake a claim to the prized ground near the registers is all but impossible, akin to a struggling young artist moving his milk crates into a Park Avenue co-op.

Or so it seemed until Jordan Eisenberg came along.

Mr. Eisenberg, 31, is the founder of UrgentRx, maker of single-dose foil packets of flavored, powdered over-the-counter medications with the same active ingredients found in products like Bayer, Pepto Bismol, Benadryl and Excedrin. Designed to be taken without water, the UrgentRx versions have been selling well enough that the company expects revenue this year of more than $3 million. Based in Denver, with 10 employees, the company has attracted more than $7 million in financing from investors like Sam Zell and Herb Simon, real estate moguls; David Bonderman, a private equity billionaire; and Hilary Swank, the actress.

But what really seems to have propelled the company’s early success are the inroads Mr. Eisenberg has made with major retailers. In the three years since the company’s debut, he has placed UrgentRx products near the checkout counter at 2,700 retail outlets across the country, including those of Duane Reade, Walmart and Kroger. Recent agreements and continuing negotiations, he estimates, should put the products in 27,000 stores by the end of the year. Merchandising fees — when big chains do take a flier on a new brand, they often charge stiff first-time stocking fees — have been less than $100,000, he said.

How has he done it? With a simple insight: Mr. Eisenberg realized that while most small brands cannot break into the plan-o-gram, they can persuade retailers to give them access to the unused space in the margins beyond the plan-o-gram. This insight has earned Mr. Eisenberg a reputation as a kind of “store seer,” a master at finding wasted spaces hidden in plain sight. Employing a variety of custom-fabricated display units, the burly former engineering major has designed lazy susan-like trays that spin atop the stanchions of queue lines, racks that hang off the ends of display walls, and oddly shaped shelving units that seem to levitate above sale counters.

“What he’s doing is one step beyond audacious,” said Kim Feil, chief marketing officer for OfficeMax, which recently signed an agreement to allow a horizontal UrgentRx display to sit atop the candy, mint and gum rack at the front of its checkout lanes. A 30-year merchandising veteran, Ms. Feil likened Mr. Eisenberg’s tactics to when 5-Hour Energy got its individual shot-size bottles into the racks by developing a carton of 12 with a tear-off lid and the precise dimensions of a candy, mint or gum slot. “But there haven’t been too many others,” she said.

On a recent afternoon, Mr. Eisenberg was visiting Manhattan, testing his latest prototype for Duane Reade. Although the chain has already installed his lazy susan queue-line display in two-thirds of its locations, its older and smaller stores do not have queue lines. So Mr. Eisenberg asked his fabricator to fashion a different sort of display — a 2-by-12-inch, white powder-coated strip of metal with three clear acrylic pockets affixed to the front.

Near 44th Street and Ninth Avenue, Mr. Eisenberg entered an older Duane Reade, clutching his prototype filled with packets of UrgentRx, to scope out spots near the front of the store. At the register, a cashier surrounded by razors, cigarettes, nicotine replacements, candy and gum was ringing up a customer. Next to the register, a stack of chocolates took up what little counter space was available. Then the UrgentRx rack popped into view, Mr. Eisenberg holding it up to show how it could be fastened to the back of the arm supporting the register screen. Suddenly, it was the most prominent point of sale in the store.

A moment later, he was standing by a metal refrigerated case in a prime location across from the counter. He held the same rack flush against the side of the case. “Put some magnets on the back and it could also go right there,” he said. On the other side of the case, where a clear acrylic rack of Lifesavers mints was attached, he showed how his rack could go on the side of the Lifesavers rack. “This is why my wife won’t go into stores with me anymore,” he said.

He is clearly something of an obsessive. After reading “Secrets from an Inventor’s Notebook” in college, he talked his way into an apprenticeship with its author, Maurice Kanbar, the originator of both Skyy vodka and a type of lint remover, calling on Mr. Kanbar’s office at least once a month for two years before landing a meeting. He eventually assisted Mr. Kanbar with the start of four companies.

By the time Mr. Eisenberg was 27, he had founded two companies on his own: CollarCard, maker of a credit-card-size shirt stay holder given out as a premium by men’s wear chains; and PMS Buddy, an app that reminded men when their wives or girlfriends were having their periods. The app received 30,000 downloads the day Ashton Kutcher, the actor and Twitter sensation, tweeted about it.

The inspiration for UrgentRx came to Mr. Eisenberg, who is severely allergic to raw fruits and vegetables, while disinterring a Benadryl pill that he used to wrap in cellophane and carry in his wallet in case his throat swelled up. The idea solidified when he realized that his father, then 61, was doing the same thing with aspirin, which is known to improve one’s chances of surviving a heart attack. Soon after test-marketing began in Colorado, Mr. Eisenberg became the subject of local news reports when a Denver man claimed that the UrgentRx’s aspirin formulation had saved his life.

Mr. Eisenberg says he believes that many brands can learn from his unorthodox merchandising methods. Walking into a Staples outlet on Broadway, he said that a lot of brands made the mistake of skimping when designing display equipment. He pointed to the counter where a dented plastic container was nearly drained of hand sanitizer bottles. “See, as soon as those are gone,” he said, “that’s going to get thrown out because it looks cheap.”

In the next block, Mr. Eisenberg came across another Duane Reade, this one in a newer location. Inside, he noticed that half of the UrgentRx packets in a display were either upside down or in the wrong slots. “It’s a constant battle,” he said, pulling out all of the packets, re-sorting them and then placing them in the appropriate slots. He noticed a woman waiting in line with a box of Benadryl.

“Here, you should try this instead,” said Mr. Eisenberg, handing her a packet of UrgentRx Allergy Relief To-Go. “It’s much better than that other product.”

She took the packet, read the back of the package, and returned the Benadryl, before turning to the cashier: “I’ll try one of these.”

“I have no shame,” Mr. Eisenberg said.

Article source: http://www.nytimes.com/2013/08/08/business/smallbusiness/how-urgentrx-crashed-the-party-at-the-cash-register.html?partner=rss&emc=rss

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Shares Move Up After Fed Release

April 10, 2013 by Leave a Comment

Wall Street traded strongly higher on Wednesday as investors scooped up technology and financial shares that have lagged gains in other sectors recently.

The Standard Poor’s 500-stock index was up 1.1 percent in afternoon trading, hitting its highest level ever and breaking a record that had stood since October 2007. The benchmark index hit and then surpassed 1,567.10 to break its previous intraday high.

The Dow Jones industrial average rose 0.9 percent in afternoon trading and the Nasdaq composite index added 1.7 percent. The Dow closed at a fresh record on Tuesday.

Financial shares helped lead Wednesday’s advance, with the S.P. financial sector index gaining 1.1 percent and the S.P. information technology sector index up 1.7 percent. In the past month, both sectors have lagged as investors pushed into more defensive areas, including health care and consumer staples.

Minutes from the Federal Reserve’s meeting in March, released early on Wednesday, showed that a few policy makers expected to taper the pace of asset purchases by midyear and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end.

But because the meeting referenced in Wednesday’s minutes occurred before last week’s unemployment data — which showed that job creation was unexpectedly weak in March — the market may place less importance on it, said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.

Earlier, encouraging data from China buoyed investors’ optimism. Imports of key commodities rebounded in March, signaling domestic demand was picking up and would help drive the economy. Asian markets ended moderately higher, and European stocks were trading ahead about 2 percent in afternoon trading.

Investors were also positioning for the start of corporate earnings season. Among the 5 percent of S.P. 500 companies that have reported results so far, almost three-quarters have topped expectations, according to Thomson Reuters data.

Family Dollar Stores reported weaker-than-expected profit on Wednesday. The stock started the day lower, but was up 0.3 percent by early afternoon.

Health Management Associates cut its outlook for 2013 earnings and revenue, citing weak patient admissions in the first quarter of the year. The stock slumped 16.8 percent.

Article source: http://www.nytimes.com/2013/04/11/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Fundamentally: Dividend-Paying Stocks Have Become More Expensive

January 7, 2012 by Leave a Comment

In fact, the four best-performing categories of equity funds in 2011 — portfolios that specialize in utilities, health care, real estate investment trusts and consumer companies involved in food, beverages and other household products — all dabble in dividend-rich parts of the market. And all of these groups produced average gains of more than 7 percent last year, when the Standard Poor’s 500-stock index rose a mere 2 percent, according to the fund tracker Morningstar.

But almost as quickly as investors rediscovered dividend payers, they’ve started to learn that this strategy is becoming expensive.

“It does beg a little closer inspection,” said Mark D. Luschini, chief investment strategist at Janney Montgomery Scott. “Investors have plowed into these areas without much regard for what underlying securities are actually producing these yields and what their valuations are.”

Mr. Luschini noted, for instance, that because of their recent popularity, shares of many utilities and consumer-staples companies — businesses that produce basic household necessities like food and toothpaste — are now at or near their recent highs.

Utilities, which have historically traded at a significant discount to the S. P. 500, owing to the sector’s slower-than-average growth, have an average price-to-earnings ratio of 15, based on the trailing 12 months of earnings. That means the sector trades at a premium to the overall market P/E of about 13.

And as far as real estate investment trusts go, their prices are starting to become uncomfortably high, said Chris Cordaro, chief investment officer at RegentAtlantic Capital. “We’ve been in REITs for clients for more than 20 years, but we’re completely out of them right now because of their valuations,” he said.

Still, prices in income-producing sectors haven’t reached the point where strategists recommend abandoning the search for dividends. Instead, they say, investors just need to be more mindful of how they use the strategy.

Thomas H. Forester, manager of the Forester Value fund, which outperformed 56 percent of its peers last year, noted that his fund sold its shares of a giant utility, Dominion Resources, when they were trading at a P/E of above 15.

But his fund has not given up on the sector entirely. It continues to own shares of utilities with lower-than-average P/E ratios, like American Electric Power, which is trading at just 11 times last year’s earnings.

Mark R. Freeman, co-manager of the Gamco Westwood Balanced fund, which beat 65 percent of its peers in 2011, adds that investors would be wise to focus on high yielders and on companies with the potential to methodically bolster payouts over time. “This is the wrong time to reach for stocks with the absolute highest yields,” he said. “I’m a bigger fan of companies that are yielding 2 to 4 percent now but that promise earnings growth in the future and higher-quality balance sheets.”

FOCUSING on dividend growth should help create a more stable portfolio, market strategists say. After all, companies that can bolster their earnings and payouts consistently are likely to withstand an economic downturn better than their peers.

What’s more, this approach should help investors find dividend-payers in less-expensive sectors of the economy.

Henry B. Smith, chief equity investment officer at the Haverford Trust Company, an asset management firm in Radnor, Pa., said that the firm maintains two separate blue-chip dividend stock strategies. The first focuses on companies in position “to increase their dividends over time based on their above-average earnings growth,” he said, and is used in the Haverford Quality Growth Stock mutual fund. The other, available to clients though not through a retail fund, pays more attention to companies with higher current yields.

While the second approach outperformed the first in 2011, the dividend-growth portfolio has a lower average P/E ratio — around 10 times 2012 estimated earnings, versus about 11 for the high-yielding portfolio.

By focusing on dividend growth, investors will also be drawn to less-traditional income-producing sectors like technology.

Mr. Cordaro of RegentAtlantic says that one of his favorite dividend-paying stocks these days is Intel, the chip maker now paying out a market-beating 3.3 percent dividend yield. The stock is trading at a modest P/E of 10, and its earnings are expected to grow roughly 10 percent annually.

“You’ve got the same exact thing going on at Microsoft,” he said, referring to the software giant whose shares have a 2.9 percent dividend yield. Like Intel, Microsoft has earnings that are expected to grow around 10 percent annually, yet it is trading at less than 10 times last year’s earnings.

“If I told you in 1998 that these companies would turn into dividend leaders,” Mr. Cordaro said, “you’d say I was crazy.”

Paul J. Lim is a senior editor at Money magazine. E-mail: fund@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=2cf138b5f27f761ff5de4fb22c2f8c26

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Fundamentally: For Many Types of Stocks, It Hasn’t Been a Lost Decade

December 24, 2011 by Leave a Comment

WITH only a week left in 2011, the Standard Poor’s 500-stock index has a dubious distinction: its performance has been far worse than that of a basic basket of bonds in the last 12 years. But while betting on a large-cap stock index may not have paid off over that time, it would be wrong to assume that this has been the case for all sectors of the market.

A quick glance at the numbers shows that the S. P. 500 index of large domestic stocks has gone virtually nowhere since the technology bubble burst in 2000, while the Barclays United States aggregate bond index has returned more than 6 percent a year, on average.

Yet long-term-minded investors who had the patience to hold a diversified portfolio have done much better than that in other types of equities, said Sam Stovall, chief equity strategist at S. P. Capital IQ.

For instance, shares of companies that paid dividends returned nearly 8 percent a year, on average, since the start of 2000, based on the Dow Jones U.S. Select Dividend index. Several specific sectors, meanwhile, including utilities and consumer staples, posted solid gains despite the so-called lost decade, the period from 2000 through 2009 when the broad stock market lost ground.

Jeffrey Kleintop, chief market strategist at LPL Financial, is quick to point out that conservative investments weren’t the only ones that thrived.

Economically sensitive sectors, like energy, also posted strong gains, along with shares of small and midsize domestic companies. They’re not defensive holdings, he said. And no matter: although the economy has hit some rough patches, the S. P. 400 midcap index and the S. P. 600 index of small-company shares have each returned more than 7 percent, annualized, since 2000. Although that’s below their long-term historical average, it outpaces both bonds and inflation. Emerging-market stocks, too, have enjoyed a strong run in recent years, even though they sank in 2011.

What does this disparate group of winning equities have in common?

One feature jumps out for James W. Paulsen, chief investment strategist at Wells Capital Management. “They’re not large-cap tech,” he said. He noted that at the end of the 1990s, the S. P. 500’s performance was driven largely by a handful of the biggest growth-oriented stocks found mainly in the technology sector.

“Underneath that group, you had a lot of other types of stocks, like small caps and defensive-minded shares, that were actually being pounded,” Mr. Paulsen said. “But the tech boom covered that up.” In other words, the performance of these equities was really about valuations.

William Reichenstein, a professor of investment management at Baylor University, points out that in January 2000, the price-to-earnings ratio of the S. P. 500, based on 10 years of averaged earnings, was 43.8. That’s more than double the average of around 19 since 1953, he said, which would help explain why blue-chip domestic stocks have fared poorly so far in this century.

Yet smaller stocks, dividend-paying defensive issues and emerging-market shares were all being overlooked back in the late 1990s, and, as a result, were trading at relatively attractive valuations.

Of course, all of this raises the question: What types of stocks are likely to outpace the broad market in the coming years because of their appealing valuations today?

Jack A. Ablin, chief investment officer at Harris Private Bank, argues that because of the steep losses that emerging-market stocks suffered of late, their prices are starting to look attractive again.

“As the emerging markets got hammered this year, they went from trading at a 15 to 20 percent premium to the S. P. to trading at a 15 to 20 percent discount,” he said.

At the other end of the spectrum, Mr. Ablin argued, the group that clearly underperformed in recent years — large blue-chip stocks in the S. P. 500 — also seemed to be priced at attractive enough levels to bounce back.

But Duncan W. Richardson, chief equity investment officer at Eaton Vance, argues that the investing landscape is not so clear-cut as it was after the tech bubble burst a dozen years ago.

Back then, he said, the market was divided between large technology stocks and everything else, with tech stocks looking frothy and many other parts of the market priced attractively. “Today it’s more of a horse race between equity categories,” Mr. Richardson said, noting that this makes picking the winners that much harder.

AT the very least, investors can try to steer clear of making big bets on the potential losers.

“One key is to avoid becoming enamored with a glitzy asset class — especially after a long period of dramatically good returns,” Mr. Reichenstein said.

He noted that tech stocks in the Nasdaq composite index disappointed investors after their surge from 1995 to 1999. In fact, nearly a dozen years after its peak at 5,048, the Nasdaq is back only to 2,618. Similarly, he said, “after the dramatic returns of Japanese stocks in the 1980s, the Nikkei index is selling at less than one-fourth its 1989 closing price —22 years later.”

What does that mean for investors? Well, Mr. Reichenstein said, “now may not be the time to load up on gold.”

Paul J. Lim is a senior editor at Money magazine. E-mail: fund@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=024425953a6cb6e00bb86ed13e400cdf

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