Comment - Monster meets its troubles head-on
Monster could be facing more rockiness ahead
Monster is feeling the heat, there's no doubt about it. After taking a while to respond to its circling critics last month, the group's CEO himself spoke out yesterday about the spate of negativity around the group. And it was far from just a throwaway line.
It came during an analysts' conference call following the group's Q3 results announcement. We are all familiar with the pattern of these slightly stilted affairs. Tightly-scripted CEO talks about the company's wonderful performance, followed by CFO rattling through the numbers. Then, analysts, and occasionally journalists, probing with questions.
But not this time. Rodney Sacks, Monster's CEO, decided to address the group's problems head-on - from the start. “I’m sure that you’re aware that our company, as a result of certain litigation, regulatory requests and media reports, has been the subject of discussion recently,” he told the conference callers. Sacks then went to say Monster's products are “safe”; the lawsuit claims are “totally baseless” and “not supported by the science”; and it would re-categorise its energy drinks as a food, but only if it felt like it.
Monster did issue a press release saying similar things last month, but it will have helped that it came from the company's founder.
But has this come too late? The Q3 period covers to the end of September and the lawsuit story, arguably the most damaging and media-friendly as it involves a 14-year-old girl, only broke last month. However, Sacks did stress that Monster's gross October sales are up around 28% year-on-year, but that “sales in a single month are often disproportionately impacted by various factors”.
Either way, with Monster missing analysts' estimates and its profits growth taking a slide yesterday, it felt the pain as its share price fell off a cliff. It has since recovered slightly today.
Analysts today suggested these “regulatory pressures” will not subside anytime soon, despite the company's reassurances.
Monster's CEO may find himself having to address these “issues”, either pro-actively, or re-actively, for a while to come.
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