Energizer (NYSE: ENR), spun off as an independent battery company on July 1, 2015, is showing the share gains we anticipated as an independent company with increased focus on the battery category. The spin-off of Duracell to Berkshire Hathaway (NYSE: BRK.A, BRK.B) in February 2016 has been hampered by the normal integration management of an acquisition, complicated by the need for restructuring and integration into an organization with no prior battery experience or CP G infrastructure.
The Energizer – Duracell Share Interactions
The continuing story is the tradeoff between Energizer and Duracell in shares since the beginning of the year. Within Nielsen outlets the shift in the gap between Energizer and Duracell has moved 6 share points in Energizer’s favor, from 17.2 for the four weeks ended Jan. 23, 2016, to 11.1 for the latest four weeks ended Nov. 5, 2016.
Within Nielsen outlets, I have observed the facings improvements at Walmart with none of the fanfare of the original losses; Energizer, Duracell and Rayovac (Spectrum, NYSE: SPB) are now at 38%, 27% and 35%, respectively. I see similar share of shelf improvements in non-Nielsen outlets such as Home Depot (NYSE:HD). Energizer has also spoken of distribution gains including recovery of some of the losses of a few years ago, but without any specifics.
This sets the stage for a return to the historic relationship between these two major battery brands. The current 11-point gap should be sustainable and brings them back to the 11-point gap we saw in 2013. Energizer has spoken about keeping the fight for distribution and space rational and profitable. If they execute on that philosophy and don’t get too greedy, they should be able to avoid an over-reaction from Duracell. Sustaining that gain would be worth about +6% for the North American business and +3.5% for the global entity.
Fuente: Seeking Alpha
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