VLI Corp. Says 1986 Losses Tripled Over Previous Year
VLI Corp. said that its losses for 1986 more than tripled to $4.9 million from $1.4 million the previous year. The maker of the Today contraceptive sponge said the loss came despite a slight increase in revenues to $17 million from $16.7 million in 1985.
Robert Hobbs, Irvine-based VLI’s chief financial officer, said that marketing and advertising costs increased more than 23% during 1986 to about $11 million from $8.9 million in 1985. However, VLI plans to slash its marketing budget “considerably” during 1986, he said.
In a prepared statement, Robert Elliott, VLI’s chairman, blamed the relatively flat 1986 sales on delays in obtaining regulatory approval to market the Today sponge in a number of foreign countries.
For the fourth quarter, VLI reported a net loss of $1.6 million, compared with a net loss of $555,000 during the like period of 1985. VLI took $297,585 in write-offs for the quarter, much of which was associated with the closing late last year of the company’s Montana facility, Hobbs said.
Quarter Revenues Down
Revenues for the final quarter fell 3% to $3.56 million from $3.67 million a year earlier. Hobbs blamed the lower sales during the final three months on a third-quarter sales campaign that caused some distributors to overstock the “Today” sponge, “robbing sales from the fourth quarter.”
Though stepped-up advertising boosted the sponge’s share of the non-prescription female contraceptive market to about 30% in 1986, Hobbs said that VLI cannot continue its media blitz at 1986 levels and expect to become profitable.
Hobbs, who added that the sponge may have “topped out” at nearly one-third of the domestic market, said that it is “questionable” whether the increased market share that could be achieved through more advertising would be worth the cost.
Instead, VLI hopes new products, including the Clearblue pregnancy test kit it began marketing this month, will boost sales during 1986. The test kit is manufactured by Unipath Ltd., a subsidiary of Unilever PLC, which is based in the United Kingdom.
VLI, which has never turned a yearly profit, expects to become profitable during the current quarter and for all of 1987 through new products, hoped-for increases in international sales and reduced marketing costs, Hobbs said.
