Less than a year after jumping into the highly competitive car wax market, Armor All Products said Wednesday that its new wax and wash products rank among the top three nationally and are contributing significantly to the company's sales.
Irvine-based Armor All reported revenues of $34.4 million for the quarter ended June 30, up from $28.4 million in the same period last year. Profits were $6.4 million for the quarter, compared to $5.3 million a year earlier.
Armor All is best known for its car protection product, which was designed for vinyl tops and upholstery but is used on everything from briefcases to ladies' handbags. The product accounts for 90% of the national market.
The company introduced its new wax and wash products at a trade show in August, 1987, and the products began appearing on store shelves in December. Armor All accompanied the product launch with a $5-million advertising campaign.
According to market research conducted by the A.C. Nielsen Co. of Northbrook, Ill., Armor All's wax already has captured 14.9% of the national market, the company said.
That is virtually the same share as Borden's Rain Dance, which has been sold for 14 years. Turtle Wax Hard Shell is the industry leader, with nearly 72% of the wax market.
The Nielsen research shows that Armor All Car Wash, a detergent, has an 11.4% market share, ranking it third in that field, the company said.
Jeffrey Sherman, Armor All president and chief executive officer, said the new products contributed significantly to the company's sales during the latest quarter.
The company would not say what portion of the company's first-quarter sales were generated by the products.
But Marvin Krasnansky, vice president for corporate relations at the McKesson Corp., which owns 83% of Armor All, said the products accounted for about $12 million of Armor All's $126.4 million in revenue for the fiscal year ended March 30.
"Armor All is benefiting immensely from the growth of its new products," said Henry Jicha, an analyst for Wood Gundy Ltd. in New York. "Their name recognition is extremely high, and customers are very receptive to the new products when they see it on the shelves."
The successful launch of Armor All's new products is causing concern among competitors, analysts said.
"Borden has been dissatisfied with the performance of Rain Dance for quite a while now," said Mary Hardin, an analyst at Duff & Phelps in Chicago. "It's tough for them to make a decent profit in this situation. They're trying to re-carve a niche in a market not showing much growth."
The key to Armor All's success, Krasnansky said, has been its ability to capitalize on its existing relationships with distributors. He said about 113,000 distributors already handle the company's protectant, and almost 90% are carrying the new products.
Jicha said he can see Armor All capturing 20% of the polish market, putting even more pressure on Borden's Rain Dance line.
Next on Armor All's agenda, McKesson said, is the international market.
"North American automobiles are only one avenue," he said. "Armor All is sold in 20 countries worldwide. We're looking to double that."