It’s a boring day on the board, so I thought it might be a good day to debate something that’s been on my mind since I reviewed SODA’s Q4 ER.
I was surprised that sales of Soda Stream machines weren’t much higher for Q4 based on the reports we were getting from store checks and the impressive amount of ad and display activity they received over the holidays from every major retailer (at least in the US).
SODA sold 1.111 million Soda Makers in Q4. That’s an impressive figure when you consider it’s the most they’re ever sold in a quarter…up from 941,000 in Q3.
However, when you divide 1.111 million by 60,000 retail stores that carry SodaStream you get an average of 15.8 machines sold per store. That is an average of 1.4 units sold per week in the 13 week period.
I think the actual per store number is actually lower than that when you factor out online sales and direct to consumer sales. I’ll make an assumption that 15% of their sales came from online purchases (Amazon, SODA’s website, etc.) or on HSN and not thru a retail store. That means that approximately 944,000 sales were thru a retail store and 167,000 were sold direct to consumer.
Divide 944,000 units by the 60,000 retail outlets that SODA sells to and you get 15.7 machines sold per store for the 13 week quarter or 1.2 machines per store per week.
Bottom line is that I was surprised that the average store sold so few units when SodaStream was displayed, promoted, and advertised as heavily as it was over the holidays.
And no…I’m not trying to negative on SODA as I’ve been accused of being. I’ve researched this company and this is a metric that both surprised and concerned me as potential investor. I’m interested in the Board’s thoughts.
compare SODA with GMCR, GMCR in Dec 08 have 13,000 doors, Dec 09 the door grew to 18,000, in that 1 year period they sold around 2.2 unit, so each Q about 550k unit. SODA has half revenue in US, so let's say they sold 500k in US, that closed to CMCR's growth trajectory. tipping point is coming, but not yet, just need more time, 1-2 years?
good topic to ponder. I have thought about it some. But, basically you are right. these things are not flying off the shelves and some may want to believe. Since last summer, I have been doing store checks for one reason. To convince myself this is a fad, so I could short soda. Never could though as the sales were "slow but steady". I basically stopped monitoring it close....until NOV-DEC, when I saw a drastic increase in sales of the machines. I had to assume(and still think) it was due to their national advertising. So, on my reseach, I went from a potential short to a long....three times, with good results each time. I am currently out, but watching things closely.
Thus, in the 4th qrt the sales were very, very slow until NOV when all of a sudden WMT and TGT both sold out of stock. But, overall, the avg.is very small sales weekly.
FWIW, the sales stayed fairly strong in the first few weeks of JAN, but have now grown very slow again. But, I suspect when all the rug rats get out off school, get bored, and start screaming for carbinated kool aide, sales will pick up again.
But, the most importan t thing is NOT how many they sales per month, but how many folks keep using their machine(rather than throwing it into the attic), and buying more CO2 and syrup.
Good input. I was truly surprised with their Q4 numbers. With as much display activity and momentum they going into the holidays I would have thought they would have sold a lot more.
You're right on another point that no one mentioned ...the out-of-stocks. They definitely lost sales because of that...not sure how many but they lost sales.
Interesting conversation. The key question that we need to take away is what company Soda or GMCR is more attractive in terms of investing today. It would appear GMCR has had a very good run and I would speculate that Soda is due to start it's run to catch up . Assuming they still are possibly connected. I haven't seen any negative news that would go against that hypothesis. Or is this market too scaring to invest now? What's the board's take. I did put more money to work in Soda but will need to play the waiting game now.
Sentiment: Strong Buy
Burgh, consider they only have 15,000 or so US doors and that half their revenue comes from the US. Do the math again and ( I'm guestimating) it is somewhere between 2 and 4 per door per week..... Other regions may sell more machines in warmer seasons.
Great ignorance would be concerned, because great ignorance doesn't understand the difference between sell-in and sell-out. You see this every year in SODA. Retailers stock up in Q3 not for what they intend to sell in Q3 only, but because of what they sell in Q3 and Q4. God forbid the company beat last year numbers by a wide margin. And yes, yes you are and as usual always finding a negative aspect of SODA's numbers.
Once again Blue weighs in with criticism and a smarter than everyone attitude but offers no insight. You do realize this board has become a much more boring place after your arrival and your tendancy to jump down anyone's throat who says something you disagree? You add very little but you detract a lot from this board.
Trust me I understand the difference between sell-in and sell-thru.
Assume that every unit SODA sold into retailers in Q3 in addition to every unit they shipped in Q4 was sold by retailers in just Q4...the average store would have still only sold 2.2 units during the 13 week holiday period.
You can slice it or analyze it anyone you want but SODA doesn't sell a lot of product per "average" store.
The difference may be what was sold in the stores vs what was sold by SODA. Much of last qtr retailer inventory was sold by SODA in the previous qtr into the distribution network.
The benefit of a good "sell through", which was clearly the case, is that the the following qtr will be stronger than normal as retailers replenish shelf stock.
Lots of extra Co2 being sold in France. This is from Amazon. Also 1 machine listed 39 on Germany Amazon. Not sure about the answer to the question you have.
Product Weight: 1.4 Kg
Model number of the item: 1032250340
Date posted on Amazon.fr: December 6, 2010
Average Customer Review: 4.2 out of 5 stars See all reviews ( 22 customer reviews )
Ranking Amazon Bestsellers Rank: 1 in Kitchen & Dining ( See Top 100 in Books )
# 1 in Kitchen & Dining Small Appliances Soda Machines
OK, Burgh, you debate that with the Soda eggheads:).I will LMAO if they buy this market anticipating a Hail Mary from Uncle Ben.Seth-amuse Burgh:) I know the answer, but I don't care.No offense Burgh-seriously:).
Sentiment: Strong Buy