Muscle Pharm Corporation (MSLPQ)

[CWS1987]

I agree wholeheartedly. I follow the sports nutrition market very closely for a market research firm, and I just don't see many of the new launches driving incremental sales all that much. The Black Line and Hardcore Series are targeting only the most sophisticated users, and I think there's real potential for cannibalization of the Core series, not to mention potentially lower margins related to be one-retailer exclusives. The Combat Crunch bar breaking into Kroger could be huge, and I think those sort of mass-facing launches should be the focal point. An FDM-targeted lineup of basic supplements (protein powder, creatine, pre-workout) in the vein of Six Star or Body Fortress makes more sense to me than two retailer-exclusive lines targeting the same small user group. I'm also not as sold on the energy drinks as most other people. Unless they can get Energy Sport into the channels that actually sell large amounts of energy drinks (convenience stores, hyper- and supermarkets, instead of online and indy supplement stores), I don't see they contributing much to top or bottom line sales.

I also think their advertising is getting out of whack. They're spending too much on big names, that they turn around and barely use. It's great to see the MP on Tiger's golfbag (when he's actually playing), but he's not really doing any active advertising for the brand outside of that. Same goes for Johnny Football. It just doesn't seem like they could possibly be generating good ROI.

At the end of the day, though, product development isn't really what's killing profitability. That would be executive compensation, and until that is decoupled from revenue growth, nothing will change.