Energizer 2010 Annual Report Download - page 57

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Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
47
approximately $32, up 2%, on a constant currency basis, excluding Venezuela. Net sales in
the Personal Care business increased $158.3, or 8%, or approximately $115, up 6%, on a
constant currency basis, exclusive of Venezuela.
Net sales for fiscal 2009 were $3,999.8, down $331.2, or 8%, due primarily to approximately
$225 of unfavorable currencies as compared to fiscal 2008. Net sales in the Household
Products division as compared to fiscal 2008 decreased $364.8, or 15%, or approximately
$220, down 9% on a constant currency basis. Net sales in the Personal Care business as
compared to fiscal 2008 increased $33.6, or 2%, or approximately $113, up 6%, on a constant
currency basis.
For further discussion regarding net sales in Household Products and Personal Care, please
see the section titled “Segment Results” provided below.
Gross Profit
Gross profit dollars were $2,019.3 in fiscal 2010, an increase of $160.7, or 9%, due primarily to
the favorable impact of currencies of approximately $82, exclusive of Venezuela, and the
favorable impact of the higher sales noted above.
Gross margin as a percent of net sales was 47.5% in fiscal 2010, 46.5% in fiscal 2009 and
47.0% in fiscal 2008. The margin percentage increase in fiscal 2010 was due primarily to
favorable currencies, excluding Venezuela, which added approximately 90 basis points. The
margin percentage decline in fiscal 2009 as compared to fiscal 2008 was also due primarily to
unfavorable currencies, which we estimate reduced gross margin by approximately 130 basis
points in fiscal 2009 versus the prior fiscal year.
Selling, General and Administrative
Selling, general and administrative expenses (SG&A) were $765.7, an increase of $23.1, as
compared to fiscal 2009, due primarily to the impact of annual merit increases and support of
growth initiatives. As a percent of net sales, SG&A was 18.0%, down somewhat from 18.6% in
fiscal 2009 due to the year-over-year net sales increase described above. SG&A decreased
$51.4 in fiscal 2009 as compared to fiscal 2008 due primarily to the favorable impact of
currencies of approximately $44 in fiscal 2009 and reduced overhead spending due, in part, to
the economic recession.
Advertising and Promotion
Advertising and promotion (A&P) increased $46.8 in fiscal 2010 due to increased spending
including support of the Company’s Schick Hydro launch in April 2010. A&P decreased $72.3
in fiscal 2009 as compared to fiscal 2008 due to reduced spending resulting, in part, from the
economic recession, and approximately $23 of favorable currencies as compared to fiscal
2008.
A&P expense was 10.9%, 10.4% and 11.2% of sales for fiscal 2010, 2009 and 2008,
respectively. A&P expense may vary from year to year with new product launches, the impact
of acquisitions, strategic brand support initiatives, the overall competitive environment, and the
state of the global economy.
We expect A&P expense to increase in fiscal 2011 due to the launch of Schick Hydro in key
markets in Europe and Japan, and the continued support of the new product launch in North
America. Our current estimate is that A&P expense may be in the range of 11.5% to 12% of
net sales in fiscal 2011. While we incurred Schick Hydro launch-related A&P spending in fiscal