Here’s a Good Play in the E-Cigarette Space
In this article, I will discuss some of the business highlights of Vapor Corp. (OTC:VPCOD), a leading supplier of electronic cigarettes or “e-cigs” with a diverse product portfolio that includes the most recognized brands by both retailers and consumers in the industry. I will briefly discuss recent quarterly performance, a promising conference presentation, and then the impact of the just announced reverse split of shares. Thus far, Vapor Corp. is the only fully reporting publicly traded e-cig company in the U.S. Vapor’s leading brands include Krave, Fifty-One, Green Puffer, Americig, and Vapor-X, among others. Vapor Corp’s products are available online, on television and at retail locations across all levels/channels of retail throughout the United States.
Vapor Corp. reported Q3 2013 results on October 21. In the quarter net sales exceeded $6.4 million, an increase of approximately $2.6 million, or approximately 66.3 percent from the comparable year ago quarter. Cost of goods sold increased 56 percent to nearly $4 million as compared to $2.5 million for the comparable year ago quarter. The mostly positive results were primarily attributable to increased sales volume, product mix, and lower average cost per unit through higher volume purchases from suppliers. Gross margins increased to 38.9 percent from 35.1 percent in the comparable 2012 quarter. Operating income was $393,282 compared to an operating loss of $1,252,086 for the same quarter in the prior year. This led to net income for the quarter of $280,827 compared to a net loss of $819,010 for the comparable 2012 quarter.
Sales were up so sharply in Q3 but advertising expenses decreased approximately 50.3 percent to approximately $0.4 million for the quarter ended September 30, 2013 compared to approximately $0.8 million in the comparable 2012 quarter. The company decreased internet advertising, print advertising campaigns, and new television direct marketing campaign for the Alternacig brand and continued various other advertising campaigns. However, the company anticipates that advertising expense will increase in the fourth quarter of 2013 as it re-launches the television direct marketing campaign for their Alternacig brand and as the company re-launches its flagship KRAVE brand. This increase is well timed to promote the new product. We will see how this impacts the company once fourth quarter and year end results are reported.