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Daily Herald; Arlington Heights, Ill.

By Mike Comerford Daily Herald Business Writer

Salton Inc. has former heavyweight champion George Foreman and the Food Network's Rachel Ray promoting its products but its stock price could use some star-power of its own.

Salton hit it big 10 years ago with the George Foreman Grill but it has foundered in recent years and on Wednesday the New York Stock Exchange warned the firm it is below the minimum market capitalization.

The Lake Forest-based consumer products firm said it will provide the exchange a turnaround plan within 45 days to keep its stock trading on the NYSE.

In 2000 its stock traded around $60 a share but on Wednesday it closed down 39 cents, or 17 percent, to $1.87.

With a market capitalization of $27 million, it is well under the $75 million minimum standard set by the exchange.

"They're not a company we're comfortable with, even when they get a hot product," said Alexander Paris Sr., founder of Barrington Research, a Chicago-based equity research and brokerage firm. "That kind of company goes up and down with their promotional items."

The firm lost $52 million last year on $1 billion in sales. In the first nine months of this year sales are down 24 percent, to $506.5 million with a loss of $17 million.

"We continue to face rising material costs in our products and, as a result, continuing margin pressure," said William Rue, Salton president, in the most recent quarterly earnings announcement.

"We have implemented price increases in many of our products and we are cautiously optimistic these increases will be accepted by our customers," he added. "In the interim, however, this has affected volume until old, lower-cost inventory has worked through retail channels."

Rue said a combination of cost cutting and new products will return the company to profitability. This year it is launching 130 product lines, including an indoor/outdoor portable grill. Plug the grill into the wall socket and it will use a hydrogen flame to cook food without the emissions of charcoal or propane. The grill will be marketed under the George Foreman brand.

In the past the company had relied on its suppliers to innovate new products, but Chief Executive Officer Leonhard Dreimann said late last year the company has launched its own in-house design and product development team.

Salton officials have blamed their sales drop on the sale of its tabletop business, post-holiday overstocks at retailers and the reduction of product lines.

In February, the company said it is considering the sale of assets and businesses to draw down its heavy debt load.

However, last year sales fell so precipitously the company fell out of compliance with its debt covenants and was forced to seek a waiver from its senior lenders.

Salton makes espresso machines, bread makers, grills and juicers. It also markets kitchen items, personal-care appliances and home decor products.

Many of its products are made by independent manufacturers in the Far East.

(c) 2006 Daily Herald; Arlington Heights, Ill.. Provided by ProQuest Information and Learning. All rights Reserved.