Vitamin Shoppe, Inc. Announces Fiscal Second Quarter and First Half 2011 Results Second Quarter Highlights:

- Comparable store sales grew 8.0%

- Net sales increased 12.3%

- Operating income rose 32.0%

- Fully diluted EPS of $0.40

- Opened 9 stores during the quarter

NORTH BERGEN, N.J., July 28, 2011 /PRNewswire/ -- Vitamin Shoppe, Inc. (NYSE: VSI), a leading specialty retailer and direct marketer of nutritional products, today announced preliminary results for its fiscal second quarter ended June 25, 2011.  During the period, the company reported fully diluted earnings per share (EPS) of $0.40, up from $0.26 in the comparable period of the prior year.  Comparable store sales increased 8.0%, revenue advanced 12.3% while operating income and net income rose 32.0% and 63.5%, respectively.  For the six month period, fully diluted EPS was $0.80, up from $0.57 in the comparable period of the prior year, driven by an 8.0% increase in comparable sales, margin improvement and a reduction in interest expense.

Commenting on the strong results, Tony Truesdale, Chief Executive Officer of the Company stated, "I am pleased with our second quarter results.  We have been able to consistently deliver a strong performance in terms of comparable sale growth, margin improvement, earnings growth, cash flow generation and overall financial strength.  We feel good about the momentum we are seeing in the business."  

Added, Mr. Truesdale, "We are making investments in the business, particularly online, to support our growth.  Both in retail and online we continue to work to build a business that exceeds our customers' expectations and strengthens our brand – our most valuable asset.  We have a strong balance sheet that can support our growth."

Fiscal Second Quarter 2011 Results

Net sales increased $23.7 million, or 12.3%, to $215.9 million for the three months ended June 25, 2011, compared with $192.2 million for the three months ended June 26, 2010.  The increase was the result of the growth in comparable store sales predominantly driven by traffic, continued strong performance from new stores and a 4.4% increase in direct sales driven by further expansion in Vitamin Shoppe's online business.  

Overall store sales for the three months ended June 25, 2011 grew as a result of an increase in non-comparable store sales of $9.2 million and an increase in comparable store sales of $13.6 million, or 8.0%.  The Company opened 9 stores in the quarter.  Total store count was 505 as of June 25, 2011, compared with 463 on June 26, 2010.  

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $13.7 million, or 10.6%, to $142.2 million for the three months ended June 25, 2011, compared with $128.5 million for the three months ended June 26, 2010.

Gross profit increased $10.0 million, or 15.7%, to $73.7 million for the three months ended June 25, 2011, compared with $63.7 million for the three months ended June 26, 2010.  Gross profit as a percentage of sales was 34.1% for the quarter ended June 25, 2011, up from 33.1% for the comparable prior year period.  The improvement reflects more effective promotional spending, a mix shift to higher margin items and leverage on occupancy driven by the strong comparable sales performance.

Selling, general and administrative expenses ("SG&A"), including operating payroll and related benefits, advertising and promotion expense, depreciation and amortization, and other SG&A, increased $5.1 million, or 10.5%, to $53.3 million for the three months ended June 25, 2011, compared with $48.2 million for the three months ended June 26, 2010.  SG&A as a percentage of net sales decreased to 24.7% for the quarter compared to 25.1% for the comparable prior year period.  The improvement represents maturation of the store base, strong comparable store sales, as well as the company's ability to leverage costs over a larger store base and expense discipline.

Income from operations increased $4.9 million, or 32.0%, to $20.4 million for the three months ended June 25, 2011, compared with $15.4 million for the three months ended June 26, 2010.  Income from operations as a percentage of net sales increased to 9.4% for the 2011 quarter, compared with 8.0% for the comparable prior year period.  

Net income increased $4.6 million, or 63.5% to $12.0 million for the three months ended June 25, 2011, compared with $7.3 million for the three months ended June 26, 2010.  This was primarily attributable to stronger sales and margin improvement.  Net income also benefitted from significantly lower interest expense versus the same period in 2010 due to reduced outstanding debt and lower interest rates.  

Earnings per diluted share increased to $0.40 in fiscal second quarter 2011 from $0.26 per share in the comparable period of the prior year.  

Balance Sheet and Cash Flow

During the fiscal second quarter 2011, the Company paid down the revolving credit facility which had $22 million drawn at the end of fiscal first quarter 2011.  Additionally, during the first half of fiscal year 2011, the company had a net reduction in debt of approximately $51 million.  Total debt, excluding capital lease obligations, at quarter's end was $21.9 million.  Cash and equivalents at June 25, 2011 were $6.9 million.

2011 Outlook

The current fiscal year is a 53-week year.  The outlook provided below is based on a 52-week year comparable with the prior fiscal year.  Management expects:

  • To open approximately 48 new stores
  • Capital expenditures of approximately $23 million
  • Comparable store sales of approximately 7.0% for the full year
  • Continued improvement in EBIT margin reflecting continuing maturation of the store base, leverage on depreciation and amortization
  • SG&A for the remainder of the year is expected to include approximately $1.0 million of additional investments to support long-term growth, primarily for the e-commerce business
  • Reduced interest expense compared with the prior year reflecting lower debt levels from strong cash flow and lower interest rates under the new term loan

Webcast

The Company will webcast a conference call at 4:30 p.m. Eastern Time (ET) today to discuss its fiscal second quarter 2011 results. Interested investors and other parties may listen to the simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.vitaminshoppe.com.  The on-line replay will be available immediately following the call.  A telephonic replay will be available beginning at 6:30 p.m. ET and can be accessed by dialing 1-888-286-8010 or for international callers, 1-617-801-6888. The passcode for the replay is 54857613.  The replay will be available until August 4, 2011.

About Vitamin Shoppe, Inc. (NYSE: VSI)

Vitamin Shoppe is a leading specialty retailer and direct marketer of nutritional products based in North Bergen, New Jersey. The Company sells vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas, homeopathic remedies, green living products, and health and beauty aids to customers located primarily in the United States. The Company carries national brand products as well as exclusive products under the Vitamin Shoppe, MD Select, and VS Basics proprietary brands. The Vitamin Shoppe conducts business through more than 500 Company-owned retail stores, websites and national mail order catalogs, primarily www.VitaminShoppe.com and www.EcoShoppe.com, and has a social community site at www.VSconnect.com.

Forward Looking Statement

Certain statements in this press release are "forward-looking statements."  Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, trade restrictions, availability of suitable store locations at appropriate terms and other factors which are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 2010 and in all filings with the Securities Exchange Commission made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.


VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except share and per share data)

(unaudited)



Three Months Ended


Six Months Ended


June 25,


June 26,


June 25,


June 26,


2011


2010


2011


2010

















Net sales

$       215,942


$       192,234


$   432,794


$   383,847

Cost of goods sold

142,230


128,541


283,806


255,140

Gross profit

73,712


63,693


148,988


128,707

Selling, general and administrative expenses

53,319


48,246


107,770


95,188

Income from operations

20,393


15,447


41,218


33,519

Loss on extinguishment of debt

-


568


552


1,120

Interest expense

527


2,562


1,657


5,489

Income before provision for income taxes

19,866


12,317


39,009


26,910

Provision for income taxes

7,914


5,008


15,468


10,875

Net income

$         11,952


$           7,309


$     23,541


$     16,035









Earnings per share:








Weighted average shares outstanding:








  Basic

28,750,355


27,130,809


28,653,474


26,911,896

  Diluted

29,538,485


28,159,448


29,416,315


27,933,956

Net income per share








  Basic

$             0.42


$             0.27


$        0.82


$         0.60

  Diluted

$             0.40


$             0.26


$        0.80


$         0.57





SEGMENT DATA, KEY PERFORMANCE INDICATORS AND STORE INFO

($ in thousands)

unaudited




Three Months Ended


Six Months Ended



June 25,


June 26,


June 25,


June 26,



2011


2010


2011


2010










Sales:









Retail

$      194,674


$     171,868


$       387,316


$      340,931


Direct

21,268


20,366


45,478


42,916

Net sales

$      215,942


$     192,234


$       432,794


$      383,847










Income from operations:









Retail

$        37,385


$       30,349


$         76,212


$         61,705


Direct

3,990


3,627


8,568


8,118


Corporate costs

(20,982)


(18,529)


(43,562)


(36,304)

Income from operations

$        20,393


$       15,447


$         41,218


$         33,519










Increase in comparable store net sales

8.0%


8.6%


8.0%


7.4%

Depreciation and Amortization

$           5,000


$         5,411


$            9,848


$         10,825

Impairment charge on fixed assets

$              291


$            224


$               291


$              224

Amortization of deferred financing fees

$                84


$            189


$               198


$              474










Capital Expenditures

$           5,412


$         4,605


$            9,911


$         10,013










Gross profit as a percent of net sales

34.1%


33.1%


34.4%


33.5%

Income from operations as a percent of net sales

9.4%


8.0%


9.5%


8.7%










Store Data:









Stores open at beginning of period

497


453


484


438


   Stores opened

9


10


24


26


   Stores closed

(1)



(3)


(1)


Stores open at end of period

505


463


505


463














VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data)

(Unaudited)



June 25,


December 25,


2011


2010

ASSETS




Current assets:




 Cash and cash equivalents

$                6,881


$               25,968

 Inventories

111,828


111,305

 Prepaid expenses and other current assets

13,986


13,612

 Deferred income taxes

4,033


4,033

          Total current assets

136,728


154,918

Property and equipment, net

79,912


80,949

Goodwill

177,248


177,248

Other intangibles, net

69,415


69,718

Other assets:




  Deferred financing fees, net of accumulated amortization of $544 and $1,961 respectively

556


816

 Other

2,540


2,068

    Total other assets

3,096


2,884

Total assets

$            466,399


$             485,717





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




 Current portion of long-term debt

$              12,500


$                     -

 Current portion of capital lease obligations

1,536


1,711

 Revolving credit facility

-


18,000

 Accounts payable

16,636


18,994

 Deferred sales

9,130


15,929

 Accrued salaries and related expenses

7,485


9,573

 Other accrued expenses

22,429


14,752

        Total current liabilities

69,716


78,959

Long-term debt

9,375


55,106

Capital lease obligations, net of current portion

261


977

Deferred income taxes

21,391


20,595

Deferred rent

28,108


27,080

Other long-term liabilities

5,731


5,304





Commitments and contingencies








Stockholders' equity:




Common stock, $0.01 par value; 400,000,000 shares authorized, 29,120,536 shares issued and




  outstanding at June 25, 2011, and 28,627,897 shares issued and outstanding at December 25, 2010  

291


286

Additional paid-in capital

254,133


243,558

Retained earnings

77,393


53,852

      Total stockholders' equity

331,817


297,696

Total liabilities and stockholders' equity

$            466,399


$             485,717












SOURCE Vitamin Shoppe, Inc.



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