Vitamin Shoppe, Inc. Announces Fiscal First Quarter 2011 Results

NORTH BERGEN, N.J., April 26, 2011 /PRNewswire/ -- Vitamin Shoppe, Inc. (NYSE: VSI), a leading specialty retailer and direct marketer of nutritional products, today announced preliminary results for its fiscal first quarter ended March 26, 2011.  During the period the company reported diluted earnings per share (EPS) of $0.40, up from $0.31 in the comparable period of the prior year.  When adjusting for a one-time cumulative charge of $3.7 million ($2.3 million, after tax) for certain non-income-based taxes, EPS was $0.47, a 51.6% increase over the prior year.  Comparable store sales increased 8.1%, revenue advanced 13.2% while operating income and net income including the one-time charge rose 15.2% and 32.8%, respectively.  After adjusting for the one-time charge, operating income and net income increased 35.8% and 59.1%, respectively.

Commenting on the strong results, Tony Truesdale, Chief Executive Officer of the Company stated, "I am pleased with our first quarter operational results.  We achieved strong comparable store sales combined with solid results in the direct channel.  This represents our 22^nd consecutive quarter of positive comparable store sales.  We believe these results reflect the strong momentum of our businesses."

Added Mr. Truesdale, "As we look forward to the remainder of the year, we will continue to capitalize on those initiatives that have driven Vitamin Shoppe's strong performance, including our strong value proposition, a cohesive merchandise strategy, as well as superior customer service.  We believe we are well positioned to continue to open new stores, drive comparable-store sales growth while improving operating margins.  We have a business model with a track record of successful execution that has generated consistent growth in sales and profits.  We also have a healthy balance sheet which will allow us to make the appropriate investments to grow the business."

Fiscal First Quarter 2011 Results

Net sales increased $25.2 million, or 13.2%, to $216.9 million for the three months ended March 26, 2011, compared with $191.6 million for the three months ended March 27, 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 7.4% increase in direct sales driven by further expansion in Vitamin Shoppe's online business.  

Overall store sales for the three months ended March 26, 2011 grew as a result of an increase in non-comparable store sales of $10.0 million and an increase in comparable store sales of $13.5 million, or 8.1%.  The Company opened 15 stores in the quarter.  Total store count was 497 as of March 26, 2011, compared with 453 on March 27, 2010.  

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $15.0 million, or 11.8%, to $141.6 million for the three months ended March 26, 2011, compared with $126.6 million for the three months ended March 27, 2010.

Gross profit increased $10.3 million, or 15.8%, to $75.3 million for the three months ended March 26, 2011, compared with $65.0 million for the three months ended March 27, 2010.  Gross profit as a percentage of sales was 34.7% for the quarter ended March 26, 2011, up from 33.9% for the comparable prior year period.  The improvement reflects improved purchasing, effective inventory management 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 $7.5 million, or 16.0%, to $54.5 million for the three months ended March 26, 2011, compared with $46.9 million for the three months ended March 27, 2010.  SG&A as a percentage of net sales increased to 25.1% for the quarter compared to 24.5% for the comparable prior year period.  The first quarter of 2011 includes a cumulative $3.7 million charge to adjust reserves for certain non-income-based taxes.  Excluding this charge, SG&A as a percentage of net sales would have been 23.4%. 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 $2.8 million, or 15.2%, to $20.8 million for the three months ended March 26, 2011, compared with $18.1 million for the three months ended March 27, 2010.  Excluding the one-time charge for non-income-based taxes, income from operations would have increased 35.8%.  Income from operations as a percentage of net sales increased to 9.6% for the 2011 quarter, compared with 9.4% for the comparable prior year period.  Excluding the one-time charge, income from operations as a percentage of net sales would have been 11.3%.

Net income increased $2.9 million to $11.6 million for the three months ended March 26, 2011, compared with $8.7 million for the three months ended March 27, 2010.  Net income adjusted for the one-time non income tax item increased 59.1% to $13.9 million.  Net income benefited from significantly lower interest expense versus the same period in 2010.  Both fiscal first quarter 2011 and 2010 results include $0.6 million of debt extinguishment expenses incurred in connection with the redemption of debt.

Earnings per diluted share increased to $0.40 in fiscal first quarter 2011 from $0.31 per share in the comparable period of the prior year.  Excluding the charge for non-income-based taxes, earnings per diluted share for the quarter would have been $0.47.

Balance Sheet and Cash Flow

During the first quarter 2011, the Company redeemed the remaining $55.1 million of its Second Priority Senior Secured Floating Rate Notes due 2012 and entered into a new term loan for $25 million.  Total debt, excluding capital lease obligations, at quarter's end was $47.0 million. Cash and equivalents at March 26, 2011 were $7.9 million.

2011 Outlook

For the current fiscal year, management expects:

• To open approximately 48 new stores
• Capital expenditures of approximately $23 million
• Comparable store sales between 5% - 6% for the full year
• Continued improvement in EBIT margin reflecting continuing maturation of the store base, leverage on depreciation and amortization and corporate expenses
• SG&A trends for the remainder of the year is expected to include approximately $2.0 million of additional compensation expense due to organizational changes
• 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 5:00 p.m. Eastern Time (ET) today to discuss its fiscal first 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 8:00 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 13327621. The replay will be available until May 3, 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, national mail order catalogs, and websites, 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.

SOURCE Vitamin Shoppe, Inc.