Vitamin Shoppe, Inc. Announces Fiscal Third Quarter 2011 Results

NORTH BERGEN, N.J., Oct. 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 third quarter ended September 24, 2011.  Comparable store sales increased 7.1%, net sales advanced 11.5% while operating income rose 27.3%.  During the period, the company reported fully diluted earnings per share (EPS) of $0.40, an increase from $0.25 in the comparable period of the prior year.  For the nine-month period, fully diluted EPS was $1.20, up from $0.83 in the comparable period of the prior year.

Commenting on the results, Tony Truesdale, Chief Executive Officer of the Company stated, "Our results once again demonstrate the unique strength of our retail store portfolio, our evolving multichannel growth model and The Vitamin Shoppe brand.  We realized improved gross profit margins, leveraged our fixed operating expenses and continued to make investments for the future while achieving significant growth in our EPS."

Added, Mr. Truesdale, "We believe that our strong multi-channel business model will allow us to continue to gain market share.  As always, we will continue to work to enhance our customers' overall shopping experience, and we remain committed to being our customers' first choice for their health and wellness needs."

Fiscal Third Quarter 2011 Results

Net sales increased $21.6 million, or 11.5%, to $208.9 million for the three months ended September 24, 2011, compared with $187.4 million for the three months ended September 25, 2010.  The increase was the result of the growth in comparable store sales predominantly driven by traffic, growth from new stores and a 7.7% increase in direct sales as the result of an approximate 12% increase in e-commerce sales.

Overall store sales for the fiscal 2011 third quarter grew as a result of an increase in non-comparable store sales of $8.3 million and an increase in comparable store sales of $11.7 million, or 7.1%.  The Company opened 10 stores in the quarter.  Total store count was 515 as of September 24, 2011, compared with 472 on September 25, 2010.

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $13.3 million, or 10.5%, to $139.5 million for the three months ended September 24, 2011, compared with $126.2 million for the comparable period in the prior year.

Gross profit increased $8.3 million, or 13.5%, to $69.4 million for the fiscal 2011 third quarter, compared with $61.2 million for the same quarter in the prior year.  Gross profit as a percentage of net sales was 33.2% for the quarter ended September 24, 2011, up from 32.6% for the comparable prior year period.  The improvement reflects leverage on occupancy and distribution costs driven by the strong comparable sales performance as well as improved product margin.

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 $4.5 million, or 9.5%, to $51.8 million for the three months ended September 24, 2011, compared with $47.3 million for the three months ended September 25, 2010. SG&A as a percentage of net sales was 24.8% for the fiscal 2011 third quarter compared to 25.3% for the comparable prior year period.  The improvement was primarily attributable to expense discipline and leverage due to sales growth.

Income from operations increased $3.8 million, or 27.3%, to $17.6 million for the three months ended September 24, 2011, compared with $13.9 million for the three months ended September 25, 2010.  Income from operations as a percentage of net sales increased to 8.4% for the fiscal 2011 third quarter, compared with 7.4% for the comparable prior year period.

Net income increased $4.7 million to $11.9 million for the three months ended September 24, 2011, compared with $7.2 million for the comparable period in the prior year.  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 and a lower effective tax rate in the quarter.  The lower effective tax rate was primarily due to a reduction in reserves for tax positions established in prior years.

Earnings per diluted share increased to $0.40 in fiscal third quarter 2011 from $0.25 per share in the comparable period of the prior year.

Balance Sheet and Cash Flow

During the first nine months of fiscal year 2011, the company had a net reduction in debt of approximately $56 million.  Total debt, excluding capital lease obligations, at quarter's end was $18.8 million.  Cash and equivalents at September 24, 2011 were $24.8 million.  Capital expenditures were $5.3 million in the quarter.  Subsequent to quarter's end, on October 25, 2011, the company paid $18.8 million, representing the remaining principal balance and accrued interest on its term loan which was originally scheduled to mature on January 20, 2013.

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 48 new stores
• Capital expenditures of approximately $23 million
• Comparable store sales growth of approximately 7% for the full year
• Continued improvement in EBIT margin

Preliminary 2012 Outlook

Looking forward to 2012 management expects:

• To open approximately 52 new stores
• Comparable store sales growth in mid-single digits
• Continued improvement in EBIT margin

Webcast

The Company will webcast a conference call at 8:30 a.m. Eastern Time (ET) today to discuss its fiscal third 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 online replay will be available immediately following the call. A telephonic replay will be available beginning at 11:30 a.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 47998554. The replay will be available until November 2, 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 and BodyTech proprietary brands.  The Vitamin Shoppe conducts business through more than 500 company-owned retail stores, national mail order catalogs, website, www.VitaminShoppe.com and has a social community site at www.VSconnect.com.  

Follow The Vitamin Shoppe on Facebook at http://www.facebook.com/THEVITAMINSHOPPE and on Twitter at http://twitter.com/VitaminShoppe.

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.