Vitamin Shoppe, Inc. Announces First Quarter 2015 Results
NORTH BERGEN, N.J.  – Vitamin Shoppe, Inc. (NYSE:  VSI), a multi-channel specialty retailer and manufacturer of nutritional products, today announced preliminary results for the three months ended March 28, 2015. Total net sales in the first quarter increased 9.4% to $336.8 million compared to $307.8 million in the same period of the prior year. Reported fully-diluted earnings per share in first quarter 2015 were $0.63, compared with $0.67 in first quarter 2014.
Commenting on the quarter’s results, Colin Watts, recently appointed Chief Executive Officer of the Company stated, “Our first quarter results were both below our expectations and were disappointing due to a combination of external headwinds and margin pressure. We are working quickly to strengthen the core business and develop new growth opportunities. As a trusted, leading health and wellness retailer, we have confidence in our ability to deepen our relationships with our customers and to improve business performance going forward.”
First Quarter 2015 Results
Sales growth in the quarter was driven by: 1) Total comparable sales of 1.2%, 2) growth from non-comp stores, and 3) manufacturing revenue of $14.0 million. Retail comparable sales were 1.5% and ecommerce sales were down 90 basis points.
Cost of goods sold, which includes product, distribution, manufacturing and store occupancy costs, increased $23.8 million, or 12.0%, to $222.2 million for the three months ended March 28, 2015, compared with $198.4 million for the three months ended March 29, 2014.
Gross profit increased $5.2 million, or 4.7%, to $114.6 million for 2015 first quarter, compared with $109.5 million for first quarter 2014.  Gross profit as a percentage of net sales was 34.0% for the quarter ended March 28, 2015, compared to 35.6% in first quarter 2014. The decrease was mainly attributable to product mix, increased promotional activity, deleverage on store occupancy costs and the impact of Nutri-Force.
Selling, general and administrative expenses (SG&A), including operating payroll and related benefits, advertising expense and depreciation and amortization increased $8.5 million, or 11.3%, to $83.7 million for the quarter ended March 28, 2015, compared with $75.2 million for the quarter ended March 29, 2014. SG&A includes approximately $0.4 million of acquisition-related costs.  SG&A for first quarter 2014 included acquisition related expenses for Super Supplements and manufacturing consulting costs of approximately $1.8 million. Reported SG&A as a percentage of net sales was 24.8% for first quarter 2015 compared with 24.4% in first quarter 2014. Excluding non-operating items for both periods, SG&A as a percent of revenue was 24.7% in first quarter 2015 and 23.9% in first quarter 2014. This increase in SG&A rate was mainly driven by higher store payroll, digital advertising costs and depreciation and amortization expense.
Income from operations in first quarter 2015 of $31.0 million compared to $34.2 million in the same period of the prior year. As a percentage of net sales, income from operations was 9.2% for first quarter 2015 compared with 11.1% for first quarter 2014. Adjusted for non-operating costs in both periods, income from operations as a percentage of sales was 9.3% in first quarter 2015 and 11.7% in first quarter 2014.
Net income was $18.7 million for first quarter 2015 compared to $20.5 million in the same period of the prior year. Reported earnings per diluted share were $0.63 in first quarter 2015 compared with $0.67 in first quarter 2014. Adjusted EPS was $0.63 for first quarter 2015 and $0.70 for first quarter 2014.
Balance Sheet and Cash Flow
Cash and equivalents at March 28, 2015 were $1.9 million and $18.0 million was drawn on the revolver.
Capital expenditures were $11.3 million in the quarter. Funds were primarily expended on new stores and IT investments.
During the quarter, under the company’s previously announced $100 million share buyback program, the company repurchased 400,000 shares of its common stock for a total purchase price of $16.5 million. As of March 28, 2015, 1,672,039 shares have been repurchased for a total of $74.4 million.
Subsequent Event.  The Board of Directors has authorized another share repurchase program that enables the company to purchase an additional $100 million of its shares of common stock over the next three years. Shares will be repurchased from time-to-time in the open market or in privately negotiated transactions. The repurchase program does not obligate the Company to acquire any specific number of shares and may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases.
2015 Outlook
In view of first quarter 2015 results and recent trends, management now expects the following for 2015:
- Net sales increase of 6% to 8%
- Total comparable sales growth, including e-commerce, in the low single digits for the year
- Approximately 60 new stores
- Earnings per diluted share of approximately $2.05 to $2.25 for the full-year. This assumes completion of the 2014 share buyback program.
Webcast
Management will host a conference call to discuss the first quarter 2015 results at 8:30a.m. Eastern Time (ET) today.  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. A telephonic replay will be available beginning at 11:30a.m. ET on May 6, 2015and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers. The passcode for the replay is 5621899.The replay will be available until 11:59 p.m. ET on May13, 2015.  The webcast will also be archived on the company’s website at www.vitaminshoppe.com in the investor relations section.
About the Vitamin Shoppe, Inc. (NYSE:Â VSI)
Vitamin Shoppe is a multi-channel specialty retailer and contract manufacturer of nutritional products based in North Bergen, New Jersey. In its stores and on its websites, the Company carries one of the most comprehensive retail assortments in the industry, including vitamins, minerals, specialty supplements, herbs, sports nutrition, homeopathic remedies, green living products, and beauty aids. In addition to offering 900 national brand products, the Vitamin Shoppe also carries products under The Vitamin Shoppe®, BodyTech®,True Athlete®, MyTrition®, plntTM, ProBioCareTM, Next StepTM, Betancourt and Nutri-Force Sports®brands. The Vitamin Shoppe conducts business through more than 700 company-operated retail stores under The Vitamin Shoppe, Super Supplements and Vitapath retail banners, and primarily through its website, www.VitaminShoppe.com.Follow the Vitamin Shoppe on Facebook at http://www.facebook.com/THEVITAMINSHOPPE and on Twitter at http://twitter.com/VitaminShoppe.
Forward Looking Statements
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, the availability of raw materials, compliance with regulations, certifications and best practices with respect to the development, manufacture, sales and marketing of the company’s products and other factors which are further described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and in all filings with the Securities and 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 to do so by law.
