Market Overview

Vitamin Shoppe, Inc. Announces Record Third Quarter 2012 Results

28th Consecutive Quarter of Positive Comparable Sales Growth

NORTH BERGEN, N.J., Nov. 6, 2012 /PRNewswire/ -- 

Third Quarter Highlights:
- Comparable store sales grew 9.6%
- E-commerce revenue increased 16.9%
- Net sales increased 14.4%
- Fully diluted EPS of $0.54, up from $0.40

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 29, 2012.  Net sales in fiscal third quarter 2012 advanced 14.4% while operating income rose 40.5%.  During the period, the company reported fully diluted earnings per share (EPS) of $0.54; up from $0.40 in fiscal third quarter 2011. For the nine-month period, fully diluted EPS was $1.71, up from $1.20 in the comparable period of the prior year.

Tony Truesdale, Chief Executive Officer of the Company commented, "We reported another quarter of strong growth while also investing for the future.  We are pleased with our business, our positioning and our consistent and predictable results.  The third quarter represented our 28th consecutive quarter of positive comparable store sales."

Fiscal Third Quarter 2012 Results

Net sales increased $30.1 million, or 14.4%, to $239.0 million for the three months ended September 29, 2012, compared with $208.9 million for the three months ended September 24, 2011.  This increase was the result of; 1) a 9.6% increase in comparable store sales, 2) growth from new stores, and 3) a 16.9% increase in e-commerce sales.

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $17.0 million, or 12.2%, to $156.5 million for the three months ended September 29, 2012, compared with $139.5 million for the three months ended September 24, 2011.

Gross profit increased $13.1 million, or 18.8%, to $82.5 million for the fiscal 2012 third quarter, compared with $69.4 million for fiscal third quarter 2011.  Gross profit as a percentage of net sales was 34.5% for the quarter ended September 29, 2012, up from 33.2% in fiscal third quarter 2011.  The improvement in gross profit margin reflects leverage on occupancy and product margin improvement.

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 $5.9 million, or 11.4%, to $57.7 million for the quarter ended September 29, 2012, compared with $51.8 million for the quarter ended September 24, 2011.  SG&A as a percentage of net sales were 24.2% for the quarter ended September 29, 2012, down from 24.8% in fiscal third quarter 2011.  This improvement was due to sales leverage.

Income from operations increased $7.1 million, or 40.5%, to $24.8 million for the three months ended September 29, 2012, compared with $17.6 million for the three months ended September 24, 2011.  As a percentage of net sales , income from operations was 10.4% for the fiscal 2012 third quarter, compared with 8.4% for fiscal third quarter 2011.

Net income increased $4.4 million or 36.8%, to $16.3 million for the three months ended September 29, 2012, compared with $11.9 million for fiscal third quarter 2011.  This was primarily attributable to stronger sales and margin improvement. Net income also benefitted from a lower effective tax rate in both this year's and last year's third quarters, which primarily reflects the reversal of charges previously recorded related to uncertain tax positions due to the expiration of applicable statutes of limitation.  The net benefit to the provision for income taxes was $1.6 million and $1.0 million for the fiscal third quarters of 2012 and 2011, respectively.

Earnings per diluted share were $0.54 in fiscal third quarter 2012 up from $0.40 in third quarter 2011.

Balance Sheet and Cash Flow

Cash and equivalents at September 29, 2012 were $76.1 million.  Capital expenditures were $7.7 million in the quarter.  Capital expenditures were used primarily for the build-out of new stores and improvements to existing stores, as well as computer equipment related to those stores.

2012 Outlook

For the current year management expects:

  • To open approximately 52 new stores
  • Comparable store sales growth for the full year of approximately 8%
  • Continued improvement in operating income margin
  • Capital expenditures between $35 million and $40 million
  • Fourth quarter 2012 fully diluted shares outstanding of 30.5 million

Preliminary 2013 Outlook

For the upcoming year management expects:

  • To open approximately 57 new stores
  • Comparable store sales growth in mid-single digits for the year
  • Continued improvement in operating income margin
  • Capital expenditures of approximately $45 million, which includes capital for the new distribution center
  • Depreciation of approximately $26 million
  • Fully diluted shares outstanding of 30.7 million

Webcast

Management will host a conference call to discuss its fiscal third quarter 2012 results at 8:30 a.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. The online replay will be available immediately following the call.  A telephonic replay will also be available beginning at 11:30 a.m. ET and can be accessed by dialing 1-877-870-5176 or for international callers, 1-858-384-5517. The passcode for the replay is 7104137. The replay will be available until 11:59 p.m. ET on November 13, 2012.

About the 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, BodyTech and True Athlete proprietary brands. The Vitamin Shoppe conducts business through more than 560 company-owned retail stores, national mail order catalogs, and 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 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 31, 2011 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 by law.

 

VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)






Three Months Ended


Nine Months Ended


September 29,


September 24,


September 29,


September 24,


2012


2011


2012


2011









Net sales

$ 238,994


$ 208,936


$ 732,026


$ 641,730

Cost of goods sold

156,494


139,493


475,435


423,299

Gross profit

82,500


69,443


256,591


218,431

Selling, general and administrative expenses

57,732


51,812


173,690


159,582

Income from operations

24,768


17,631


82,901


58,849

Loss on extinguishment of debt

-


-


-


552

Interest expense, net

161


419


535


2,076

Income before provision for income taxes

24,607


17,212


82,366


56,221

Provision for income taxes

8,316


5,301


31,219


20,769

Net income

$ 16,291


$ 11,911


$ 51,147


$ 35,452









Weighted average common shares outstanding








Basic

29,646,287


28,916,734


29,333,828


28,741,227

Diluted

30,244,053


29,693,651


29,993,403


29,508,761

Net income per common share








Basic

$ 0.55


$ 0.41


$ 1.74


$ 1.23

Diluted

$ 0.54


$ 0.40


$ 1.71


$ 1.20


 

 

SEGMENT DATA, KEY PERFORMANCE INDICATORS AND STORE INFO

($ in thousands)

unaudited

 








Three Months Ended


Nine Months Ended



September 29,


September 24,


September 29,


September 24,



2012


2011


2012


2011










Sales:









Retail 

$          214,083


$         187,108


$          655,233


$         574,424


Direct

24,911


21,828


76,793


67,306

Net sales

$          238,994


$         208,936


$          732,026


$         641,730










Income from operations:









Retail 

$            42,548


$           33,916


$          136,224


$         110,128


Direct

4,990


3,807


15,358


12,375


Corporate costs

(22,770)


(20,092)


(68,681)


(63,654)

Income from operations

$            24,768


$           17,631


$            82,901


$           58,849










Increase in comparable store net sales

9.6%


7.1%


9.2%


7.7%

Depreciation and amortization 

$              5,684


$             5,057


$            16,539


$           14,905

Impairment charge on fixed assets

$                 202


$                360


$                 730


$                651

Amortization of deferred financing fees

$                   66


$                  84


$                 231


$                282










Capital Expenditures

$              7,742


$             5,259


$            18,625


$           15,170










Gross profit as a percent of net sales

34.5%


33.2%


35.1%


34.0%

Income from operations as a percent of net sales

10.4%


8.4%


11.3%


9.2%










Store Data:









Stores open at beginning of period 

551


505


528


484


    Stores opened 

15


10


39


34


    Stores closed 

(2)



(3)


(3)


Stores open at end of period

564


515


564


515

 

VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)






September 29,


December 31,


2012


2011

ASSETS








Current assets:




  Cash and cash equivalents

$                 76,054


$                10,754

  Inventories

130,821


121,494

  Prepaid expenses and other current assets

25,211


20,768

     Total current assets

232,086


153,016

Property and equipment, net of accumulated depreciation and amortization of $176,523 and $163,247 in 2012 and 2011, respectively

89,207


88,677


Goodwill

177,248


177,248

Other intangibles, net

68,758


68,852

Other assets

3,088


2,812

Total assets

$               570,387


$              490,605





LIABILITIES AND STOCKHOLDERS' EQUITY 




Current liabilities:




  Current portion of capital lease obligations

$                      104


$                     956

  Accounts payable

24,306


22,279

  Accrued expenses and other current liabilities

57,498


60,438

     Total current liabilities

81,908


83,673

Capital lease obligations, net of current portion

103


-

Deferred income taxes

16,213


13,725

Deferred rent

29,774


28,738

Other long-term liabilities 

6,758


8,666





Commitments and contingencies








Stockholders' equity:




  Preferred stock, $0.01 par value; 250,000,000 shares authorized and no shares issued and outstanding at September 29, 2012 and December 31, 2011

-


-


  Common stock, $0.01 par value; 400,000,000 shares authorized, 30,165,955 shares issued and outstanding at September 29, 2012, and 29,216,888 shares issued and outstanding at December 31, 2011

302


292


  Additional paid-in capital

285,466


256,795

  Retained earnings 

149,863


98,716

           Total stockholders' equity 

435,631


355,803

Total liabilities and stockholders' equity

$               570,387


$              490,605





SOURCE Vitamin Shoppe, Inc.

 

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