During a call with investors, Tony Truesdale, CEO of Vitamin Shoppe, said the company is launching two new formulations in its Probiocare range to target two growth trends in probiotics: Higher-potency formulas and increasing demand by women.
The company is also seeing opportunity in the $5.6 billion herbs and botanical sector, said Truesdale.
“As a result of customer feedback, we've created a line of herbs that include key attributes that our herb and botanical customers identified as most important to them. These will be premium-priced herbal supplements made with all-natural ingredients, which will be marketed under the ‘plant’ label.”
Truesdale said that private label product development is important for the business model long term, but the company has not set any long-term goals.
“We typically have been running in the 20% to 22% of sales,” he noted. “It's tough to look at it in totality, but we are making progress in the categories where we're investing in and building the SKUs. I mean -- and that's why I called out the MyTrition. That's an item that didn't exist and is now in our top-selling SKUs of the company.”
“I think it's really about creating our assortment differentiation in the marketplace long term. So owning some brands like [plant, MyTrition and Probiocare], we're the only place you can buy those products. So it's important to us, from an assortment strategy, to maintain our assortment advantage, the 8,000 SKUs that we have.
“Both True Athlete and MyTrition have been solid brands for us and we expect Probiocare and plant to be as well. And we're -- we'll continue to take advantage of opportunities as they show up on the product development.”
While the retailer continues to plan bricks-and-mortar store openings (60 are planned for the next year), e-commerce continues to drive double-digit growth for Vitamin Shoppe. Indeed, during this quarter, e-commerce sales increased 18% over the prior year, said Truesdale.
“Looking ahead, we expect our e-commerce sales to continue to grow faster than our retail sales,” he said. “We will continue to invest in this channel through growth in product categories, marketing spend, customer service enhancements and additional functionality to drive continued strong performance.”
The company also outlined its omni-channel strategy that would allow consumers to buy online and pick up the product in-store. Additional additional enhancements will be rolled out over several years, he added.
“All this is designed so that customers can shop however, wherever and whenever they want, and this will set us further apart from pure play e-commerce companies.”
The company had a solid third quarter, said Brenda Galgano, CFO.
“During the quarter, we reported total sales growth of 14% with comparable retail store sales growth of 2.6%,” she said. “Retail revenue increased 13.9% to $244 million with the 31 Super Supplements stores contributing about $17 million. E-commerce continues to drive significant growth, increasing 17.7%, with Super Supplements contributing 6 percentage points to this growth.”
“Reported third quarter gross profit as a percentage of sales was 34.2% compared to 34.5% in the same quarter of the prior year. This reflects faster growth in lower-margin product categories and higher growth in e-commerce sales.”