Vitamin Shoppe Q3: New category introduction props up flat to declining sales

By Adi Menayang contact

- Last updated on GMT

Vitamin Shoppe Q3: New category introduction props up flat to declining sales

Related tags: ecommerce, subscription, ketogenic, keto diet, Retailers, Retailing

Vitamin Shoppe’s Q3 reflected retail trends in the dietary supplements sector—online sales continue to grow while bricks-and-mortar are flat to declining. The company closed three stores this quarter.

On her first earnings call as Vitamin Shoppe’s CEO, Sharon M. Leite said “much of what I've learned in my short time here is that our wounds are self-inflicted and can be overcome.”

At $276 million, total sales dipped by 2.0% compared to the same period of last year. Mitigating the decline was an increase in sales for the company’s online store, which grew by 22.1%, in line with trends of the past few quarters.

Leite credited progress to the company’s embrace of new categories. Dave Mock, executive vice president and chief merchandising and marketing officer at Vitamin Shoppe, added that the key driver behind sales in Q3 have been new product introductions.

“For example, we are very excited about being first to market in launching our Keto destination or KETO HQ in-store and on our website, which has been well-received with both existing and new customers and driving incremental sales,”​ he said during the call, transcripts of which are available on SeekingAlpha.com.

In August, the company announced the launch of KetoHQ​, a specialized section in both its physical stores and online stores that are dedicated to products targeting consumers adhering to a low-carb, high-fat ketogenic diet.

“Our omni launch of Keto in Q3 has positioned us top of mind with our consumers and as their destination for meeting their everyday Keto needs,”​ Mock added.

“Our Health Enthusiasts are trained Keto experts and have become a key resource for customers seeking a Keto solution.”

The future of Vitamin Shoppe’s store count

This quarter, the retailer opened one store and closed three. When asked by analyst about the company’s approach to store count, Leite said: “We're not in a position right now to make a comment about the longer-term footprint.”

“However, I will say we are going to be incredibly diligent in understanding the profitability of our fleet and we do plan to always look at that and we'll have more information for you in the near term.”

Like many other legacy retailers, Vitamin Shoppe has been ramping up its digital commerce unit. It released SPARK Auto Delivery around this time last year, which lets consumers subscribe to supplement products they buy routinely.

The company declined to comment on consumer retenation and basket size for this service, but Bill Wafford, EVP and Chief Financial Officer at Vitamin Shoppe, said that “We are incredibly pleased to see the performance of that and how it's maintained its consistency throughout the duration of the program to date.”

Reported earnings per share (EPS) from continuing operations in third quarter 2018 was $0.08, compared to a loss per share from continuing operations of $3.60 in the same period of the prior year.

Related topics: Markets, The changing retail landscape

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