Higher margin ecommerce sales help bail out supplement marketer FitLife Brands

By Hank Schultz

- Last updated on GMT

Higher margin ecommerce sales help bail out supplement marketer FitLife Brands

Related tags ecommerce

FitLife Brands reports rising revenue in its third quarter, helped by rising ecommerce sales. Sales in the higher margin platform helped the company post a third consecutive quarterly profit.

FitLife sells supplements under a variety of brand names including NDS Nutrition Products, SirenLabs, CoreActive, Metis Nutrition, BioGenetic Laboratories, Energize and iSatori. Several years ago the company chose to hitch its wagon firmly to the GNC star. Going all in one distribution through GNC was seen as a way to ensure a more stable and predictable demand curve, even though it put pressure on margins. 

Ecommerce to the rescue

But the move coincided with a decline in GNC’s sales and foot traffic to its stores. Earlier this year the company announced it had launched its own Amazon storefront, and rising sales in that channel helped the company post its third consecutive quarterly profit in its recent third quarter earnings release.

Sales were up over the same period a previously, even though sales declined over the entire nine month period compared to fiscal 2017. The higher margin achievable in ecommerce sales as well as continued aggressive cost cutting were contributing factors, the company said.

For the third quarter ended September 30, 2018, total revenue was $4.6 million compared to $4.0 million in the third quarter of 2017. Gross margin was 38.2% for the quarter compared to 36.6% during the same period a year ago. The improvement in gross margin was primarily driven by lower discounting and growth in e commerce sales, which generate a higher gross margin. Net income for the third quarter was $0.4 million, or $0.03 per share, versus a loss of $(0.5) million, or $(0.05) per share, last year.

For the nine months ended September 30, 2018, total revenue was $13.6 million versus $14.6 million for the comparable period last year. Net income for the nine months ended September 30, 2018 was $0.8 million, or $0.07 per share, compared to a net loss of $(1.4) million, or $(0.13) per share, last year.

“We continue to face revenue pressures with our brick and mortar retail partners, driven by declining traffic and lower sell-through at retail. To counter these challenges, we have significantly reduced our cost structure to restore the Company to profitability. We are also focused on developing our e commerce capability, and have achieved a significant increase in e commerce revenue over the course of the year,” ​said Dayton Judd, Chief Executive Officer of FitLife Brands.

Stock price languishes

Stock traders seemed mostly unimpressed by the company’s recent performance.  Since the announcement of the most recent profitable quarter, the company’s stock has traded in the 46 cents to 55 cents a share range.  The company’s shares traded at more than $3 a share in early 2014.

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