Vitamin Shoppe’s Q1: Positive private label performance, a new website, but store closures continue

09-May-2019 - Last updated on 15-Aug-2019 at 15:09 GMT

Vitamin Shoppe's PLNT brand will be expanded this year. Image: Vitamin Shoppe Twitter

The turnaround at Vitamin Shoppe is continuing with improvements in private label performance and good growth from keto and on-the-go nutrition products, but challenges remain, and more stores are slated to close this year.

CEO Sharon Leite was appointed last summer to lead the company’s “turnaround and future growth” after several difficult years: The retailer’s share price has fallen from a high of almost $48 at the end of 2014 to under $6 today.

On her first earnings call as Vitamin Shoppe’s CEO at the end of 2018, Leite said, “much of what I've learned in my short time here is that our wounds are self-inflicted and can be overcome”.

The strategy has been to focus more on e-commerce and close brick-and-mortar stores. During Q1 Vitamin Shoppe closed five stores and will close a total of 60 to 80 stores over the next three years.

But the company will open some new stores this year, which will adhere to its new store model that was trialed in a prototype opened in late September 2018.

Q1

Total sales in the first quarter were $283.3 million, said the company, 4.3% lower than for Q1 2018. In addition, total Q1 comparable sales fell 3.5%.

Gross profit margin was 33.5%, while adjusted EBITDA increased by 9% to $18.2 million, Chuck Knight, interim Chief Financial Officer, said during an earnings call this week.

“For the balance of the year, we'll be focused on stabilizing our store performance, significantly growing our digital business as well as the launch -- as well as launching new growth initiatives,” said Knight, according to a transcript available on seekingalpha.com.

Positives

On the digital business, Leite noted that the company has optimized the performance of its website, including boosts to “site speed, search engine optimization, cart execution, check out and more”.

She also stated that the company is growing its email revenue generation through “personalization and loyalty tier migration and recognition”.

Vitamin Shoppe’s private label brand also performed positively, with a relaunch of its BodyTech brand, and expansion of its Plant and True Athlete portfolio.

The company will also double “the amount of newness and innovation in 2019 compared to last year and look forward to future product launches of V-thrive, BodyTech Elite, the restage of our core Vitamin Shoppe brand, Fit Factor, our new weight management system, and so much more”, said Leite.

NEXCOM

Leite also said the company is excited about its recently signed partnership with the Navy Exchange Service Command (NEXCOM). The deal will see Vitamin Shoppe launch pop-up stores in approximately 19 NEX stores initially, which include a broad selection of The Vitamin Shoppe own brand products, including Vitamin Shoppe, PLNT, ProBioCare, BodyTech and True Athlete.

The first pop-up shop was launched last month (April) and carries over 300 SKUs. The remaining shops are expected to rollout through the summer.

According to the company, approximately 30 NEX locations will carry a full product assortment by Q4 of 2019.

“To summarize,” said Leite, “the first quarter showed solid progress on our transformation plan, and we recognize we still have much more work to do. With our key accomplishments from the quarter, we are confident we are moving in the right direction with opportunities to improve our financial performance as our transformation continues to gain traction in the marketplace.”