Vitamin Shoppe Inc., a leading multi-channel specialty retailer of nutritional products, announced preliminary results for the three months ended March 29, 2014. Total net sales in the first quarter increased 10.3 percent to $307.8 million compared to $279.1 million in the same period of the prior year. Reported fully-diluted earnings per share in first quarter 2014 were $0.67, compared with $0.68 in first quarter 2013.
Tony Truesdale, chief executive officer of the company, commented, "Total comparable sales of 3.6 percent were positive for the 34th consecutive quarter, which highlights the consistency in our industry and our business model. Our e-commerce sales reported another quarter of double-digit growth. We are continuing to make investments in our omnichannel initiative to further enhance our customers overall experience."
First quarter 2014 results
Sales growth in the quarter was driven by: 1) a 2.3 percent increase in comparable retail store sales, 2) growth from non-comp stores, including Super Supplements, and 3) a 17.0 percent increase in e-commerce sales. Super Supplements contributed approximately 2 percentage points to e-commerce growth. Total comparable sales were 3.6 percent, including e-commerce comp sales.
The Company opened nine stores in the quarter, including one in Canada. The majority of the store openings occurred later in the quarter. Total store count was 667 as of March 29, 2014, compared with 621 on March 30, 2013.
Cost of goods sold, which includes product, warehouse, distribution and store occupancy costs, increased $20.9 million, or 11.8 percent, to $198.4 million for the three months ended March 29, 2014, compared with $177.4 million for the three months ended March 30, 2013.
Gross profit increased $7.8 million, or 7.7 percent, to $109.5 million for 2014 first quarter, compared with $101.6 million for first quarter 2013. Gross profit as a percentage of net sales was 35.6 percent for the quarter ended March 29, 2014, compared to 36.4 percent in first quarter 2013. The decrease was primarily attributable to the new distribution center, shifts in product category sales mix and higher penetration of e-commerce sales.
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 $8.3 million, or 12.3 percent, to $75.2 million for the quarter ended March 29, 2014, compared with $67.0 million for the quarter ended March 30, 2013. SG&A includes approximately $1.8 million of expenses related to potential manufacturing acquisition opportunities and integration costs. SG&A in first quarter 2013 included transaction and integration related expenses for the Super Supplements acquisition of $2.0 million. Reported SG&A as a percentage of net sales was 24.4 percent for first quarter 2014 compared with 24.0 percent in first quarter 2013. Excluding non-operating costs for both periods, SG&A as a percent of revenue was 23.9 percent in first quarter 2014 and 23.3 percent in first quarter 2013. The increase reflects higher depreciation and less leverage due to lower comparable retail sales growth.
Income from operations in first quarter 2014 of $34.2 million was essentially flat with the same period of the prior year. As a percentage of net sales, income from operations was 11.1 percent for first quarter 2014 compared with 12.4 percent for first quarter 2013. Adjusted for non-operating costs in both periods, income from operations as a percentage of sales was 11.7 percent in first quarter 2014 and 13.1 percent in first quarter 2013.
Net income was $20.5 million for first quarter 2014, essentially flat with the same period of the prior year. Reported earnings per diluted share (EPS) were $0.67 in first quarter 2014 compared with $0.68 in first quarter 2013. First quarter 2014 includes an estimated $0.03 per share of acquisition-related expenses while first quarter 2013 included an estimated $0.04 per share impact related to the Super Supplements acquisition.
Balance sheet and cash flow
Cash and equivalents at March 29, 2014 were $87.8 million and the company has no debt. Capital expenditures were $8.5 million in the quarter with funds expended primarily for the build-out of new stores, improvements to existing stores and IT investments.
Management expects the following for 2014:
- Retail store comparable sales growth of low to mid-single digits, and total comps including e-commerce, of mid-single digits
- Approximately 60 new stores
- Depreciation & amortization of approximately $31 million
- Slight EBIT margin decline
- Capital expenditures of approximately $35 million to $40 million