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The Vitamin Shoppe bruised by sports nutrition competition

Sports supplement competition and promotion has heated up in both the specialty supplement and mass channels. For The Vitamin Shoppe, the shifting market has hit the bottom line. Here's how it adds up and what the supplement chain is doing to combat the slippage.

Americans’ appetite for protein has created a challenging environment for The Vitamin Shoppe as growth has invited competition and shifted vendor focus.

CEO Colin Watts emphasized bruised sports nutrition sales as a key driver of disappointing first quarter 2017 results for the New York Stock Exchange-traded company.

Total revenue decreased 5.9 percent, with net sales of $316.9 million compared with $336.8 million during the same period the prior year. Comparable store sales fell 6.3 percent. Even online sales dropped 9.1 percent.

Increased sports nutrition competition is to blame, Watts said. The trend is continuing into the second quarter, too.

"The sports customer and the sports market is a very unique part of our business driven by a lot of different issues that are throwing us off, frankly, right now," he said.

The slippage started in 2016 and accelerated in 2017 as specialty retailers aggressively promote to the market, and conventional grocery and mass merchandisers increase their share of shelf and online incursion. With innovation, price and convenience driving sports shoppers, Watts noted the challenge for The Vitamin Shoppe as vendors shift their focus to serve online retailers as well as the food, mass and drug channel.

Sports represented one-third of Vitamin Shoppe’s business last year. Yet vitamin, mineral and supplement sales "continues to drive a significant portion of our profits," Watts said via press release. This area grew 1.2 percent in the quarter. And the company’s focus on private label has shown 3 percent growth as it has reached 21.2 percent penetration.

Reinvention and cost reduction, a familiar refrain heard from competing GNC, remain the focus for the Vitamin Shoppe as it tests strategies in pilot stores and rolls out learnings across the chain this year. For Vitamin Shoppe, this means increasing in-store workshops, introducing one-on-one consultation, selling wellness bundles, featuring kombucha on tap, adding fit-focused freezer and cooler sets and improving sampling including a sports nutrition station, among other strategies.

Vitamin Shoppe will not retract from the sports market, Watts said, but will balance emphasis on its sports and VMS segments and "remain competitive so we can get back to growth."

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