NBTY Solidifies Status as No. 1 Supplement Company With Record Year


NBTY posted record net sales of $674 million for its fiscal fourth quarter ended September 30, 2009, with growth of 12% compared to the same period in 2008. The company benefited from strong dietary supplement categorical growth of 11% in the mass market for the 13 week period ended September 26, according to Nielsen Company estimates. Total fiscal year net sales totaled $2.6 billion, compared to net sales of $2.2 billion for the prior fiscal year, an increase of 18% or $402 million. Already atop Nutrition Business Journal’slist of the top supplement companies, NBTY solidified its No. 1 position with another solid year.

With Leiner Health Products now fully integrated into the company, NBTY has benefited from the increased private label production capacity acquired in the transaction. NBTY’s wholesale/U.S. nutrition division increased sales by 13%, producing $46 million for the quarter. The company attributed 40% of its wholesale/U.S. nutrition sales to private label business. By comparison, private label represented only 22.5% of the division’s sales prior to the merger.

Overall gross profit margins went down from 49% to 44% for the year, which the company attributes to the lower margins traditionally associated with private label. Still, NBTY has been able to capitalize on the company’s vertical integration and manage the supply chain in order to increase its bottom line numbers, according to Harvey Kamil, president and chief financial officer. In a November 9 conference call, Kamil told investors and members of the media that he thought a 45% to 46% gross profit margin should be sustainable moving forward.

After posting earnings that did not meet company expectations during the first two quarters of fiscal 2009, NBTY appears poised to sustain its Q3 and Q4 growth well into fiscal 2010. “We do not think Q1 or Q2 were indicative of our operations,” said Kamil. “We were struggling through certain issues, but now we’ve cleared those up.” One of the issues NBTY had to correct was insufficient inventory levels inherited from Leiner, which were not adequate to maintain customer fulfillment levels. The company has corrected the issue and is now achieving 100% fulfillment rates, according to Kamil.

Company executives pointed to an aging population that is increasingly interested in supplements and heightened flu awareness as two trends helping to drive sales. NBTY has seen an increase in vitamin C sales recently, according to Chairman and CEO Scott Rudolph. Kamil also noted that supplement sales were up 16% in the month of October in the mass market, according to Nielsen Company estimates. NBJ features a one-page company profile detailing NBTY’s 2008 business in the 2009 Supplement Business Report—a guide for supplement manufacturers and marketers in the United States.

Related NBJ Links:
Private-Label Success Helps Push NBTY Stock Price to 52-Week High
NBTY Reports Solid Q2 Sales Growth, Investors Take Notice
Perrigo Flying High Despite Losing Leiner Bidding War Last Year

Related Functional Ingredient magazine links:
Functional Ingredients Industry People News

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