Private-Label Success Helps Push NBTY Stock Price to 52-Week High

Shares of NBTY’s stock hit a 52-week high on July 27, 2009, on the heels of the company’s financial earnings report, which showed a 22% sales increase over 2008 during the third quarter ended June 30, 2009. 


The largest supplement manufacturer in the United States added $117 million during the third quarter, as net sales totaled $652 million. The company is also trending up over the last nine months, with sales increasing 21% to $1.9 billion over that period. Shares were trading at $36.54 when markets closed on July 27, a 14.7% increase over its previous closing price.

As expected, NBTY’s wholesale profit margin benefited from higher prices that were implemented in January 2009. The company’s wholesale/U.S. nutrition division grew an impressive 40% over Q3 2008. Much of the growth in the wholesale division was attributed to private-label sales, which have little or no advertising costs, Chief Financial Officer Harvey Kamil said on a July 27 conference call. The division added $113 million for the quarter, for a total of $396 million in Q3 sales.

The company has also benefited from the full integration of Leiner Health Products, eliminating manufacturing and marketing expenses that were previously associated with the acquired company. “NBTY generated a significant increase in sales for the quarter, particularly in our wholesale sector, which continues to benefit from the Leiner acquisition,” said NBTY Chairman and CEO Scott Rudolph. “We are now experiencing operating leverage, generating long-term growth, garnering greater market share and enhancing our position as the global leader in the nutritional supplement industry.”

NBTY’s North American retail division was able to climb 1% as 442 Vitamin World locations in the United States and 86 LeNaturiste stores in Canada capitalized on an economy that is showing signs of recovery. European Retail sales were up 3% over 2008 including $27 million from Julian Graves, which the company acquired in September 2008. Excluding Julian Graves sales, the NBTY’s European sales decreased 14% in U.S. dollars.

Direct-response and Web sales backtracked 3% to $53 million from the $55 million the division posted during the same quarter in 2008. The company attributed slow direct sales to a promotional schedule that varies throughout the year and noted that the division is best measured on an annual basis. In addition to the positive retail sales, there are indications that consumers are beginning to open their wallets again. The direct-response average order size climbed to $77.37 for the quarter, which is a $12 increase from the third quarter in 2008.

Related NBJ links:
NBTY Revenues Up, Profit Margin Down for Fiscal '09 Q1
NBTY Reports Strong October and November Sales Growth

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