NBTY Revenues Up, Profit Margin Down for Fiscal '09 Q1

NBTY’s net sales increased 29% to $511 million for the first quarter of its 2009 fiscal year (ended December 31, 2008), the company reported January 29. 


The supplement company’s revenues included $131 million in sales from Leiner Health Products and $35 million from Julian Graves, two acquisitions NBTY completed in the fiscal fourth quarter of 2008.

The company’s net income was $13.5 million, down more than 70% from $46 million for the fiscal first quarter ended December 31, 2007. NBTY cited high raw material costs, which could not be offset by higher prices for its customers, weak foreign exchange rates and the termination of the company’s unsuccessful direct response information technology programs as factors contributing to the decline in profits. Down too was NBTY’s total profit margin, which was reported at 41% compared to 53% this time last year. Part of the decrease in margin was attributed to a lower-than-expected margin on the Leiner private-label business. NBTY was also forced to purchase products at higher costs when it was discovered that Leiner’s inventory levels were not sufficient to fulfill customer demand. NBTY made a decision to eat those losses rather than passing the costs along to customers, the company reported.

Despite impressive revenue growth, NBTY is feeling the effects of the consumer downturn. Without $131 million in sales from Leiner products, revenues from the supplement company’s wholesale/U.S. nutrition division would have decreased 7%. Net sales for NBTY’s North American retail division, which is made up of Vitamin World stores in the United States and LeNaturiste stores in Canada, declined 14% to $48 million for the quarter. In Europe, retail sales were down 2% to $156 million. Without its purchase of Julian Graves, a U.K.-based specialty food retailer, sales would have decreased 24%.

NBTY’s direct/e-commerce division remained a major growth driver during the first quarter, with sales of $49 million on growth of 32%. Online sales, which are primarily generated through NBTY’s Puritan’s Pride Web catalog, accounted for 47% of the division’s total sales, up from 40% the previous year. The company said it plans to increase online offerings to stimulate future growth.

NBTY’s better-than-expected first-quarter sales moved the company’s stock price up more than 12% to $18.55 on January 29.

For more NBJ coverage of NBTY, see:
NBTY Reports Strong October and November Sales Growth
NBTY Reports Strong 3rd Quarter Sales
NBTY Swallows Competition

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