Vitamin Shoppe Inc. (NYSE: VSI), a leading multi-channel specialty retailer of nutritional products, announced preliminary results for its fiscal second quarter ended June 29, 2013. Total net sales in the quarter increased 14.1 percent to $279.5 million compared to $245.0 million in the same period of the prior year. Net income per diluted share for fiscal second quarter 2013 was $0.60 compared to $0.55 per share in the same quarter of the prior year.  

Tony Truesdale, CEO, commented, "On a comparable store sales basis, the first two quarters were more challenging and volatile than they had historically been as we lapped last year's strong performance in sports nutrition, accelerated weight management sales and above-average retail inflation. Nevertheless, we delivered positive comparable store sales in the quarter which represented the 31st consecutive quarter of positive comparable store sales."

Mr. Truesdale further commented, "2013 is a year of investment for the Vitamin Shoppe as we position the company for long-term sustainable growth. We have successfully integrated the back office operations of Super Supplements and towards quarter's end we began inbound inventory shipment to our new Virginia distribution center. We remain focused on our key growth initiatives and will continue to invest in all shopping channels to encourage customers to experience the Vitamin Shoppe whenever or wherever they want."

Fiscal second quarter 2013 results
Total net sales in fiscal second quarter 2013 increased 14.1 percent to $279.5 million compared to $245.0 million in the same period of the prior year.  Sales growth in the quarter was driven by: 1) a 2.3 percent increase in comparable sales, which was on top of an 8.3 percent comparable sales increase in the second quarter of 2012, 2) the contribution from Super Supplements retail stores of $18.0 million, 3) growth from new stores, and, 4) an 18.5 percent increase in ecommerce sales, including a 5.5 percent contribution from Super Supplements. 

The Company opened 10 stores in the quarter and 23 year-to-date. The majority of the second quarter store openings occurred late in the quarter.  Total store count was 630 as of June 29, 2013, compared with 551 on June 30, 2012. This includes two company-operated stores in Canada.

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $23.0 million, or 14.4 percent, to $182.2 million for the three months ended June 29, 2013, compared with $159.2 million for the three months ended June 30, 2012.  

Gross profit increased $11.5 million, or 13.4 percent, to $97.3 million for the fiscal 2013 second quarter, compared with $85.8 million for fiscal second quarter 2012. Gross profit as a percentage of net sales was 34.8 percent for the quarter ended June 29, 2013, compared to 35.0 percent in fiscal second quarter 2012.  The decrease was attributable to lower gross margins at Super Supplements.

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 $8.6 million, or 14.9 percent, to $66.7 million for the quarter ended June 29, 2013, compared with $58.1 million for the quarter ended June 30, 2012.  SG&A includes integration related expenses for the Super Supplements acquisition of approximately $0.9 million offset by insurance recoveries of $0.9 million related to Super Storm Sandy. SG&A as a percentage of net sales were 23.9 percent for second quarter 2013 compared with 23.7 percent in second quarter 2012.  This increase was attributable to the inclusion of Super Supplements.

Income from operations in fiscal second quarter 2013 was $30.6 million, an increase of 10.4 percent from the same period in the prior year. As a percentage of net sales, income from operations was 10.9 percent for the fiscal 2013 second quarter compared with 11.3 percent for fiscal second quarter 2012. By segment, the retail income from operations margin decreased 40 basis points in the quarter and reflects the inclusion of Super Supplements. For the direct business, income from operations reflects the inclusion of the lower margin Super Supplements e-commerce business as well as an increase in promotional activity.

Net income was $18.3 million for fiscal second quarter 2013, compared with $16.6 million for fiscal second quarter 2012. Reported earnings per diluted share (EPS) were $0.60 in fiscal second quarter 2013 compared with $0.55 in second quarter 2012.  

Balance Sheet and Cash Flow Cash and equivalents at June 29, 2013 were $54.8 million.  Capital expenditures were $12.0 million in the quarter and $23.8 million year-to-date.  Capital expenditures were used primarily for the new distribution center, build-out of new stores, improvements to existing stores, as well as the integration of Super Supplements. 

2013 Outlook For the current year management expects: