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Natural Foods Merchandiser

Negative media, slow innovation among issues for Vitamin Shoppe

Negative media, slow innovation among issues for Vitamin Shoppe
Sluggish sales continue at The Vitamin Shoppe, and the negative media environment around supplements remains a primary factor in challenges, leaders say.

A negative media environment and sluggish supplement innovation are prime contributors to short- and long-term growth challenges for the industry and The Vitamin Shoppe, the retailer’s new CEO Colin Watts said during the May 6 first-quarter financial results conference call.

While Watts noted internal factors and weather in a progressively worsening first quarter—especially online—that continued into April, he said, “Negative media is probably the major issue we are facing in the short term.”

First-quarter results highlights for The Vitamin Shoppe (NYSE: VSI):

  • Revenue of $336.84 million, up 9.4 year over year, but a target miss of $7.82 million.
  • Comparable sales increased 1.2 percent.
  • Retail comps rose 1.5 percent.
  • Gross profit grew $5.2 million, or 4.7 percent.
  • Gross profit as a percentage of net sales was 34 percent for the quarter ended March 28, 2015, compared to 35.6 percent in first quarter 2014.

Watts attributed decreased gross profit to product mix, increased and poorly executed promotional activity, deleverage on store occupancy costs and the impact of Nutri-Force brand line growth/changeover that has led to out-of-stocks and other challenges.

The new leader is assessing the state of the company, and while he is not yet ready to outline detailed strategic initiatives, he said opportunity exists for Vitamin Shoppe in developing private label and owned brands, increasing third-party sales, delving into consumer insights, creating products and finding new areas of growth.

He noted moving “beyond pills and powders” into the broader health and wellness market to poise the supplement seller for growth. Consumer trends are moving away from dieting and to fitness in general, he said, pointing to the growth of fitness trackers as one indicator.

“We need to stay in front of these trends,” he said.

Meanwhile, he added, two major supplement market drivers cause industry ebbs and flows—a positive media environment and product innovation. Neither exists currently, in his opinion.

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