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Natural Foods Merchandiser

NBTY hasn't felt impact from New York supplement action, CEO says

NBTY hasn't felt impact from New York supplement action, CEO says
The New York supplement investigation has not affected sales and likely won't impact the industry like media headlines of December 2013 did, according to the CEO of NBTY.

The New York attorney general’s supplement attack is an issue of testing, not efficacy or consumer protection, and has not yet affected customer confidence at the shelf, NBTY CEO Steve Cahillane said during the company’s first-quarter earnings call on Feb. 11.

“We are very confident all of our products meet our label claims,” he said.

The attorney general called for GNC, Target, Walgreens and Wal-Mart to remove some private label herbal supplements from their shelves after samples tested found no DNA of the labeled herb.

NBTY’s leading brands include Vitamin World retail stores, and Nature’s Bounty and Sundown Naturals supplements, with private label business accounting for 10 percent to 12 percent of its business. The corporation does not identify customers, but no NBTY branded products were included in the attorney general’s tests and “only a limited number of product lots referenced in the New York attorney general letters were contract manufactured by NBTY,” he said.

NBTY is owned by the Carlyle Group, a Washington, D.C.-based investment fund, and discloses financial resuts because the company's debt is publicly traded.

Cahillane said NBTY will continue to work with industry groups such the Council for Responsible Nutrition to get the truth out to consumers. This is not going to be “a December 2013” issue, when the supplement industry took a hit because of bad press.

“We haven’t seen any effect at all in consumer takeaway in the category at large or in herbal supplements in particular,” he said.

The news starts the year with new challenges for the company that reported flat sales for the first quarter ended Dec. 31: $825.8 million, down from $827.1 million a year earlier. Domestic business continues to be “challenging,” Cahillane said. Compelling offers and new products are a focus to address this.

Additional highlights during the call include these takeaways:

  • Optimal Solutions Hair, Skin and Nails gummies were cited as a success in innovation, marketing and sales for the company.
  • Nature’s Bounty aromatherapy line also was a noted success as NBTY moves into the mind and body health space. More can be expected here.
  • More off-shelf space is being dedicated to the supplement category as the products are “a very good impulse item.”
  • The Disney franchise supplements have been a success the company hopes to replicate with Star Wars.

“We continue to work on the innovation pipeline and see opportunity to be an innovation leader,” Cahillane said.

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