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The Vitamin Shoppe Inc. will introduce hemp-extract products ‘shortly’

Despite slight drop in second-quarter sales, net income is back in the black, company announces.

Hemp extracts are coming to The Vitamin Shoppe, the company’s chief merchandising and marketing officer announced during Wednesday’s earnings call.

“Shortly, we’ll be launching a line of hemp-extract products that support overall health and wellness, and restorative health,” David Mock said. To support the new category, the retailer will push a marketing campaign via social media, email, in-store displays and website features.

The announcement seemingly supports the company’s cautious optimism about the changes it has made to attract new customers and improve sales.

For the second quarter of 2018, The Vitamin Shoppe reported a 1.1 percent drop in comparable sales.

Net sales totaled $293.1 million, compared to $296.4 million a year ago. The company saw net loss of $156.4 million in the second quarter of 2017. 

Total sales also dropped 1.1 percent for the time period. Same-store sales fell 5.1 percent, but e-commerce sales, including the company’s e-commerce site and auto-delivery, rose 36.9 percent, according to the company.

For the first time since the first quarter of 2017, The Vitamin Shoppe did not experience a year-to-year drop in net income. This quarter, the company generated a reported net income of $7.2 million, compared with a $156.4 loss in the second quarter of 2017.

Alex Smith, president and interim CEO, said, “To be clear, a better quarter and improving trends does not mean we are satisfied or believe that we have things fixed.

“I do believe, however, that it indicates that our strategy is directionally correct: our focus on upgrading talents, processes, products, and how we engage with our customers.”

Mock pointed out that the quarter’s 1.1 percent drop in comparative sales is “an improving trend, both year-over-year and sequentially.” First-quarter sales were 3.2 percent lower than in the previous year. In fiscal 2017, fourth-quarter total comparative sales fell 4.6 percent compared to the fourth quarter of 2016; third-quarter comparative sales dropped 6.6 percent; second-quarter sales, 8.3 percent; first-quarter sales, 5.9 percent, according to data previously released by The Vitamin Shoppe.

Other second-quarter results support the conclusion that the retailer is seeing an improving trend:

  • Gross profit as reported was $94.2 million, a 3.2 percent decrease from the $97.3 million in Q2 2017.
  • Adjusted gross profit was $97.9 million, 0.6 percent higher than in Q2 2017.
  • Reported gross profit was 32.2 percent of sales; it was 32.8 percent for the same period in 2017.
  • Adjusted gross profit as a percentage of sales was 33.4 percent of sales, an increase of 60 basis points over 2017.

The company has repurchased $30 million face value of the debt that would have been due in December 2020, CFO Bill Wafford said.

The company did not change its prior guidance.

Last month, The Vitamin Shoppe reported that Sharon Leite, formerly of Godiva Chocolatier, will become the company’s new chief executive officer on Aug. 27. 

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