Vitamin Shoppe, Inc. (NYSE: VSI), a leading specialty retailer and direct marketer of nutritional products, today announced results for its fiscal third quarter ended September 26, 2009.
“We are pleased to report solid results for the third quarter of 2009,” said Vitamin Shoppe Chief Executive Officer Rick Markee. “Vitamin Shoppe’s comparable store sales increased 4.4% - our 16th consecutive quarter of comparable store sales growth - and the Company continues to demonstrate its resilience throughout the challenging economic conditions of the past year. We are also very satisfied with the completion of our IPO and believe it will contribute to the flexibility of our capital structure as we focus on continuing to grow our business.”
Initial Public Offering
On October 27, 2009, the Company completed its IPO of 9,096,077 shares. Including the subsequent exercise of the Company’s over-allotment option, a total of 10,460,488 shares were offered. The IPO resulted in the merger of VS Parent, Inc. into VS Holdings, Inc., with VS Holdings being renamed on October 29, 2009, as Vitamin Shoppe, Inc. (“VSI”). All common and preferred equity previously held by VS Parent, Inc., was redeemed or converted to common shares of VSI at a split ratio of approximately 1.8611 to one. Total outstanding common shares were 26,572,276 as of November 1, 2009.
The Company intends to use the net proceeds of approximately $121.2 million from the offering for the pro rata redemption of approximately $72.5 million of its outstanding preferred stock, the repurchase of approximately $45.2 million in aggregate principal amount of its outstanding senior secured notes, and the payment of offering-related expenses.
Fiscal Third Quarter 2009 Results
Net sales increased $17.1 million, or 11.3%, to $168.4 million for the three months ended September 26, 2009, compared with $151.3 million for the three months ended September 27, 2008. The increase was primarily the result of an increase in comparable store sales and new sales from non-comparable stores, offset in part by a decrease in direct sales.
The Company operated 434 stores as of September 26, 2009 compared with 374 stores as of September 27, 2008. Overall store sales for the three months ended September 26, 2009 rose due to an increase in non-comparable store sales of $12.0 million and an increase in comparable store sales of $5.8 million, or 4.4%.
Cost of goods sold, which includes product, warehouse and distribution and occupancy costs, increased $14.4 million, or 14.1%, to $116.0 million for the three months ended September 26, 2009 compared with $101.6 million for the three months ended September 27, 2008. The increase was primarily due to an increase in product costs and occupancy costs for the quarter ended September 26, 2009, as compared with the quarter ended September 27, 2008.
Gross profit increased $2.7 million, or 5.4%, to $52.4 million for the three months ended September 26, 2009, compared with $49.7 million for the three months ended September 27, 2008. Gross profit as a percentage of sales decreased to 31.1% for the quarter ended September 26, 2009, compared with 32.8% for the comparable prior year period. Gross margin for the quarter ended September 26, 2009 reflects an increase in non-recurring pricing promotions during the month of August, 2009. Gross margin also reflects higher occupancy costs attributable to the increased number of new stores in operations during the quarter ended September 26, 2009, compared with the comparable prior year period.
Selling, general and administrative expenses, including operating payroll and related benefits, advertising and promotion expense, depreciation and amortization, and other selling, general and administrative expenses, increased $3.1 million, or 7.6%, to $43.4 million for the three months ended September 26, 2009, compared with $40.4 million for the three months ended September 27, 2008. Selling, general and administrative expenses as a percentage of net sales decreased to 25.8% for the three months ended September 26, 2009, compared with 26.7% for the comparable prior year period.
Income from operations decreased $0.4 million, or 4.4%, to $8.5 million for the three months ended September 26, 2009, compared with $8.9 million for the three months ended September 27, 2008. Income from operations as a percentage of net sales decreased to 5.1% for the three months ended September 26, 2009, compared with 5.9% for the comparable prior year period.
Net income was $2.0 million for the three months ended September 26, 2009 and the three months ended September 27, 2008. Net income for the current quarter excluding the loss on extinguishment of debt of $0.3 million was $2.2 million.
Nine Months Ended September 26, 2009
Net sales increased $53.7 million, or 11.7%, to $512.1 million for the nine months ended September 26, 2009, compared with $458.4 million for the nine months ended September 27, 2008. Gross profit increased $15.2 million, or 10.1%, to $165.2 million versus $150.0 million for the comparable prior year period. Income from operations increased $4.5 million, or 15.5%, to $33.4 million versus $28.9 million for the comparable prior year period. Income from operations as a percentage of net sales increased to 6.5% versus 6.3%. Net income was $10.8 million for the nine months ended September 26, 2009, compared with $7.6 million for the nine months ended September 27, 2008.
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