Vitamin Shoppe, Inc. (NYSE: VSI), a leading specialty retailer and direct marketer of nutritional products, today announced its preliminary results for its fiscal first quarter ended March 27, 2010.
"We had a very strong first quarter," said Rick Markee, Chairman and Chief Executive Officer of Vitamin Shoppe, Inc. "Comparable store sales for the first quarter of 2010 increased 6.2%, making this our 18th consecutive quarter of comparable same-store sales growth. Additionally, the results reflect a solid 7.8% growth in our direct business. Income from operations increased by 42.3% and net income almost doubled."
Fiscal First Quarter 2010 Results
Net sales increased $19.1 million, or 11.0%, to $191.6 million for the three months ended March 27, 2010, compared with $172.6 million for the three months ended March 28, 2009. The increase was the result of the increase in comparable store sales, a strong performance from new stores and a 7.8% increase in direct sales driven by growth in Vitamin Shoppe's online business.
The Company operated 453 stores as of March 27, 2010 compared with 418 stores as of March 28, 2009. Overall store sales for the three months ended March 27, 2010 rose due to an increase in non-comparable store sales of $8.1 million and an increase in comparable store sales of $9.3 million, or 6.2%.
Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $11.1 million, or 9.6%, to $126.6 million for the three months ended March 27, 2010 compared with $115.5 million for the three months ended March 28, 2009.
Gross profit increased $8.0 million, or 14.0%, to $65.0 million for the three months ended March 27, 2010, compared with $57.0 million for the three months ended March 28, 2009. Gross profit as a percentage of sales was 33.9% for the quarter ended March 27, 2010, compared with 33.0% for the comparable prior year period. The strong improvement reflects a decrease in the level of promotional activity.
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 $3.0 million, or 6.8%, to $46.9 million for the three months ended March 27, 2010, compared with $43.9 million for the three months ended March 28, 2009. Selling, general and administrative expenses as a percentage of net sales showed improvement by decreasing to 24.5% for the quarter, compared with 25.5% for the comparable prior year period reflecting the maturation of the store base, leverage on corporate expenses and ongoing attention to financial disciplines.
Income from operations increased $5.4 million, or 42.3%, to $18.1 million for the three months ended March 27, 2010, compared with $12.7 million for the three months ended March 28, 2009. Income from operations as a percentage of net sales increased to 9.4% for the 2010 quarter, compared with 7.4% for the comparable prior year period.
Net income increased to $8.7 million for the three months ended March 27, 2010, compared with $4.6 million for the three months ended March 28, 2009. Diluted earnings per share increased to $0.31 for the three months ended March 27, 2010, compared with $0.12 for the three months ended March 28, 2009. Net income for the current quarter includes a pretax loss on extinguishment of debt of $0.6 million (or approximately $.01 per share), related to the previously announced redemption of $20 million of Vitamin Shoppe's senior notes.
The company also today announced it has expanded its senior credit facility to $70 million (from $50 million) and plans to redeem an additional $25 million of outstanding floating rate notes. This is expected to save in excess of $1 million of interest expense annually.
2010 Outlook
The Company reiterated its outlook for 2010. Vitamin Shoppe expects:
- to spend approximately $22 million in total capital expenditures while opening approximately 42 new stores
- continued comparable store sales growth in line with industry growth in the mid-single digits
- an effective tax rate of approximately 40%
- diluted weighted average shares outstanding of 27.8 million
- inventory growth at a rate less than total sales growth
- continued reduction of debt and to fund store growth with excess cash flow
- to improve its operating margin largely reflecting leverage on selling, general and administrative expenses (including corporate and depreciation and amortization expense)
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