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Vitamin Shoppe, Inc. Announces Fiscal Second Quarter 2010 Results
-- Comparable store sales grew 8.6% for the fiscal second quarter of 2010 versus last year, net sales increased 12.3% -- Income from operations increased 27% -- Net income increased 74% -- Diluted EPS increased 160% to $0.26 per share ($0.29 per share exc
PRNewswire-FirstCall
NORTH BERGEN, N.J.

Vitamin Shoppe, Inc. (NYSE: VSI), a leading specialty retailer and direct marketer of nutritional products, today announced its preliminary (unaudited) results for its fiscal second quarter ended June 26, 2010.

"2010 started strong and that momentum continued into the second quarter," said Rick Markee, Chairman and Chief Executive Officer of Vitamin Shoppe, Inc. "Comparable store sales for the second quarter of 2010 increased 8.6%, making this our 19th consecutive quarter of comparable same-store sales growth. Additionally, we continue to achieve operating leverage across our business. Income from operations increased by 27.2% (31.3% excluding expenses associated with the secondary offering) and net income was up 73.8%."

Fiscal Second Quarter 2010 Results

Net sales increased $21.1 million, or 12.3%, to $192.2 million for the three months ended June 26, 2010, compared with $171.1 million for the three months ended June 27, 2009. The increase was the result of the growth in comparable store sales, strong performance from new stores and a 5.1% increase in direct sales driven by further expansion in Vitamin Shoppe's online business.

The Company operated 463 stores as of June 26, 2010, compared with 425 stores as of June 27, 2009. Overall store sales for the three months ended June 26, 2010 rose due to an increase in non-comparable store sales of $7.1 million and an increase in comparable store sales of $13.0 million, or 8.6%.

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $13.2 million, or 11.4%, to $128.5 million for the three months ended June 26, 2010, compared with $115.4 million for the three months ended June 27, 2009.

Gross profit increased $7.9 million, or 14.2%, to $63.7 million for the three months ended June 26, 2010, compared with $55.8 million for the three months ended June 27, 2009. Gross profit as a percentage of sales was 33.1% for the quarter ended June 26, 2010, compared with 32.6% for the comparable prior year period. The improvement reflects efficiencies in a number of areas including warehouse and transportation costs.

Selling, general and administrative expenses ("SG&A"), including operating payroll and related benefits, advertising and promotion expense, depreciation and amortization, and other SG&A, increased $5.1 million, or 11.8%, to $48.2 million for the three months ended June 26, 2010, compared with $43.2 million for the three months ended June 27, 2009. SG&A as a percentage of net sales decreased to 25.1% for the quarter, compared with 25.2% for the comparable prior year period. Included in SG&A for the three months ended June 26, 2010 are $0.5 million of expenses incurred in connection with a secondary offering of the Company's common stock during the quarter. Excluding such expenses, SG&A as a percentage of net sales showed improvement by decreasing to 24.8% for the quarter, compared with 25.2% for the comparable prior year period. This reflects the ongoing maturation of the store base, leverage on corporate expenses and ongoing attention to financial disciplines.

Income from operations increased $3.3 million, or 27.2%, to $15.4 million for the three months ended June 26, 2010, compared with $12.1 million for the three months ended June 27, 2009. Income from operations as a percentage of net sales increased to 8.0% for the 2010 quarter, compared with 7.1% for the comparable prior year period. Excluding expenses for the secondary offering, income from operations increased 31.3% while income from operations as a percentage of net sales increased to 8.3% for the 2010 quarter, compared with 7.1% for the comparable prior year period.

Net income increased 74% to $7.3 million for the three months ended June 26, 2010, compared with $4.2 million for the three months ended June 27, 2009. Earnings per diluted share increased to $0.26 for the three months ended June 26, 2010, compared with $0.10 for the three months ended June 27, 2009. Net income benefited from lower interest expense versus the same period in 2009, resulting from ongoing debt reduction. Net income for the current quarter includes a pretax loss on extinguishment of debt and fees related to the secondary offering, totaling $1.1 million (or approximately $0.03 per share, net of tax). Excluding these items, earnings per diluted share for the quarter were $0.29.

The Company completed a secondary public offering of 7,171,768 shares of its common stock on May 29, 2010. All of the shares of common stock were sold by certain stockholders of Vitamin Shoppe. The Company did not receive any proceeds from the sale of shares in the offering.

  2010 Outlook
  The Company updated its outlook for 2010. Vitamin Shoppe expects:
  --  to spend approximately $22 million in total capital expenditures while
      opening approximately 46 new stores;
  --  continued comparable store sales growth for the remainder of the year
      in line with industry growth in the mid-single digits;
  --  an effective tax rate for the remainder of the year of approximately
      40%;
  --  diluted weighted average shares outstanding of 28.5 million reflecting
      the exercise of options in conjunction with the secondary offering;
  --  inventory growth at a rate less than total sales growth;
  --  continued reduction of debt and to fund store growth with excess cash
      flow; and
  --  to improve its operating margin reflecting leverage on gross margin
      and selling, general and administrative expenses (including corporate
      and depreciation and amortization expense).


  Conference Call

The Company will hold a conference call at 10:00 am Eastern Time today to discuss its fiscal second quarter 2010 results. The call can be accessed live over the phone by dialing 1-888-713-4199, or for international callers, 1-617-213-4861, passcode number 93121665. A replay will be available one hour after the call and can be accessed by dialing 1-888-286-8010 or for international callers, 1-617-801-6888. The passcode for the replay is 10502830. The replay will be available until July 29, 2010.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.vitaminshoppe.com. The on-line replay will be available beginning immediately following the call.

About Vitamin Shoppe, Inc. (NYSE: VSI)

Vitamin Shoppe is a leading specialty retailer and direct marketer of nutritional products based in North Bergen, New Jersey. The Company sells vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas, homeopathic remedies, green living products, and health and beauty aids to customers located primarily in the United States. The Company carries national brand products as well as exclusive products under the Vitamin Shoppe, MD Select, and VS Basics proprietary brands. The Vitamin Shoppe conducts business through more than 450 Company-owned retail stores, national mail order catalogs, and websites, www.VitaminShoppe.com and www.EcoShoppe.com, and has a social community site at www.VSconnect.com.

Certain statements herein are "forward-looking statements". Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, trade restrictions, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2009 and in all filings with the Securities Exchange Commission made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

         VITAMIN SHOPPE, INC. AND SUBSIDIARY

   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   (In thousands, except share and per share data)
                     (Unaudited)


                                          Three Months Ended
                                          ------------------
                                     June 26,         June 27,
                                          2010             2009
                                          ----             ----



    Net sales                         $192,234         $171,143
    Cost of goods sold                 128,541          115,381
                                       -------          -------
    Gross profit                        63,693           55,762
    Selling, general and
     administrative expenses            48,246           43,171
    Related party expenses                   -              447
                                           ---              ---
    Income from operations              15,447           12,144
    Loss on extinguishment of debt         568                -
    Interest expense, net                2,562            4,832
                                         -----            -----
    Income before provision for
     income taxes                       12,317            7,312
    Provision for income taxes           5,008            3,106
                                         -----            -----
    Net income                           7,309            4,206

    Preferred stock dividends in
     arrears                                 -            2,628
    Net income available to common
     stockholders                       $7,309           $1,578
                                        ======           ======

    Weighted average shares
     outstanding
       Basic                        27,130,809       14,175,906
       Diluted                      28,159,448       15,670,533
    Net income per share
       Basic                             $0.27            $0.11
       Diluted                           $0.26            $0.10






                                                 Six Months Ended
                                                 ----------------
                                             June 26,         June 27,
                                                     2010           2009
                                                     ----           ----



    Net sales                                    $383,847       $343,698
    Cost of goods sold                            255,140        230,924
                                                  -------        -------
    Gross profit                                  128,707        112,774
    Selling, general and
     administrative expenses                       95,188         87,113
    Related party expenses                                           816
                                                                     ---
    Income from operations                         33,519         24,845
    Loss on extinguishment of debt                  1,120              -
    Interest expense, net                           5,489          9,839
                                                    -----          -----
    Income before provision for
     income taxes                                  26,910         15,006
    Provision for income taxes                     10,875          6,238
                                                   ------          -----
    Net income                                     16,035          8,768

    Preferred stock dividends in
     arrears                                            -          5,205
    Net income available to common
     stockholders                                 $16,035         $3,563
                                                  =======         ======

    Weighted average shares
     outstanding

       Basic                                   26,911,896     14,175,906
       Diluted                                 27,933,956     15,820,009
    Net income per share

       Basic                                        $0.60          $0.25
       Diluted                                      $0.57          $0.23





  Key Performance Indicators and Statistics (In thousands, except store
                                  data):

                            Three Months Ended       Six Months Ended
                            ------------------       ----------------
                            June 26,   June 27,  June 26,   June 27,
                                 2010       2009      2010       2009
                                 ----       ----      ----       ----

  Net sales                  $192,234   $171,143  $383,847   $343,698
  Increase in comparable
   store net sales                8.6%       4.3%      7.4%       4.7%
  Gross profit as a percent
   of net sales                  33.1%      32.6%     33.5%      32.8%
  Income from operations      $15,447    $12,144   $33,519    $24,845
  Depreciation and
   Amortization                $5,635     $5,215   $11,049    $10,293
  Amortization of deferred
   financing fees                $189       $292      $474       $584






                              Three Months Ended      Six Months Ended
                              ------------------      ----------------
                             June          June   June         June
                              26,           27,    26,          27,
                              2010          2009   2010         2009
                              ----          ----   ----         ----
  Store Data:
    Stores open at beginning
     of period                 453           418    438          401
        Stores opened           10             8     26           25
        Stores closed            -            (1)    (1)          (1)
    Stores open at end of
     period                    463           425    463          425
                               ===           ===    ===          ===






                        Three Months Ended          Six Months Ended
                        ------------------          ----------------
                                                                June
                    June 26,       June 27,   June 26,           27,
                         2010           2009       2010           2009
                         ----           ----       ----           ----

  Sales:
    Retail           $171,868       $151,760   $340,931       $303,402
    Direct             20,366         19,383     42,916         40,296
                       ------         ------     ------         ------
  Net sales          $192,234       $171,143   $383,847       $343,698
                     ========       ========   ========       ========

  Income from
   operations:
    Retail             30,349         24,987     61,705         49,662
    Direct              3,627          3,720      8,118          8,086
    Corporate costs   (18,529)       (16,563)   (36,304)       (32,903)
                      -------        -------    -------        -------
  Income from
   operations         $15,447        $12,144    $33,519        $24,845
                      =======        =======    =======        =======





                            VITAMIN SHOPPE, INC. AND SUBSIDIARY

                           CONDENSED CONSOLIDATED BALANCE SHEETS
                             (In thousands, except share data)
   (Unaudited)


                                                             December
                                                  June 26,      26,
                                                       2010       2009
                                                       ----       ----
                            ASSETS

  Current assets:
    Cash and cash equivalents                       $18,193     $8,797
    Inventories                                     106,251    106,091
    Prepaid expenses and other current assets        17,208     13,401
    Deferred income taxes                             3,103      5,145
                                                      -----      -----
       Total current assets                         144,755    133,434
  Property and equipment, net.                       82,420     83,960
  Goodwill                                          177,248    177,248
  Other intangibles, net                             70,012     70,356
  Other assets:
    Deferred financing fees, net of accumulated
     amortization of $2,253 and $2,856 in 2010
     and                                              1,310      2,384
      2009, respectively
    Other long-term assets                            1,844      1,875
                                                      -----      -----
       Total other assets                             3,154      4,259
                                                      -----      -----
  Total assets                                     $477,589   $469,257
                                                   ========   ========

             LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Current portion of long-term debt                    $-    $20,000
    Current portion of capital lease obligation       1,648      1,537
    Revolving credit facility                        33,000
    Accounts payable                                 16,660     25,075
    Deferred sales                                    8,502     14,386
    Accrued salaries and related expenses             5,351      7,551
    Other accrued expenses                           16,894     14,469
                                                     ------     ------
       Total current liabilities                     82,055     83,018
  Long-term debt                                     75,106    100,106
  Capital lease obligation, net of current
   portion                                            1,619      2,303
  Deferred income taxes                              18,681     19,945
  Other long-term liabilities                         5,017      4,766
  Deferred rent                                      26,162     24,768

  Commitments and contingencies
  Stockholders' equity:
  Common stock, $0.01 par value; 400,000,000
   shares authorized, 27,791,900 shares issued
   and outstanding at
      June 26, 2010, and 400,000,000 shares
       authorized, 26,750,423 shares issued and
       outstanding at December 26, 2009                 278        268
  Additional paid-in capital                        228,281    210,359
  Accumulated other comprehensive loss                 (251)      (882)
  Retained earnings                                  40,641     24,606
                                                     ------     ------
             Total stockholders' equity             268,949    234,351
                                                    -------    -------
  Total liabilities and stockholders' equity       $477,589   $469,257
                                                   ========   ========

First Call Analyst:
FCMN Contact: smclaughlin@vitaminshoppe.com

SOURCE: Vitamin Shoppe, Inc.

CONTACT: Investor Contacts, Michael Archbold, Chief Financial Officer,
+1-201-624-3611, ir@vitaminshoppe.com; or Ian Lee, Solebury Communications
Group, +1-203-428-3215, ilee@soleburycomm.com; or Media Contacts:, Susan
McLaughlin, Director Corporate Communications, +1-201-624-3134,
smclaughlin@vitaminshoppe.com, or Allison & Partners, Jill Yaffe,
+1-646-428-0602, vitaminshoppe@allisonpr.com

Web Site: http://www.vitaminshoppe.com/


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