News Releases

Vitamin Shoppe, Inc. Announces Fourth Quarter 2016 Results
Fourth Quarter 2016 Highlights:
- Total revenue increases 3.9%
- Total comparable sales down 2.2%
- Vitaminshoppe.com sales increased 7%
- Records $39.2 million of impairment charges for Nutri-Force, impacts EPS by $0.98
- GAAP fully diluted loss per share of $0.49, and adjusted fully diluted earnings per share of $0.36

SECAUCUS, N.J., March 1, 2017 /PRNewswire/ -- Vitamin Shoppe, Inc. (NYSE: VSI), a multi-channel, specialty retailer and manufacturer of nutritional products, today announced preliminary results for the three months ended December 31, 2016.  Total net sales in the fourth quarter were $304.9 million, up 3.9% with the same period of the prior year.  Reported fully diluted loss per share in fourth quarter 2016 was $0.49, compared to fully diluted earnings per share of $0.22 in fourth quarter 2015.  Results in fourth quarter 2016 include a $39.2 million, or $0.98 per share, impairment charge associated with Nutri-Force goodwill and other intangible assets and a $3 million tax benefit from the closure of the Canadian stores earlier in the year, while fourth quarter 2015 results include approximately $7.4 million, or $0.17 per diluted share, of certain costs primarily related to strategic initiatives.  Excluding these items in both periods, adjusted EPS was $0.36 and $0.39, in fourth quarter 2016 and 2015, respectively.  (Refer to Table 4 at the end of this press release.)  Additionally, 2016 was a 53-week year and the extra week added approximately $0.08 to EPS. 

Commenting on the quarter's results, Colin Watts, Chief Executive Officer of the Vitamin Shoppe stated, "Our top line growth is not yet where we want it to be as fourth quarter comparable sales were disappointing, but generally in line with our expectations.  Although the external environment was more difficult than we planned coming into 2016, we made significant progress in rolling out initiatives tied to our reinvention strategy.  While we are encouraged by the early results of these programs in 2016, we acknowledge that they will still take time to reach full scale.  In addition to good progress on growth initiatives during the quarter, we were particularly pleased with accelerated progress in our cost reduction and margin enhancement initiatives, which are vital to building a stronger Return on Capital profile for our Company in 2017.  We still have a ways to go to realize our full Reinvention vision, but we remain bullish about our long-term prospects for sustainable, profitable growth."

Fourth Quarter 2016 Results

Total sales of $304.9 million in the quarter increased 3.9% over the same period of the prior year.  Total comparable sales were down 2.2% in the quarter driven by a 1.8% decline in retail store comparable sales and a 5.0% decrease in total e-commerce comparable sales.  Included in e-commerce comp sales, vitaminshoppe.com comparable sales increased 7%.  Manufacturing third party sales decreased 28.9% from the same period of the prior year.  The Company opened three stores in the quarter and closed two.

Cost of goods sold, which includes product, distribution, manufacturing and store occupancy costs, increased $2.5 million, or 1.2%, to $204.7 million for the three months ended December 31, 2016, compared with $202.2 million for the three months ended December 26, 2015.

Gross profit of $100.2 million was up 9.7% from $91.3 million in fourth quarter 2015.  Gross profit as a percentage of net sales was 32.9% in fourth quarter 2016, compared to 31.1% in the same period of 2015.  Gross margin in fourth quarter 2015 includes approximately $2.6 million in inventory related charges for Super Supplements conversion, inventory write-off for customer which went out of business and Canada store closings.  Excluding the impact of these charges as detailed in Table 4, gross margin in fourth quarter 2015 was 32.0%.  The fourth quarter 2016 year over year increase was primarily due to product margin improvement and leverage in occupancy and supply chain costs due to the 53rd week.

Selling, general and administrative expenses (SG&A), including operating payroll and related benefits, advertising expense and depreciation and amortization, increased $42.7 million to $122.8 million for the quarter ended December 31, 2016, compared with $80.2 million for the quarter ended December 26, 2015.  SG&A in fourth quarter 2016 includes $39.2 million of impairment charges for Nutri-Force.  SG&A for fourth quarter 2015 included total costs of $4.9 million primarily related to reinvention and management realignment costs and Super Supplements conversion expenses.  Excluding certain items for both periods, SG&A as a percent of revenue was 27.4% in fourth quarter 2016 and 25.7% in fourth quarter 2015.  (For further information on adjustments see Table 4 at the end of this release.)  The increase in the SG&A rate was primarily driven by deleverage from lower sales.

Loss from operations in fourth quarter 2016 of $22.7 million compared to operating income of $11.1 million in the same period of the prior year.  Adjusted for the items noted in the preceding paragraph, income from operations as a percentage of sales was 5.4% in fourth quarter 2016 and 6.3% in fourth quarter 2015.  (See Table 4.)

Net loss was $11.6 million for fourth quarter 2016 compared to net income of $6.1 million in the same period of the prior year.  Reported fully diluted loss per share was $0.49 in fourth quarter 2016, compared to fully diluted earnings per share of $0.22 in fourth quarter 2015.  EPS, on an adjusted basis (for the items described in Table 4), was $0.36 and $0.39 for the fourth quarters of 2016 and 2015, respectively.

Balance Sheet and Cash Flow

Cash and equivalents at December 31, 2016 were $2.8 million.  At quarter end, the Company had $11 million drawn on the revolving line of credit and a convertible notes liability of $121 million.

Capital expenditures were $8.8 million in the quarter.  Funds were primarily expended on new and remodel stores, supply chain, digital and other IT investments.

During the quarter, the Company repurchased 0.4 million shares of its common stock, or approximately 2.0% of the shares outstanding, for a total purchase price of $10.0 million.

Full Year 2016 Financial and Operating Highlights

  • Opened 26 stores
  • Transformed 4 stores into new reinvented stores
  • Launched new responsive website
  • Total revenue increased 1.8%
  • Total comparable sales were down 0.9%
  • GAAP fully diluted earnings per share of $1.04, or $2.09 per fully diluted share excluding certain costs.  This compares with fully diluted earnings per share of $1.82 or an adjusted $2.11 per share, in 2015.  See Table 4.
  • Repurchased 2.6 million common shares for a total of $66.0 million.

2017 Outlook

Management is providing the following outlook for 2017:

  • Total comparable sales growth flat to low single digit negative
  • The opening of 15 new stores
  • Remodel 10 to 15 stores into new format
  • Fully diluted earnings per share in the range of $1.95 - $2.20.  This excludes any potential charges associated with the implementation of strategic initiatives to improve performance at Nutri-Force.
  • Capital expenditures of approximately $45 million

Non-GAAP Financial Measures

Adjusted information is non-GAAP financial information. These supplemental non-GAAP measures should not be considered superior to, or a substitute for, and should be considered in conjunction with the GAAP financial measures presented.  The Company believes such non-GAAP financial information facilitates analysis and comparisons of our ongoing business operations because it excludes items that may not be indicative of, or are unrelated to the Company's and our business segments' core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses.  These adjustments are consistent with how management views our businesses.  Management uses such non-GAAP financial information in making financial, operating and planning decisions and evaluating the Company's and each business segment's ongoing performance.  A reconciliation of adjusted financial information to the most directly comparable financial measures calculated and presented in accordance with GAAP is shown in Table 4.

Webcast
Management will host a conference call to discuss the fourth quarter 2016 results at 8:30a.m. Eastern Time (ET) today.  Interested investors and other parties may listen to the simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.vitaminshoppe.com.  A powerpoint presentation to accompany the call can be found on the website in the Investor Relations section.  A telephonic replay will be available beginning at 11:30 a.m. ET on March 1, 2017 and can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 for international callers. The passcode for the replay is 9786140.  The telephonic replay will be available until 11:59 p.m. ET on March 8, 2017.  The webcast will also be archived on the company's website at www.vitaminshoppe.com in the investor relations section.

About the Vitamin Shoppe, Inc. (NYSE:VSI)

Vitamin Shoppe is a multi-channel, specialty retailer and contract manufacturer of nutritional products based in Secaucus, New Jersey.  In its stores and on its website, the Company carries a comprehensive retail assortment including: vitamins, minerals, specialty supplements, herbs, sports nutrition, homeopathic remedies, green living products, and beauty aids.  In addition to offering products from approximately 900 national brands, the Vitamin Shoppe also carries products under The Vitamin Shoppe®, BodyTech®, True Athlete®, MyTrition®, plnt®, ProBioCare®, Next Step® and Betancourt Nutrition® brands.  The Vitamin Shoppe conducts business through more than 775 company-operated retail stores under The Vitamin Shoppe and Super Supplements retail banners, and through its website, www.vitaminshoppe.com.  Follow the Vitamin Shoppe on Facebook at http://www.facebook.com/THEVITAMINSHOPPE and on Twitter at http://twitter.com/VitaminShoppe.

Forward Looking Statements

This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements under the caption "2017 Outlook", statements regarding future financial results and performance, share repurchases, future business prospects, revenue, new stores, product offerings, store growth, working capital, liquidity, capital expenditures, capital needs and interest costs, industry based factors, including the level of competition in the vitamin, mineral and supplement industry, continued demand from the primary markets the Company serves, consumer perception of the Company's products, the availability of raw materials as well as economic conditions generally and factors more specific to the Company such as compliance with manufacturing regulations, certifications and practices and restrictions imposed by the Company's revolving credit facility, including financial covenants and limitations on the Company's ability to incur additional indebtedness and the Company's future capital requirements, and other risks, uncertainties and factors set forth under Item 1A., entitled "Risk Factors", in the Company's Annual Report on Form 10-K for the fiscal year ended December26, 2015 and in the Company's other reports and documents filed with the SEC.  These forward-looking statements can be identified by the use of words such as "outlook", "believes", "expects", "potential", "continues", "may", "will", "should", "seeks", "predicts", "intends", "plans", "estimates", "anticipates", "target", "could" or the negative version of these words or other comparable words.  These statements are subject to various risks and uncertainties, many of which are outside the Company's control, including, among others 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, the availability of raw material and other specific factors discussed herein and in other Company SEC filings (including reports on Forms 10-K and 10-Q filed with the SEC).  The Company believes that all forward-looking statements are based on reasonable assumptions when made; however,  it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes with certainty and that, accordingly, one should not place undue reliance on these statements.  Forward-looking statements speak only as of the date when made and the Company undertakes no obligation to update these statements in light of subsequent events or developments. Actual results may differ materially from anticipated results or outcomes discussed in any forward-looking statement.

 

 

 

TABLE 1

VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)

(Unaudited)




Three Months Ended


Fiscal Year Ended



December 31,


December 26,


December 31,


December 26,



2016


2015


2016


2015










Net sales


$         304,865


$         293,490


$       1,289,243


$       1,266,549

Cost of goods sold


204,705


202,193


862,887


847,634

Gross profit


100,160


91,297


426,356


418,915

Selling, general and administrative expenses


122,842


80,180


380,779


329,922

Income (loss) from operations


(22,682)


11,117


45,577


88,993

Interest expense, net


2,546


590


9,523


1,105

Income (loss) before provision for income taxes


(25,228)


10,527


36,054


87,888

Provision for (benefit from) income taxes


(13,614)


4,395


11,090


34,717

Net income (loss)


$         (11,614)


$            6,132


$           24,964


$           53,171










Weighted average common shares outstanding









   Basic


23,357,556


28,102,790


23,875,540


28,954,804

   Diluted


23,552,982


28,300,462


24,067,686


29,203,429

Net income (loss) per common share









   Basic


$             (0.50)


$              0.22


$              1.05


$              1.84

   Diluted


$             (0.49)


$              0.22


$              1.04


$              1.82

 

 

TABLE 2

VITAMIN SHOPPE, INC. AND SUBSIDIARY

SEGMENT DATA, KEY PERFORMANCE INDICATORS AND STORE INFO

($ in thousands)

(Unaudited)




Three Months Ended


Fiscal Year Ended



December 31,


December 26,


December 31,


December 26,



2016


2015


2016


2015

Net sales:









Retail 

$             262,144


$             244,727


$          1,109,202


$          1,081,123


Direct

31,078


32,381


130,024


128,825


Manufacturing

21,989


23,974


87,684


91,159


Segment net sales

315,211


301,082


1,326,910


1,301,107


Elimination of intersegment revenues

(10,346)


(7,592)


(37,667)


(34,558)

Net sales

$             304,865


$             293,490


$          1,289,243


$          1,266,549










Income (loss) from operations:









Retail 

$               44,921


$               37,036


$             197,450


$             192,598


Direct

4,553


4,928


18,737


20,904


Manufacturing

(41,405)


(544)


(44,223)


(1,977)


Corporate costs

(30,751)


(30,303)


(126,387)


(122,532)

Income (loss) from operations

$              (22,682)


$               11,117


$               45,577


$               88,993










Increase (Decrease) in total comparable net sales

(2.2)%


(0.3)%


(0.9)%


0.0 %

Increase (Decrease) in comparable store net sales

(1.8)%


(0.9)%


(1.5)%


0.1 %

Increase (Decrease) in e-commerce comparable net sales

(5.0)%


3.9 %


3.8 %


(0.6)%










Gross profit as a percent of net sales

32.9 %


31.1 %


33.1 %


33.1 %

Income (loss) from operations as a percent of net sales

(7.4)%


3.8 %


3.5 %


7.0 %










Capital Expenditures

$                 8,840


$                 9,231


$               40,068


$               39,403

Depreciation and Amortization 

$                 9,968


$               10,038


$               38,780


$               38,495










Store Data:









Stores open at beginning of period 

774


748


758


717


    Stores opened 

3


11


26


50


    Stores closed 

(2)


(1)


(9)


(9)


Stores open at end of period

775


758


775


758










Total retail square footage at end of period (in thousands)

2,709


2,662


2,709


2,662

 

 


TABLE 3

VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)



December 31,


December 26,


2016


2015

ASSETS




Current assets:




  Cash and cash equivalents

$                  2,833


$                 15,104

  Accounts receivable, net of allowance of $1,061 and $897 in 2016 and 2015, respectively

7,367


7,437

  Inventories

241,736


226,830

  Prepaid expenses and other current assets

33,717


25,194

     Total current assets

285,653


274,565

Property and equipment, net

139,132


140,158

Goodwill

210,633


243,269

Other intangibles, net

79,489


87,270

Other long-term assets

19,277


3,429

Total assets

$              734,184


$               748,691





LIABILITIES AND STOCKHOLDERS' EQUITY 




Current liabilities:




  Revolving credit facility

$                11,000


$                   8,000

  Accounts payable

65,606


41,217

  Deferred sales

5,209


20,483

  Accrued expenses and other current liabilities

52,290


47,776

     Total current liabilities

134,105


117,476

Convertible notes, net

120,874


115,410

Deferred rent

37,489


39,889

Other long-term liabilities 

1,720


615





Commitments and contingencies








Stockholders' equity:




  Preferred stock, $0.01 par value; 250,000,000 shares authorized and no shares issued




   and outstanding at December 31, 2016 and December 26, 2015

-


-

  Common stock, $0.01 par value; 400,000,000 shares authorized, 23,585,240 shares issued and




     23,424,055 shares outstanding at December 31, 2016, and 25,993,715 shares issued and 25,873,581




     shares outstanding at December 26, 2015

236


260

  Additional paid-in capital

80,727


139,827

  Treasury stock, at cost; 161,185 shares at December 31, 2016 and 120,134 shares at December 26, 2015

(6,430)


(5,225)

  Accumulated other comprehensive loss

-


(60)

  Retained earnings 

365,463


340,499

           Total stockholders' equity 

439,996


475,301

Total liabilities and stockholders' equity

$              734,184


$               748,691





 

 

 

TABLE 4

VITAMIN SHOPPE, INC. AND SUBSIDIARY

SUPPLEMENTAL OPERATING DATA

(Unaudited)


Amounts in millions except per share data










Figures may not sum due to rounding















Operating 


Net




Gross




Income


Income


Diluted


Profit


SG&A


(Loss)


(Loss)


EPS











Three months ended December 31, 2016:










As Reported

$       100.2


$       122.8


$        (22.7)


$         (11.6)


$     (0.49)











Impairment charges on goodwill and intangible asset (1)

-


(39.2)


39.2


23.2


0.98











Canada stores closing costs (2)

-


-


-


(3.0)


(0.13)











As Adjusted

$         100.2


$           83.6


$           16.5


$              8.6


$        0.36











Three months ended December 26, 2015:










As Reported

$         91.3


$         80.2


$         11.1


$             6.1


$      0.22











Management realignment charges (3)

-


(1.2)


1.2


0.8


0.03











Reinvention strategy costs (4)

-


(1.7)


1.7


1.1


0.04











Integration costs (5)

-


(0.5)


0.5


0.3


0.01











Super Supplements conversion costs (6)

1.0


(0.8)


1.8


1.1


0.04











Product write-off (7)

1.3


-


1.3


0.8


0.03











Canada stores closing costs (2)

0.3


(0.6)


0.9


0.9


0.03











As Adjusted

$           93.8


$           75.3


$           18.5


$            11.1


$        0.39











Fiscal year ended December 31, 2016:










As Reported

$       426.4


$       380.8


$         45.6


$           25.0


$      1.04











Impairment charges on goodwill and intangible asset (1)

-


(39.2)


39.2


23.2


0.96











Cost reduction project (8)

-


(3.8)


3.8


2.3


0.10











Canada stores closing costs (2)

(0.2)


(2.1)


1.9


(1.1)


(0.05)











Super Supplements conversion costs (6)

(0.2)


(1.3)


1.0


0.6


0.03











Reinvention strategy costs (4)

-


(0.5)


0.5


0.3


0.01











As Adjusted

$         426.0


$         333.9


$           92.0


$            50.3


$        2.09











Fiscal year ended December 26, 2015:










As Reported

$       418.9


$       329.9


$         89.0


$           53.2


$      1.82











Management realignment charges (3)

-


(3.4)


3.4


2.1


0.07











Reinvention strategy costs (4)

-


(2.7)


2.7


1.7


0.06











Integration costs (5)

-


(1.9)


1.9


1.2


0.04











Super Supplements conversion costs (6)

1.0


(0.8)


1.8


1.1


0.04











Account receivable bad debt reserve charge (9)

-


(1.4)


1.4


0.8


0.03











Product write-off (7)

1.3


-


1.3


0.8


0.03











Canada stores closing costs (2)

0.3


(0.6)


0.9


0.9


0.03











As Adjusted

$         421.4


$         319.1


$         102.3


$            61.7


$        2.11





















(1) Impairment charges of $32.6 million on goodwill and $6.6 million on the customer relationships intangible asset of Nutri-Force.

(2) In Fiscal 2016, charges primarily related to lease terminations and a $3.0 million tax benefit in the fiscal quarter ended December 2016
      resulting from the write-off of the Canada investment.  In Fiscal 2015, costs include inventory reserve charges, impairment charges to
      fixed assets and severance charges.

(3) Management realignment charges primarily consist of severance, sign-on bonuses, recruiting and relocation costs.

(4) The costs represent outside consultants fees in connection with the Company's "reinvention strategy".

(5) Represents integration costs related to the acquisition of Nutri-Force, consisting primarily of professional fees.

(6) In Fiscal 2016, costs primarily related to the closure of the Seattle distribution center.  In Fiscal 2015, conversion costs primarily
      include inventory reserve charges, product markdowns and accelerated depreciation.

(7) Represents a charge to inventory reserves for the write-off of USPlabs®products which the Company ceased selling.

(8) Outside consulting costs relating to a project to identify and implement cost reduction opportunities.

(9) Represents a charge to increase the allowance for doubtful accounts for Nutri-Force, related to one wholesale customer that abruptly
     ceased operations.

 

SOURCE Vitamin Shoppe, Inc.

For further information: Investors: Kathleen Heaney, 646-912-3844 OR 201-552-6430, ir@vitaminshoppe.com; Media/ PR Agency: Kaplow, 212-221-1713, vitaminshoppe@kaplow.com

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