Commenting on the strong results, Tony Truesdale, Chief Executive Officer of the Company stated, “I am pleased with our second quarter results.  We have been able to consistently deliver a strong performance in terms of comparable sale growth, margin improvement, earnings growth, cash flow generation and overall financial strength.  We feel good about the momentum we are seeing in the business.”

Added, Mr. Truesdale, “We are making investments in the business, particularly online, to support our growth.  Both in retail and online we continue to work to build a business that exceeds our customers’ expectations and strengthens our brand – our most valuable asset.  We have a strong balance sheet that can support our growth.”

Fiscal Second Quarter 2011 Results

Net sales increased $23.7 million, or 12.3%, to $215.9 million for the three months ended June 25, 2011, compared with $192.2 million for the three months ended June 26, 2010.  The increase was the result of the growth in comparable store sales predominantly driven by traffic, continued strong performance from new stores and a 4.4% increase in direct sales driven by further expansion in Vitamin Shoppe’s online business.

Overall store sales for the three months ended June 25, 2011 grew as a result of an increase in non-comparable store sales of $9.2 million and an increase in comparable store sales of $13.6 million, or 8.0%.  The Company opened 9 stores in the quarter.  Total store count was 505 as of June 25, 2011, compared with 463 on June 26, 2010.

Cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $13.7 million, or 10.6%, to $142.2 million for the three months ended June 25, 2011, compared with $128.5 million for the three months ended June 26, 2010.

Gross profit increased $10.0 million, or 15.7%, to $73.7 million for the three months ended June 25, 2011, compared with $63.7 million for the three months ended June 26, 2010.  Gross profit as a percentage of sales was 34.1% for the quarter ended June 25, 2011, up from 33.1% for the comparable prior year period.  The improvement reflects more effective promotional spending, a mix shift to higher margin items and leverage on occupancy driven by the strong comparable sales performance.

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 10.5%, to $53.3 million for the three months ended June 25, 2011, compared with $48.2 million for the three months ended June 26, 2010.  SG&A as a percentage of net sales decreased to 24.7% for the quarter compared to 25.1% for the comparable prior year period.  The improvement represents maturation of the store base, strong comparable store sales, as well as the company’s ability to leverage costs over a larger store base and expense discipline.

Income from operations increased $4.9 million, or 32.0%, to $20.4 million for the three months ended June 25, 2011, compared with $15.4 million for the three months ended June 26, 2010.  Income from operations as a percentage of net sales increased to 9.4% for the 2011 quarter, compared with 8.0% for the comparable prior year period.

Net income increased $4.6 million, or 63.5% to $12.0 million for the three months ended June 25, 2011, compared with $7.3 million for the three months ended June 26, 2010.  This was primarily attributable to stronger sales and margin improvement.  Net income also benefitted from significantly lower interest expense versus the same period in 2010 due to reduced outstanding debt and lower interest rates.

Earnings per diluted share increased to $0.40 in fiscal second quarter 2011 from $0.26 per share in the comparable period of the prior year.

Balance Sheet and Cash Flow

During the fiscal second quarter 2011, the Company paid down the revolving credit facility which had $22 million drawn at the end of fiscal first quarter 2011.  Additionally, during the first half of fiscal year 2011, the company had a net reduction in debt of approximately $51 million.  Total debt, excluding capital lease obligations, at quarter’s end was $21.9 million.  Cash and equivalents at June 25, 2011 were $6.9 million.

2011 Outlook

The current fiscal year is a 53-week year.  The outlook provided below is based on a 52-week year comparable with the prior fiscal year.  Management expects:

• To open approximately 48 new stores
• Capital expenditures of approximately $23 million
• Comparable store sales of approximately 7.0% for the full year
• Continued improvement in EBIT margin reflecting continuing maturation of the store base, leverage on depreciation and amortization
• SG&A for the remainder of the year is expected to include approximately $1.0 million of additional investments to support long-term growth, primarily for the e-commerce business
• Reduced interest expense compared with the prior year reflecting lower debt levels from strong cash flow and lower interest rates under the new term loan

 

Webcast

The Company will webcast a conference call at 4:30 p.m. Eastern Time (ET) today to discuss its fiscal second quarter 2011 results. 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.  The on-line replay will be available immediately following the call.  A telephonic replay will be available beginning at 6:30 p.m. ET and can be accessed by dialing 1-888-286-8010 or for international callers, 1-617-801-6888. The passcode for the replay is 54857613.  The replay will be available until August 4, 2011.

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 500 Company-owned retail stores, websites and national mail order catalogs, primarily www.VitaminShoppe.com and www.EcoShoppe.com, and has a social community site at www.VSconnect.com.

Forward Looking Statement

Certain statements in this press release 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 described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2010 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, unless required by law.

SOURCE Vitamin Shoppe, Inc.