Wall Street Transcript Interview with Vitacost.com, Inc. (VITC) Chief Marketing Officer David Zucker

September 10, 2012

67 WALL STREET, New York - September 10, 2012 - The Wall Street Transcript has just published its Retail Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Brick-And-Mortar Versus Online Retail Sales - Cautious Consumer Spending - Specialty Hardlines and Softlines Retail - Strong Secular Growth in E-Commerce - International Retail Platforms

Companies include: Vitacost.com (VITC) and many others.

In the following excerpt from the Retail Report, the CMO of Vitacost.com discusses the outlook for his company:

TWST: What is Vitacost.com?

Mr. Zucker: Vitacost.com is a leading online retailer of health and wellness products, including dietary supplements, as well as cosmetics, organic body and personal care products, pet products, sports nutrition and health foods. We strive to offer our customers the broadest selection of healthy living products at low prices, while providing superior customer service, and timely and accurate delivery.

TWST: What does the overall marketplace look like from your perspective? The second quarter showed a 36% increase in shipped orders and new customer growth at 100%. What are those dynamics?

Mr. Zucker: According to the Nutrition Business Journal, sales for the total U.S. supplement category grew 7% in 2011 to $30 billion across all channels with the online portion of the category growing twice as fast. While roughly two-thirds of our business is in the traditional vitamin, mineral, herbs and supplement space, or VMHS, the other one-third of our business is in faster-growing healthy living categories, such as natural beauty and home care, pet products and foods that I mentioned earlier. Collectively, this makes up the broader U.S. nutrition space, which was a much larger $126 billion in retail sales in 2011, growing in the high single-digit range. The online portion of total U.S. nutrition sales was $3.3 billion in 2011, again, up in the midteens.

We reported on our second-quarter earnings call that our revenue grew greater than 20% year over year in the June quarter with a 36% year-over-year increase in total shipments and new customer growth of over 100%.

We believe Vitacost's core value proposition of providing a wide selection of healthy products at great prices is resonating well with consumers given our performance. We have seen an acceleration in the new customer growth over the past year as we started to differentiate ourselves from the competition, specifically in terms of offering an increased selection of SKUs and really driving home the message of our attractive product prices. We sum this up in our tag line, "Take the cost out of healthy living," and in our corporate vision statement, "Make healthy living a reality."

TWST: Despite these apparently impressive numbers, are there any concerns? The average order value was down 10% year over year. Any concerns there?

Mr. Zucker: No. Our average order value, or AOV, actually grew slightly over last year, excluding two very significant programs that we initiated in the second half of last year. These programs helped contribute to our strong topline growth. One is our refer-a-friend program, which we launched in October 2011 to further drive customers to our site. Any existing customer can refer a new customer to Vitacost, and both are rewarded with a free $10 to shop on our Web site. While initial orders through the refer-a-friend program carry a lower AOV, we have seen very high repeat rates from this segment with healthy AOVs.

The other big influence on our average order value at an overall level is due to sales on Amazon.com (AMZN). Vitacost began selling products on Amazon in July of last year. Our primary objective was, and still is, to increase the company's awareness among consumers. AOV on Amazon is about $30 compared to the company total at $68.51.

TWST: Vitacost.com entered the mobile app space with its Momonomics app. How has that been accepted, and are there any plans for a Dadanomics app as well?

For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers, and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.