U.S. Markets closed

Vitamin Shoppe, Inc. Announces First Quarter 2019 Results

First Quarter 2019 Highlights:

- Gross Profit Margin Increases 200 basis points

- Total Comparable Sales (3.5%)

- GAAP net earnings per share from continuing operations of $0.15. Adjusted net earnings per share from continuing operations of $0.21

SECAUCUS, N.J., May 8, 2019 /PRNewswire/ -- Vitamin Shoppe, Inc. (VSI), an omni-channel, specialty retailer of nutritional products, today announced preliminary results for the three months ended March 30, 2019.  Reported net earnings per share (EPS) from continuing operations in first quarter 2019 was $0.15, compared to EPS from continuing operations of $0.41 in the same period of the prior year.  Excluding special items in both first quarter 2019 and first quarter 2018 as shown in Table 4 at the end of this press release, EPS from continuing operations was $0.21 in first quarter 2019 compared with $0.10 in first quarter 2018. 

Commenting on the quarter's results, Sharon Leite, Chief Executive Officer stated, "Our first quarter results were in line with our expectations and reflect continued progress on executing our reinvention plan and re-building our business.  During the quarter, we made significant progress across a number of initiatives to better position the Vitamin Shoppe in the second half of the year and beyond.  Importantly, we are encouraged by the progress we are making on our strategic initiatives, growing our private brands business, expanding into a wholesale model, improving our execution while reducing our costs." 

"With our new leadership team in place, we are taking bold steps to meet our customers' needs and accelerating our strategic initiatives to realize our most attractive opportunities. We remain focused on driving efficiencies through productivity and making disciplined investment decisions to drive growth.  While there is still more work to do, we remain confident that we have the right plans in place and are committed to advancing our strategy to regain top-line growth and grow profitability.  As we continue our turnaround efforts, we remain focused on delivering our full-year outlook," concluded Ms. Leite.

First Quarter 2019 Results

Total sales of $283.3 million in the quarter were 4.3% lower than the same period of the prior year.  Total comparable sales were down 3.5% in the quarter.  The Company closed five stores in the quarter and did not open any new ones.

Cost of goods sold, which includes product, distribution and store occupancy costs, were $188.5 million, 7.1% lower than the same period of the prior year, primarily attributable to product margin improvement.  First quarter 2018 included $1.7 million in net expenses related to the closure of the New Jersey distribution center.

Gross profit was $94.8 million, up from $93.1 million reported in first quarter 2018.  Reported gross profit as a percentage of net sales was 33.5% in first quarter 2019, compared to 31.5% in the same period of 2018.  Excluding the special items shown in Table 4 at the end of this press release, gross profit was $94.9 million in first quarter 2019 and as a percentage of sales was 33.5% compared to gross profit of $94.8 million and gross margin rate of 32.0% in first quarter 2018.  The first quarter 2019 year-over-year increase was primarily due to improvements in product margin and supply chain leverage partially offset by deleverage in occupancy. 

Selling, general and administrative expenses (SG&A), including operating payroll and related benefits and advertising expense, was $88.5 million for the quarter ended March 30, 2019, compared with $89.3 million for the quarter ended March 31, 2018.  First quarter 2019 includes approximately $1.9 million for management realignment and store closing expenses, while first quarter 2018 includes $0.6 million primarily associated with the closing of the New Jersey distribution center.  SG&A as a percent of revenue was 31.2% in first quarter 2019 compared with 30.2% in first quarter 2018.  Adjusted for the items mentioned above and shown in Table 4, for both years, SG&A as a percentage of sales was 30.6% compared to 29.9% in first quarter 2018. 

Adjusted EBITDA in first quarter 2019 was $18.2 million, 9.1% above the same period of the prior year.  (Refer to Table 5 at the end of this press release for a GAAP reconciliation.)

Operating income in first quarter 2019 was $6.3 million compared to $3.8 million in the same period of the prior year.  Adjusted for the items noted in Table 4 for both first quarters 2019 and 2018, adjusted operating income was $8.3 million in first quarter 2019 compared with adjusted operating income of $6.2 million in first quarter 2018.  (Refer to Table 4 at the end of this press release for a reconciliation.) 

Reported net income from continuing operations was $3.5 million for first quarter 2019 compared to net income from continuing operations of $9.7 million in the same period of the prior year.  Adjusting for the items shown in Table 4 for the periods ended March 30, 2019 and March 31, 2018, net income would have been $5.0 million and $2.3 million, respectively.

Reported earnings per share was $0.15 in first quarter 2019, compared to a loss per share of $0.17 in first quarter 2018.  Earnings per share from continuing operations were $0.15 in first quarter 2019 compared to $0.41 in first quarter 2018.  Earnings per share from continuing operations on an adjusted basis (for the items described in Table 4) in first quarter 2019, was $0.21 compared to $0.10 in first quarter 2018.

Balance Sheet

Cash and equivalents at March 30, 2019 were $1.6 million.  At quarter end, the Company had a convertible notes liability with a total face value of $60.4 million and nothing borrowed on its revolving line of credit. 

The key impacts to the balance sheet from the adoption of Accounting Standards Update 2016-02 (Accounting for Leases) effective December 30, 2018, resulted in $446 million of right-of-use assets as of March 30, 2019 and short-term and long-term lease liabilities of $97 million and $390 million, respectively. 

Capital expenditures were $4.4 million in the quarter with funds primarily expended on IT and other digital investments.

2019 Outlook

Based on first quarter performance, the Company is updating total comparable sales guidance for 2019.  All other guidance for the key levers that drive the business are unchanged.  The Company expects:

  • Full year comparable sales of negative mid to low single digits
  • Reported full year gross margin rate of 31.7% to 32.2%.
  • Adjusted EBITDA of $62 million to $65 million.
  • Estimated combined Federal, State and Local tax rate of 28%.
  • Full year capital expenditures of approximately $33 million, and includes the opening of approximately 10 new stores.
  • Closing approximately 60 to 80 stores over next three years

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 core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying business. These adjustments are consistent with how management views our business. Management uses such non-GAAP financial information in making financial, operating and planning decisions and evaluating the Company's ongoing performance. A reconciliation of adjusted financial information to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in Tables 4 and 5.

The Company defines Adjusted EBITDA as EBITDA (net income before interest expense, net, provision for income taxes, depreciation and amortization), as further adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company's actual operating performance including certain items which are generally non-recurring.  The Company has excluded the impact of such items from internal performance assessments.  The Company believes that excluding such items helps investors compare operating performance with the results in prior periods.  The Company believes it is appropriate to exclude these items as they are not related to ongoing operating performance and, therefore, limit comparability between periods.  (See Table 5 for a reconciliation of 1Q19 and 1Q18 Adjusted EBITDA.)

A reconciliation of the projected Adjusted EBITDA which is a forward-looking non-GAAP financial measure, to projected net income is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the individual items that are added to, or subtracted from, net income in order to derive Adjusted EBITDA.

Webcast
Management will host a conference call to discuss the first quarter 2019 results at 8:30 a.m. Eastern Time (ET) today.  The call can be accessed by dialing 1-888-394-8218 or 1-323-701-0225 for international callers.  The passcode is 7183793.  Interested investors and other parties may also 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 telephonic replay will be available beginning at 11:30 a.m. ET on May 8, 2019 and can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 for international callers.  The passcode for the replay is 7183793.  The telephonic replay will be available until 11:59 p.m. ET on May 15, 2019.  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. (VSI)
Vitamin Shoppe is an omni-channel, specialty retailer 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 700 national brands, the Vitamin Shoppe also carries products under The Vitamin Shoppe®, BodyTech®, True Athlete®, MyTrition®, plnt®, ProBioCare®, and Next Step® brands.  The Vitamin Shoppe conducts business through more than 750 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, those that contain, or are identified by, words such as "outlook", "guidance", "believes", "expects", "potential", "continues", "may", "will", "should", "predicts", "intends", "plans", "estimates", "anticipates", "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 our control, including, among others, strength of the economy, changes in the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, implementation of our strategy,  compliance with regulations, certifications and best practices with respect to the development, manufacture, sale and marketing of the Company's products, management changes, maintaining appropriate levels of inventory, changes in tax policy, ecommerce relationships, disruptions of manufacturing, warehouse or distribution facilities or information systems, regulatory  environment and other specific factors discussed herein and in other Securities and Exchange Commission (the "SEC") filings by us (including our reports on Forms 10-K and 10-Q filed with the SEC).  We believe that all forward-looking statements are based on reasonable assumptions when made; however, we caution that 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 we undertake 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 OPERATIONS

(In thousands, except share and per share data)

(Unaudited)




Three Months Ended



March 30,


March 31,



2019


2018






Net sales


$         283,332


$         295,964

Cost of goods sold


188,514


202,853

Gross profit


94,818


93,111

Selling, general and administrative expenses


88,527


89,300

Income from operations


6,291


3,811

Gain on extinguishment of debt


-


12,502

Interest expense, net


1,066


2,441

Income before provision for income taxes


5,225


13,872

Provision for income taxes


1,728


4,215

Net income from continuing operations


3,497


9,657

Net loss from discontinued operations, net of tax


-


(13,516)

Net income (loss)


$             3,497


$           (3,859)






Weighted average common shares outstanding





   Basic


23,553,099


23,294,227

   Diluted


23,851,749


23,294,227






Net income from continuing operations per common share





   Basic


$              0.15


$              0.41

   Diluted


$              0.15


$              0.41






Net loss from discontinued operations per common share





   Basic


$                  -


$             (0.58)

   Diluted


$                  -


$             (0.58)






Net income (loss) per common share





   Basic


$              0.15


$             (0.17)

   Diluted


$              0.15


$             (0.17)

 

 


TABLE 2


VITAMIN SHOPPE, INC. AND SUBSIDIARY


KEY PERFORMANCE INDICATORS AND STORE INFO


($ In thousands)


(Unaudited)





Three Months Ended



March 30,


March 31,



2019


2018






Decrease in total comparable net sales

(3.5)%


(3.6)%






Gross profit from continuing operations as a percent of net sales

33.5 %


31.5 %

Income from continuing operations as a percent of net sales

2.2 %


1.3 %






Capital Expenditures

$                 4,395


$                 6,722

Depreciation and Amortization 

$                 9,853


$               11,247






Store Data:





Stores open at beginning of period 

774


785


    Stores opened 



    Stores closed 

(5)


(2)


Stores open at end of period

769


783






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

2,686


2,730

 

 

TABLE 3

VITAMIN SHOPPE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)



March 30,


December 29,


2019


2018

ASSETS




Current assets:




  Cash and cash equivalents

$                  1,642


$                   2,668

  Inventories

190,954


189,273

  Prepaid expenses and other current assets

29,081


27,921

     Total current assets

221,677


219,862

Right-of-use assets

445,942


-

Property and equipment, net of accumulated depreciation and amortization of $319,720 and $312,977 in
2019 and 2018, respectively

116,325


123,002

Intangibles, net

11,136


11,088

Deferred taxes

31,594


31,659

Other long-term assets

3,364


2,468

Total assets

$              830,038


$               388,079





LIABILITIES AND STOCKHOLDERS' EQUITY 




Current liabilities:




  Revolving credit facility

$                         -


$                          -

  Accounts payable

36,620


39,789

  Accrued expenses and other current liabilities

60,007


65,508

  Short-term lease liabilities

97,497


500

     Total current liabilities

194,124


105,797

Long-term lease liabilities

390,340


934

Convertible notes, net

56,178


55,570

Deferred rent

-


37,034

Other long-term liabilities 

408


403





Commitments and contingencies








Stockholders' equity:




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




   and outstanding at March 30, 2019 and December 29, 2018

-


-

  Common stock, $0.01 par value; 400,000,000 shares authorized, 24,389,426 shares issued and




  24,087,459 shares outstanding at March 30, 2019 and 24,234,651 shares issued and 23,974,031




  shares outstanding at December 29, 2018

244


242

  Additional paid-in capital

86,568


85,853

  Treasury stock, at cost; 301,967 shares at March 30, 2019 and 260,620 shares at December 29, 2018

(7,602)


(7,314)

  Retained earnings 

109,778


109,560

           Total stockholders' equity 

188,988


188,341

Total liabilities and stockholders' equity

$              830,038


$               388,079





 

 

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











Gross




Operating 


Net


Diluted

Continuing Operations

Profit


SG&A


Income


Income


EPS











Three months ended March 30, 2019:




















As Reported

$           94.8


$          88.5


$                  6.3


$                   3.5


$                   0.15











Management realignment costs (1)

-


(1.0)


1.0


0.7


0.03











Store closure costs (2)

0.1


(0.9)


1.0


0.7


0.03











As Adjusted

$           94.9


$           86.6


$                  8.3


$                    5.0


$                    0.21











Three months ended March 31, 2018:




















As Reported

$           93.1


$           89.3


$                  3.8


$                    9.7


$                    0.41











Gain on extinguishment of debt (3)

-


-


-


(9.1)


(0.39)











Closing of distribution center (4)

1.7


(0.5)


2.2


1.6


0.07











Nutri-Force transaction (5)

-


(0.1)


0.1


0.1


0.00











As Adjusted

$           94.8


$           88.6


$                   6.2


$                    2.3


$                     0.10











(1) Costs related to management turnover, including severance charges and related professional fees.





(2) Store closure costs primarily include lease termination fees.









(3) Gain recognized on the repurchase of a portion of Convertible Notes, net of tax.







(4) Costs related to the closing of the North Bergen, New Jersey distribution center.







(5) Costs related to the pending sale of Nutri-Force.




















 

 

TABLE 5

VITAMIN SHOPPE, INC. AND SUBSIDIARY

ADJUSTED EBITDA RECONCILIATION

(In thousands)

(Unaudited)



Three Months Ended


March 30,


March 31,


2019


2018

Net income from continuing operations

$                     3,497


$                     9,657





Additions:




Provision for income taxes

1,728


4,215

Interest expense, net

1,066


2,441

Depreciation and amortization

9,853


10,478





EBITDA

16,144


26,791





Adjustments:




Management realignment costs (1)

1,023


-

Store closure costs (2)

1,012


-

Gain on extinguishment of debt (3)

-


(12,502)

Distribution center closing costs (4)

-


2,240

Nutri-Force transaction (5)

-


129





Adjusted EBITDA

$                   18,179


$                   16,658









(1) Costs related to management turnover, including severance charges and related professional fees.

(2) Store closure costs primarily include lease termination fees.



(3) Gain recognized on the repurchase of a portion of Convertible Notes.



(4) Costs related to the closing of the North Bergen, New Jersey distribution center.

(5) Costs related to the pending sale of Nutri-Force.





Cision

View original content:http://www.prnewswire.com/news-releases/vitamin-shoppe-inc-announces-first-quarter-2019-results-300845862.html