Vitamin Shoppe Sales Plummet 8.3%

140

Secaucus, NJ – Citing a heated competitive omnichannel retail environment, particularly in the sports supplement category, Vitamin Shoppe posted Q2 sales of $304.8 million ($6.73 loss per share) for a total decline of 8.3% over 2016.

“The challenges are clear,” said ceo Colin Watts, who told analysts 70% of the decline was in the sports product category. “We have taken decisive actions to improve our performance directly focused on customer acquisition, price/value and customer retention.

“It became increasingly clear our level of marketing spend and promotion are not enough” he said, to stave off competition from Amazon, Bodybuilding.com and GNC. Increases in grassroots store marketing spending are planned along with an increase in paid search and social media tied into store events.

[Update] Vitamin Shoppe stock hit a 52-week low, closing down 36.29% at $3.48 per share.

Watts identified several pricing initiatives the company has tested and will roll out. One, called the KVI (Key Value Item) strategy reduces prices across the most competitive and price elastic products, with more weight in the sports category. In test, he said, KVI pricing raised store traffic and overall basket size resulting in better margins.

Competitive price match branded as “Shop with Confidence” will allow store associates to meet a competitor’s price on the spot and not lose the sale to a smart phone. During a four-month pilot, Watts said, unit sales rose 5%  transactions were up 2%, and margins increased.

Subscription auto-delivery is rolling out in-store and online to help with long-term customer retention. In test, average sales were up 60% after the first three months, Watts said. The program will include a 10% discount on best-selling products, more loyalty points, a discovery box and the ability to easily change what’s delivered on the fly.

Vitamin Shoppe is also optimistic about new formats it is testing that include a kombucha on tap bar and fit freezer and cooler. All the stores are seeing a lift since they adopted the new format, although some are still falling short of positive comparable store sales.

The company’s North Bergen, N.J. distribution center will close by year’s end and the company expects to close five to 10 stores a year.

As for the unprecedented promotion by the competition of sports protein, supplements and bars, Watts said it eventually has to end. “We don’t believe this can continue forever. It’s a category under siege right now.”

Vitaminshoppe.com sales were down 20%, which Watts attributed to problems with search-engine optimization and a pullback on paid search spending. Also, 8% of online customers chose to pick up products in stores, which assigned those sales to brick-and-mortar.

Posted on WholeFoods Magazine Online, 8/8/17

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here