Secaucus, NJ – Vitamin Shoppe announced during a fourth quarter earnings call today that CEO Colin Watts will leave the company in May. He will serve as CEO until then to assure a smooth transition. Shares closed down 13.6% to trade at $3.90.
Effective immediately, Alexander Smith, who has been serving as Chairman, has been appointed Executive Chairman. The board has begun a search for Watts’ successor.
Smith told analysts that 2017 yielded disappointing results overall. Total sales of $268.8 million in the quarter were 11.8% lower than the same period of the prior year. Total comparable sales were down 4.6% in the quarter or down 3.2% adjusting for the timing of the Christmas holiday. The chain opened 15 stores and closed five, and plans to slow store openings to just two this year.
Commenting on today’s announcement, Smith said, “Over the past couple quarters, Vitamin Shoppe has begun a turnaround and signs of progress are already visible. We have also reached a mutual agreement with our CEO, Colin Watts to transition the business to new leadership by May. During this time, the entire organization will be committed to implementing the New Base Plan developed by management. In my new role as Executive Chairman, I will work closely with our leadership team in that effort while we execute our search for a new CEO.”
Watts stated, “I am encouraged by the early signs of traction from critical initiatives, as shown by the improving quarterly comps, strong Digital Commerce growth, success of Spark Auto Delivery and growth in new customers in Q4. Our New Base Plan will establish The Vitamin Shoppe brand as consumers’ Wellness Authority and create a platform for future growth and profitability. I look forward to working closely with Alex in my last few months to help implement the plan and facilitate an orderly transition for the company.”
Watts attributed the company’s continued slump to a decline in brick-and-mortar sales, as the changing consumer continues to prefer digital commerce. Looking ahead, the company plans to meet the changing consumer experience with an omni-channel focused model, shift capital expenditures to more digital based investments while at the same time reducing overall spend.
There was some good news – the company’s new SPARK Auto Delivery program continued to do well. The program offers a 10% discount, delivers paying rewards members a sample box four times per year, free shipping, flexible delivery and a wellness plan. The company’s private label sales also were flourishing, and they continued to experience good support from vendors.