GNC (NYSE:GNC) and Vitamin Shoppe (NYSE:VSI) are two of the largest retailers of sports nutrition products, vitamins, and dietary products in the world. Fortunately for investors involved in the space both of these companies recently report their latest financial results. Let's take a thorough look at their results and the companies' outlooks on the rest of fiscal 2014 to determine which had the better quarter and has the most upside potential for investors going forward.

Breaking down the results

Screen Shot

Source: GNC

On May 6, GNC released its first-quarter report and the results fell just short of analysts' expectations; here's a breakdown and year-over-year comparison:

MetricReportedExpected
Earnings Per Share $0.75 $0.76
Revenue $677.28 million $700.31 million

Source: Estimize

  • Earnings per share increased 2.7%
  • Revenue increased 1.9%
  • Comparable-store sales data:
    • 0.7% decrease at domestic company-owned locations including e-commerce
    • 3.2% decrease at domestic franchise locations
  • Gross profit decreased 0.1% to $255.99 million
  • Gross margin contracted 70 basis points to 37.8%
  • Opened 85 new stores during the quarter, bringing its total count to 8,678 worldwide
  • Other most notable update: In April, GNC acquired The Health Store, a nine-store chain based in Dublin, Ireland. The Health Store holds a double-digit market share in the Irish health and wellness market and it will begin selling GNC products immediately. The company expects the acquisition to be "modestly accretive" in 2014.

Vitamin

Source: Vitamin Shoppe

Vitamin Shoppe released first-quarter earnings on May 7 and the results exceeded analysts' expectations; here's a breakdown and year-over-year comparison:

MetricReportedExpected
Earnings Per Share $0.70 $0.68
Revenue $307.84 million $302.52 million

Source: Estimize

  • Earnings per share decreased 2.8%
  • Revenue increased 10.3%
  • Comparable-store sales data:
    • 2.3% growth at retail locations
    • 3.6% growth overall including e-commerce
  • Gross profit increased 7.7% to $109.47 million
  • Gross margin contracted 80 basis points to 35.6%
  • Opened nine new stores during the quarter, bringing its total count to 667 in North America
  • Other most notable update: At the end of the quarter, Vitamin Shoppe reported $87.8 million in cash and cash equivalents and zero debt. The company noted that it will use this cash for further expansion as well as improving its existing stores and IT investments. Also, the company opened a new distribution center in October of 2013 and this caused its gross margin to contract, but the center will help the company become more efficient over the long term. 

What do the companies expect going forward?

Screen Shot

Source: GNC

Although investors may have assumed that GNC's quarter could not get any more disappointing, it did when the company then lowered its full-year guidance; here's GNC's new outlook versus its previous outlook:

MetricPrevious OutlookCurrent Outlook
Earnings Per Share $3.18-$3.24 $3.05-$3.10
Revenue Growth high-single digit mid-single digit
Same-Store Sales Growth mid-single digit flat to low-single digit

Source: GNC

This new outlook calls for earnings per share to increase just 7%-9% from fiscal 2013 and the company noted an "unusually significant amount of negative media" surrounding dietary and pre-workout supplements as a primary reason for the weakness. This negative media has directly affected the company's sales and GNC believes this trend will continue for the next few quarters, so it may even carry over into fiscal 2015.

Vitaminshoppe

Source: Vitamin Shoppe

Following its earnings beat, Vitamin Shoppe added to the bullish sentiment by reaffirming its full-year guidance; here's what the company expects to accomplish in 2014:

  • Retail comparable-store sales growth in the low-to-mid single digits
  • Total comparable-store sales growth including e-commerce in the mid-single digits
  • Approximately 60 new stores
  • Slight margin contraction
After strong first-quarter results, Vitamin Shoppe appears well on its way to achieving all of these results; however, the company will need to speed up its expansion efforts in the second quarter since it only opened nine out of the 60 new stores it plans to add. Also, the overall contraction of its gross margin directly resulted from its aforementioned new distribution center, but the company is willing to take this hit now because the center has such vast long-term benefits.

And the winner is...

Vs

Source: Vitamin Shoppe

After reviewing the earnings results and the companies' outlooks on the rest of 2014, the winner of this match-up is Vitamin Shoppe. Vitamin Shoppe showed much better growth across most key financial categories, but its outlook is what set it apart from GNC. Since the company reported its earnings, Vitamin Shoppe's stock has fluctuated to move slightly lower, and I believe this is a great buying opportunity. Foolish investors should look to pick up long-term positions immediately and add to them on any further weakness provided by the market.

If you thought the internet was a big deal...
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big, like purchasing stock in the first nutrition retailer to open its doors or e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Joseph Solitro has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.