What: Shares of Vitamin Shoppe, Inc. (NYSE:VSI) were getting pumped up last month, climbing 10% according to data from S&P Global Market Intelligence on a better-than-expected profit in its first-quarter earnings report.
So what: Shares of the health supplement retailer jumped 6.5% on May 4 after the company posted an earnings per share of $0.67, ahead of estimates of $0.65. However, comparable sales fell 1.9%, and overall revenue was flat at $336.8 million, missing the analyst consensus of $339.5 million. Though negative same-store sales are generally a sign of weakness, Vitamin Shoppe's performance was stronger than that of rival GNC Holdings, which said it would sell off 84 company-owned stores and explore a sale of the company after an especially weak quarter. Shares of Vitamin Shoppe fell 10% on GNC's report so the rebound seemed as much of a relief rally as anything else.
CEO Colin Watts said that, despite the weak retail performance, the company was able to make strides in e-commerce, setting up an in-store pick-up program and new loyalty programs, and also promised other margin improvement initiatives would soon follow.
Now what: Shares ricocheted throughout the rest of the month, falling as Cramer Rosenthal McGlynn, an asset management firm, sold off part of its stake a week after the earnings report, but the stock recovered over the last week in May. Guidance for the rest of the year was respectable with comparable sales expected to be flat to positive low single digits. The company will also open 30 new stores and sees EPS of $2.25-$2.45, in line with estimates of $2.32.
Looking ahead, the retail landscape looks difficult for companies like Vitamin Shoppe, but building out its e-commerce platform should help guard against that risk and drive profitable growth.