Vitamin Shoppe: Zacks’ Bear of the Day Play

Vitamin Shoppe, Inc. (VSISnapshot Report) is feeling the wrath of the consumer as the nutritional product retailer recently cut its full year guidance. This Zacks Rank #5 (Strong Sell) is actually going to see earnings decline this year compared to last year.

Vitamin Shoppe operates more than 700 company-operated retail stores in the United States and Canada selling nutritional products including vitamins, minerals, specialty supplements, herbs, sports nutrition, green living products and beauty aids.

It operates under the brands The Vitamin Shoppe, Super Supplements and Vitapath and carries 900 national brand products. It also operates a web site at VitaminShoppe.com.

Removed All Acacia Rigidula Containing Products

On Apr 8, Vitamin Shoppe announced it was removing all acacia rigidula containing products over the concern that some might contain BMPEA, from its stores and web site.

BMPEA is a synthetic drug-like substance that has been found in some dietary supplements. According to a study published in Drug Testing and Analysis, some acacia rigidula containing products may also contain BMPEA.

Vitamin Shoppe decided to remove all of these products.

Missed in the First Quarter

On May 6, Vitamin Shoppe announced preliminary first quarter sales and earnings which missed the Zacks Consensus by 11 cents.

Earnings were just $0.63 compared to the Zacks Consensus of $0.74.

Comparable store sales rose just 1.2% as retail comparable sales gained 1.5% and ecommerce sales fell 0.9%.

The quarter was below expectations due to a combination of external headwinds and margin pressure.

Lowered Full Year Guidance

Not only did it miss, but it lowered full year guidance.

In Feb 2015, comparable store sales were expected to be 2% to 4% for the year. In May, the company lowered it to low single digits for the year, including ecommerce.

The earnings guidance range was also slashed to $2.05 to $2.25 from $2.36 to $2.46.

The analysts all immediately moved to lower their estimates.

10 estimates were lowered for 2015 and 9 for 2016 since the earnings announcement. The 2015 Zacks Consensus Estimate fell to $2.12 from $2.40.

That is an earnings decline of 4% as Vitamin Shoppe earned $2.20 a share a year ago.

Shares Sink in 2015

Shares of Vitamin Shoppe have been pressured all year long.

Still, even with the weakness, shares are not cheap. Vitamin Shoppe still has a forward P/E of 18.5 which is above the average of the S&P 500 at 18.2.

If you must invest in the vitamin and supplement industry, you may want to consider Natural Grocers (NGVCSnapshot Report) instead. It’s a Zacks Rank #2 (Buy) and is expected to grow earnings by 13.1% this year.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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