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Bear of the Day: Vitamin Shoppe (VSI)

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Founded in 1977, Vitamin Shoppe (VSI - Free Report) is a multi-channel specialty retailer and contract manufacturer of nutritional products. They are based in Secaucus, New Jersey and have approximately 800 stores throughout the US and Puerto Rico.

Shares Plunge After Weak Results

The company reported Q1 results on May 10. Total net sales in quarter were $316.9 million down 5.9% year over year.

Adjusted income came in at $0.37 per share, down from $0.67 in Q1 2016. Earnings were significantly short of the Zacks Consensus Estimate of $0.58 per share.

"Our overall performance in the quarter was disappointing due to lower comparable sales and ongoing challenges at Nutri-Force. Total comps were down 6.3% in the first quarter, primarily driven by an intensifying promotional environment in the Sports category, a trend that has continued into the second quarter.

Falling Estimates

Analysts have slashed their estimates for the company after weak results.  Zacks Consensus Estimates for the current and next fiscal year have fallen to $1.56 per share and $1.62 per share from $2.04 and $2.23 respectively, before the results.




The company has missed in three out of past four quarters and just met in one. The average negative quarterly surprise for the past four quarters is 13.25%.

The Bottom Line

It has been a very tough operating environment for most brick and mortar retailers due to the shift toward online shopping, particularly from Amazon. With tightening labor markets, wage pressure has also started hurting retailers.

The industry “Retail and Wholesale Food - Natural Foods Products” is currently ranked 233 out of 265 Zacks industries (bottom 12%), suggesting potential underperformance in the short-to-medium term.

It would be better for investors to stay away from this stock and the industry in view of rising challenges.

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