Benzinga  May 12  Comment 
Vitamin Shoppe Inc (NYSE: VSI) shares have recovered slightly after falling dramatically after a disappointing first quarter that saw earnings per sales come in well below consensus estimates. Barclays analyst Karen Short noted the large EPS...
Motley Fool  May 10  Comment 
Vitamin Shoppe was just the latest retailer to post a big earnings miss and declining same-store sales. But the news goes from bad to worse when e-commerce is factored in.
Benzinga  Dec 7  Comment 
The nutritional supplement space is giving contrasting signals on organic growth, especially with respect to international operations. This has given rise to confusion whether they are looking to bulk up or trim down. Vitamin Shoppe Inc (NYSE:...
Benzinga  Nov 1  Comment 
Barclays sees three scenarios for Vitamin Shoppe Inc (NYSE: VSI) when it announces its third quarter earnings on Tuesday. The results comes as the stock fell 9 percent when rival GNC reported its third quarter numbers last week. The new...
Benzinga  Oct 27  Comment 
JPMorgan analyst Christopher Horvers has downgraded Vitamin Shoppe Inc (NYSE: VSI) from Overweight to Neutral and lowered his price target from $33 to $28. The downgrade comes in the wake of competitor GNC Holdings, Inc (NYSE: GNC)’s earnings-...
newratings.com  Sep 27  Comment 
LONDON and BARCELONA, Sept. 27, 2016 (GLOBE NEWSWIRE) -- VSI is delighted to welcome Sonygraf, one of Spain's most prominent dubbing and audio post- production facilities, as the newest member of the VSI Group. This latest acquisition further...


The Vitamin Shoppe (Nasdaq: VSI) is one of the leading retailers of nutritional supplements in the United States. The company concentrates on providing superior, value-added customer service in the Vitamin, Mineral, Herbal, and Nutritional (VMHS) Supplement industry.The company's slogan "Answers for Every Body" reflects the company's dedication to providing a large variety of health and wellness products through its Direct and Retail Sales. Vitamin Shoppe markets vitamin, herbal, mineral, and sport nutritional supplements as well as homeopathic remedies.The company carries around 8,000SKUs of VMHS products from over 400 nationally recognized brands in its retail stores and an additional 12,000 SKUs are available directly from the company through its website. [1]

Business Overview

Vitamin Shoppe, Inc. was established in 1977 in New York City. Currently headquartered in New Bergen, New Jersey, The Vitamin Shoppe was acquired by Irving Place Capital Partners II, L.P. (fomerly Bear Sterns Merchant Banking Partners II, L.P.) in 2002 for $310 million and made its IPO in Ocotber of 2009. Since the flagship store opened in 1977, The Vitamin Shoppe has expanded to include 484 locations in 39 states and the District of Columbia as of Fiscal 2010 [1]. VSI is a leading specialty retailer in the VMHS (vitamin, mineral, herb, and supplement) Industry and its company is divided into retail and direct-to-consumer segments which had $674.495million in net sales during Fiscal 2010 with a net income of $4.974million [1].

Business Segments

VSI implements its business strategy through use of two business segments: retail and direct-to-consumer.


The retail segment of VSI is comprised of 484 brick and mortar sores located in high-traffic areas[1]. Since the Fiscal 2010, VSI opened an additional 9 locations by March 4, 2011 in keeping with the company's stated goal of growing the network of retail locations by 40 stores per anum. [1] VSI does not own any real estate associated with its retail operations. Instead, VSI elects to enter into long term leases of 10 years length with the option to renew each lease on a case by case basis for an additional 5 years (at the minimum) [1]. In Fiscal 2010, retail stores increased to $668 million from $596.3 million in Fiscal 2009, a $71.8 million (12%) increase in reatil sales. Each VSI location carries approximately 8,000 SKUs of product from over 400 national and proprietary brands [1].


The direct-to-consumer segment of VSI is comprised of a number of online stores, primarily www.vitaminshoppe.com, and a catalog. The company's online stores add an additonal 12,000 SKUs of product offerings for consumers. Direct Net Sales for the fiscal year 2010 were $83.5 million, a $5.2 million (6.75) increase from fiscal 2009. The increase in direct sales is attributed to the increase in customer traffic and sales on the company's website as a result of increased promotional activity on the e-store.Catalog sales during Fiscal 2010 were not considered material to the company and, consequently, the company has decided to reduce circulation of is catalogs [1].

Industry Overview

The vitamin, mineral, and herbal supplement industry in the U.S. is comprised of specialty retailers and mass merchants that sell vitamins, minerals, nutritional, herbal, or dietary supplements, and sport specific nutritional supplements. The VMHS industry in the U.S. was a $26.9 Billion retail market in 2009 and is currently forecasted to grow at an annual rate of 5.4% through 2017. The industry has a high degree of fragmentation and no individual market participant accounted for more than 5% of total industry sales in 2009[1]. Positive industry trends such as the aging U.S. population, an increase in the cost of healthcare and use of preventive measures, increased focus on diet, nutrition, and growing awareness of fitness and wellness programs. The retail specific segment of the indusrty is made up of over 5,000 companies which operate nearly 10,000 stores and a combined annual revenue of around $6 Billion. In retail specific segment of the VMHS industry the top 50 companies are responsible for 40% of sales.

Specialty Retailers

Specialty VMHS retailers target a customer base of more educated and experienced participants within the VHMS market though a focus on customer service and product variety. By far the largest segment of the VHMS industry, specialty retailers accounted for 37% of the market share in 2009 with sales forecasted to grow annually by 5% through 2017[2]. As stated above, the specialty retail segment of the VMHS industry is comprised of about 5,000 companies which operate around 10,000 stores within the United States and account for 40% of annual sales.

Mass Merchants

Mass Merchant retailers of VMHS products include regional and national businesses such as drugstores, supermarkets, and broadline retailers such as Wal-Mart and Target. Mass Merchants typically offer a limited assortment of mainstream products and focus on low-cost value propositions to target its customer base.


GNC Holdings, Inc. (GNC)

GNC is the world's largest specialty retailer of VMHS products. GNC has more than 7,200 locations worldwide; 5,600 of which a are located within the United States. Of the 5,600 locations in the United States, 903 are franchise operations, 2,003 are operated inside Rite Aid locations as store-within-a-store locations, and the remaining stores are operated directly through the company[2]. In addition to its U.S. operations, GNC has franchise operations in 46 international markets.GNC operates the majority of its stores within business centers, malls, and strip-malls. The company does not routinely operate stores on a stand-alone business model. [3]

Vitacost.com, Inc. (VITC)

Online shop for VMHS products.

Vitamin World

Founded in 1976 and headquartered in Long Island, NY, Vitamin World is a manufacturer of over 1,000 vitamins, minerals, herbs, and other nutritional supplements.Vitamin World predicates its business model on a quality based, value added business proposition and to that end has passed the most rigorous testing standards the US government has to assure product potency, quality, and purity. Vitamin World owns and operates over 400 retail stores nationwide as well as an internet sales operation. VitaminWorld.com ships around 100,000 products to over 15,000 households every month [4].

Rite Aid (RAD)

CVS Caremark Corporation (CVS)

Whole Foods Market,Inc

With more than 300 stores in North America and the UK, Whole Foods Market, Inc. is the world's leader in natural and organic foods. Founded in 1980, Whole Foods, Inc. started out as a small store in Austin, Texas. Whole Foods Market, Inc. targets the health conscious segment of consumers in today's market. The company offers premium products at premium prices and generally targets consumers of more affluent demographics to maximize profits as is evidenced by the geographic locations of stores when compared to the immediate demography (with respect to average salary). The company's mission: Whole Foods, Whole People, and Whole Planet is the foundation of the business and dedicates the company to providing food of the highest quality and with little to not additives, by a workforce of self-motivated people, and from sustainable agriculture[5].

Financial and Operating Metrics

 Industry Metrics, Monetary Values in Million $USD
Industry Metrics, Monetary Values in Million $USD

[6] * Numbers reflect values from fiscal year 2010

 Reflects 2010 fiscal year data
Reflects 2010 fiscal year data
 Reflects 2010 fiscal year data
Reflects 2010 fiscal year data

VSI =Vitamin Shoppe, Inc. (VSI)
GNC =GNC Holdings, Inc. (GNC)
WFMI = Whole Foods Market (WFMI)

When compared to these three companies in the VMHS industry, Vitamin Shoppe is doing fairly well for a company of its size. It's Return on Invested Capital is 9.55%, nearly double that of it's direct specialty retail competitor GNC, which suggests that the company's capital is being effectively and efficiently managed. The company's Operating Margin is between Whole Foods and GNC, Vitamin Shoppe's Gross Margin is the lowest of the three, implying higher costs associated with products and sales than GNC and Whole Foods. Vitamin Shoppe's Profit Margin is the highest among the companies compared which implies that the company is effectively at managing its costs. In addition to this, Vitamin Shop has much better Accounts Payable Turnover ratio than does GNC while at the same time possessing a lower Inventory Turnover as well.

 Reflects 2010 fiscal year data, amounts in millions $USD
Reflects 2010 fiscal year data, amounts in millions $USD

Vitamin Shoppe, Inc has seen a precipitous increase in Revenue, Net Income, EBITDA, ROIC, and, indeed, in all areas. Over the last five years the firm has increased Revenues by nearly $300 million, has increased EBITDA by roughly $30million, and improved its Return on Invested Capital by around 3%. The increased profitability of the firm can be partly attributed to the increased use of supplement products as preventative methods to avoid the high costs of health care in the current economic situation, the increased focus on health and wellness as the "Baby Boomer" generation's age increases, and also because of the increased cultural focus on health, wellness, and fitness.

Porter's Five Forces Analysis

Bargaining Power of Suppliers

VSI offers an incredibly broad range of products to meet every the need of any individual in the over-the-counter supplement market. The company offers nearly 20,000 SKUs through it's e-business website, www.vitaminshoppe.com. Because of the varied nature of the producst sold by VSI as well as the large number of competing distribution outlets in the market, the bargaining power of suppliers in the VMHS market should be quite high. However, because of the positively trending VMHS industry the number of suppliers is also quite high as VSI markets over 700 national brands. Ergo, the substantial bargaining power of suppliers is mitigated by the fact that the number of companies allows for Vitamin Shoppe to shift their partnership(s) to another supplier should the cost of inputs become too great. In addition to this, Vitamin Shoppe mitigates the bargaining power of suppliers by marketing its own proprietary alternatives of vitamin, nutritional, mineral, herbal, and sport nutrition supplements such as the VitaminShoppe, BodyTech, and MD Select Brands.

Threat of New Entrants

The threat of new entrants to the VMHS industry is not very high. A significant barrier to entry in the VMHS industry is the large amount of capital needed to provide acquire product variety to prospective customers as well as to allow for the slack-time between product purchases. That being said, not all prospective market participants are able to acquire and sustain the level of capital required to become a successful firm in the VMHS industry.

Threat of Substitutes and Bargaining Power of Customers

The threat of substitutes for VMHS specialty retail outlets such as VSI is high. Because consumers have the ability to buy vitamins, mineral, herbal supplements, and sport specific nutritional products at drugstores, grocery stores, broadline discounters, and eBusinesses as well as at a variety of specialty retailers such as GNC and Whole Foods Market, Inc consumers have considerable buyer power in the industry. An important mitigating factor for VSI is their Healthy Awards program which provides a monetary incentive for consumers to spend their money at Vitamin Shoppe. The program, wholly operated and funded by VSI and not supported by the manufacturers of the products VSI sells, allows customers to enroll in a program which rewards them with store credit for continued patronage. Although other participants in the market, such as GNC, operate customer-rewards progams, the Health Awards program operated by VSI does not charge consumers a fee for enrollment.

Competitive Riavlry

Competitive Rivalry within the is quite high for VSI. By virtue of being a specialty retailer, VSI is competing with other specialty retailers as well as drugstores, supermarkets, broad line retailers, and e-businesses for a finite customer base. Although the customer base is increasing annually due to the the increasing cost of health care, the increasing use of health, wellness, and nutritional programs as preventative measures (a corollary to the positively trending age in the US population), and an increase in the number of consumers using vitamins, minerals, herbs, and nutritional supplements, compeitive rivalry between market participants is fierce.

SWOT Analysis


Vitamin Shoppe, Inc. has many strengths. The company offers an incredibly diverse group of products to consumer through its retail and direct business segments; 8,000 and 20,000 SKUs, respectively. In addition its broad product offering, VSI prides itself on the high degree of training its employees, or "Health Enthusiasts" as the company defines them, undergo as part of the company's certification program. The company offers extensive training, both in-store and online. Through its online learning website, Vitamin Shoppe University, the company has created an very knowledgeable workforce.


Some of the weaknesses that VSI has include limited locations and the high cost of operations and opening new stores. First, Vitamin Shoppe has a large weakness in the form of its comparably limited locations. The company's main competitor in the direct sale of VMHS products within the specialty retailer segment is GNC which currently operates over 4,800 stores within the United States while Vitamin Shoppe only operates 484 locations. In addition to this, Vitamin Shoppe has a large weakness in the form of elastic customer demand relative to the fixed costs of its operations. Opening and maintaining stores poses a significant weakness to the company and the fact that customers do not need to purchase VMHS products on consistently expedient time frame is a weakness that cannot easily be mitigated by the company.


VSI has ample opportunities available to it. Because the company is still a relatively small national company, VSI has the opportunity to expand its operations through increased franchising within the United States, as well as expanding into international markets. The most immediate, and logical, opportunity for growth for the company would be for the company to expand its operations to into Canada as well as qualified markets in Mexico. The company would then be able to more effectively take advantage of the supply chain that supplies its broadly dispersed store base within the United States.


Vitamin Shoppe has several threats. First, poor economic conditions within the United States gives VSI's customer base plenty of incentive to explore lower cost options in VMHS products through e-business and broad line retailers. In addition to this, the high degree of competition between market participants in the VMHS industry, comprised of specialty, broad line, and e-commerce retailers, poses a significant threat to Vitamin Shoppe, Inc.. Lastly, and perhaps the most significant threat, to VSI is the relatively few number of locations is has. It's closest direct competitor within the VMHS specialty retailer segment, GNC, has nearly twelve times the locations as Vitamin Shoppe.

Marketing Strategies


VSI concentrates on provided high quality products at diverse price points. The company offers over 400 nationally recognized brands as well a proprietary line of VMHS products as lower cost alternatives. The diverse nature of their product offerings and product specific qualifiers allows the company to segment products effectively and capitalize on consumer demand for lower cost supplements given the current economic state.


Vitamin Shoppe pursues several different promotional avenues. The company actively holds advertisements in several national magazines, such as Men's Health and Runner's World, as well as operates online advertisements through its own websites as well as third party banner advertisements. In addition to advertisements, Vitamin Shoppe distributes coupons and it's Health Awards program as a means of securing business.


Vitamin Shoppe offers over 20,000SKUs of product through it's direct marketing segment and has an average of 8,000SKUs of product in each store. The products range from low cost options to premium products with price points reflecting their differences. Vitamin Shoppe offers over 400 national brands, including TwinLab, EAS, Solgar, and Nature's Way[3].


The operates in 36 states as well as the District of Columbia.The company focuses on locating their stores in independent. freestanding commercial properties in high trafficked areas.

Human Resources

As of December 25, 2010, Vitamin Shoppe, Inc had a total of 2,220 full-time and 1,361 part-time employees. Of these employees, 3,083 were employed in our retail channel and 498 were employed in corporate, distribution and support capacities [4]. None of the employees of Vitamin Shoppe, Inc. belong to a union or is party to a collective bargaining agreement[5]. The company offers a generous compensation package to its employees which includes store discounts, flexible scheduling, an on-site coporate fitness center, and a credit union as well [6].


  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Vitamin Shoppe Annual 2010 10-K Annual Report
  2. GNC Corp- Investor Relations
  3. GNC Annual 2010 10-K Annual Report
  4. About Vitamin World
  5. Whole Foods Market Investor Relations
  6. VMHS Industry Metrics
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