Leading supplement maker NBTY reported a 24 per cent rise in sales for the year to $1.2 billion, boosted by contributions from Rexall Sundown, purchased from Royal Numico in July.
However income was hit by high costs related to its integration of the unit alongside a bond investment for a planned acquisition. The deal is now not going ahead, partly because of ephedra exposure, and therefore involves a write-off of $4 million.
Net income for the full year fell 17 per cent to $81.6 million. The non-recurring charges, amounting to $10 million pre-tax, also included discontinuation of the firm's network marketing operations and the closure of facilities in Murphysboro, Illinois and Thornton, Colorado to help integrate Rexall Sundown operations.
Rexall's sales from July 25 until end of September amounted to $73 million, lifting the 16 per cent increase across other NBTY units to 24 per cent. The boost provided by Rexall is especially evident in fourth quarter results, showing a 49 per cent increase over the previous year's last quarter to $365 million.
The Rexall acquisition added numerous well-known brands to the company's wholesale operation and has reinforced the company's position in the wholesale sector, which experienced huge growth in the fourth quarter (122 per cent).
Same store sales at the Vitamin World chain increased 4 per cent in the fourth quarter but it recorded a loss of $2 million owing to an asset impairment charge, in the form of accelerated depreciation, for certain unprofitable stores.
In Europe, retail activities also grew, by 25 per cent for the year and 27 per cent to $95 million for the fourth quarter, thanks to the 65 DeTuinen stores in the Netherlands acquired earlier this year.
The company's European division currently operates 589 stores in the UK, Ireland and the Netherlands. GNC (UK) was marginally profitable but DeTuinen incurred a $500,000 loss for the fiscal fourth quarter 2003. UK and Ireland leader Holland & Barrett's same store sales for the fiscal fourth quarter 2003 increased 2 per cent with foreign exchange.
Revenues from Puritan's Pride direct response/e-commerce operations for the fourth quarter increased 16 per cent to $52 million. Online sales have increased more than 50 per cent during the period and investments in advertising, sales promotions and faster product delivery to customers, also helped lift sales here, said NBTY.
NBTY chairman and CEO Scott Rudolph said: "The fourth quarter reflected a wide array of transitional issues which we anticipate will be resolved in fiscal 2004. The Rexall acquisition is indicative of our commitment to the wholesale segment, and we anticipate continued growth in revenue and market share for NBTY."
The supplement manufacturer yesterday watched as FDA destroyed approximately $2.7 million worth of Royal Tongan Limu, a dietary supplement promoted to treat various diseases like cancer and arthritis, after the FDA found it was marketed using unsubstantiated claims.
Royal Tongan Limu was distributed by Dynamic Essentials, a subsidiary of NBTY located in Lake Mary, Florida, which has now ceased operations owing to the recall.
The FDA said the product was being promoted for treatment and mitigation of various diseases in unsubstantiated therapeutic claims on the company's website. The firm was initially warned with an FDA 'cyber letter' in 2002 informing them that claims on their website violated the law.