Sharks circle Vitamin Shoppe as stock price continues slide

On the wake of weak earnings at least eight prospective shareholders lawsuits have been announced against Vitamin Shoppe Inc. in recent days.

The prospective lawsuits, which are a common ploy by certain law firms to drum up business when a stock drops significantly in price, come on the heels of the company’s past two quarterly earnings reports, which were the weakest ones in recent memory. Total net sales in the second quarter were $304.8 million compared to $332.7 million in the same period of the prior year. Reported basic and fully diluted loss per share in second quarter 2017 was $6.73, compared to fully diluted earnings per share of $0.44 in second quarter 2016. Total comparable sales were down 8.3%. In early May the company chopped its fiscal 2017 guidance by 45% on a similarly weak earnings report.

Poor earnings pour blood into water

The big driver of the most recent sales decline was poor results in the company’s sports nutrition categories, said CEO Colin Watts. He attributed this to more promotional spending on the part of competitors, and more competitors getting into the field.

"The results during the quarter were disappointing and the challenges are clear. The market environment evolved more quickly than we anticipated particularly in the Sports categories.We have taken decisive actions to improve our performance directly focused on customer acquisition, price/value and customer retention with programs rolled out across the chain. Additionally, we continue to make progress on our reinvention initiatives and further cost restructuring programs that will help improve results well into 2018, Watts said in an earnings call with analysts.

Stock price plunges

The company has struggled for a number of quarters now with tepid sales and ongoing problems in integrating its Nutriforce contract manufacturing arm, which was supposed to offer vertical integration benefits. Stock traders seem to be losing patience, as the company’s share price plunged by more than 30% after the earnings release earlier this month, from about $9.50 a share to about $6.25, and it has continued to slide, trading at $5.30 at market close yesterday. The company’s share price is off from a 52-week high of $28.56 and an all-time high of $64.13 in early 2013.