The earnings & guidance led to another sell-off, and the stock is now trying to stabilize around current levels of $45. For the next year the company plans to open 50 new stores and has given a guidance for low to mid single digit growth. This guidance is substantially lower than what was achieved in 2012 when the revenues increased by around 11% and the net income went up by 33%. The last two earnings have led to declines in the stock and the sentiment has been dented. The corrections make the valuations better, but the growth prospects make it appear expensive compared to better growing and dividend paying peers. So the prospects are not looking that great for the stock. Unless there is some great positive surprise in the next quarters, the stock is likely to sulk around current levels. It is crucial that these levels hold otherwise the cut can be much deeper. To improve growth VSI may have to add new products or increase the efforts on the marketing front. Low margins in the business make things a little difficult. It can use its networks power to get better products on its shelves, especially from smaller companies. Many such companies like ChromaDex Corporation (CDXC) are coming up with innovative proprietary molecules which can have good growth potential. VSI can select those products which are in line with its strategy and segment focus. Smaller companies can give it a better deal, implying better margins. The recent acquisition of Super Supplements is likely to show results in the next few quarters. It is good that Vitamin Shoppe is debt free and still has $31 million cash on books. However, the recent events have done damage to the faith and robust growth in the stock price seems to be very difficult in the short term.
