The sentiments have become more negative after the second quarter earnings. This is the third time in a row that analyst estimates have not been met, and the earning release has led to a correction. Now the stock has corrected 37% from the 52 week high made in February, and made its 52 week low in the last trading session. This is despite the fact that the company was able to meet the EPS estimate. However, the topline came in slightly short of the consensus estimate of $284.28 million. However, after such a huge correction, the valuations have become better, and it ultimately depends on expectations of future growth. The growth rate for Vitamin Shoppe has not improved, and that is one reason for the negative sentiments. Further, companies like GNC Holdings (GNC) have higher margins because most of its products are proprietary. Vitamin Shoppe is more dependent on sale of other products. Comparatively, Vitamin Shoppe is better on P/E, price to sales and price to book, and it has no debt. It has decent expansion plans and has high hopes from the e-commerce segment. The management expects to open 50 new stores during the year. It expects low to mid single digit comparable store sales growth in 2013. Contribution from super supplements is also expected to help the growth. For improving margins and pace of growth, the company needs to identify new products with potential. Here, high growth potential offerings from smaller companies can be considered as better margins can be negotiated. Chromadex Corporation (CDXC) has launched a couple of high potential molecules recently. Vitamin Shoppe can look for other companies / products which may be more in line with its product line and growth strategy. Vitamin Shoppe needs to show marked improvement in the next couple of quarters to change the sentiments.
