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Vitamin Shoppe enjoys healthy growth trajectory

The recent opening of the 500th Vitamin Shoppe store was heralded as an important milestone for this rapidly growing company but within a few years the nation’s second largest nutritional products specialty retailer could be eyeing 1,000 units.

“There are many markets we are interested in establishing a presence in, and we will continue to move forward with our growth plans to expand in current markets and penetrate new ones,” Vitamin Shoppe CEO Tony Truesdale said on the occasion of the opening of the 500th store in St. Peters, Mo., earlier this month.

The company expects to open a total of 48 new stores this year, compared with 47 stores in 2009, 39 stores in 2008 and 62 stores in 2007. Beyond the current year, the company has indicated that it will add about 40 new stores per year. At that pace it would take Vitamin Shoppe more than a decade to reach the 1,000 unit mark, but considering the company completed a public stock offering in November 2009 it is conceivable new store growth could accelerate appreciably in the coming years even if the company isn’t ready to provide specific numbers.

That is the natural tendency of all retailers who go public especially when the financial benefits of a maturing store base begin to materialize. Vitamin Shoppe saw these effects last year as it leverage expenses to produce profit growth and experienced same store sales gains as more shoppers discovered its store and existing customer bought more. For example, last year the company posted a 7.1% same store sales gain which was the highest in five years and profits increased 130% to $29.2 million on total sales of $751.5 million.

As additional incentive to accelerate growth in 2012 and beyond, assuming of course Vitamin Shoppe continues to demonstrate the viability of its approach, is the fact that it is chasing an industry leader in GNC which enjoys stronger brand equity and just completed its public stock offering on April 1. GNC operates more than 7,000 units worldwide, including roughly 2,000 store-within-a-store locations at Rite Aid. That leaves Vitamin Shoppe with a lot of ground to make up and going back to CEO Truesdale’s comment about penetrating new markets there are a lot of places lacking Vitiamin Shoppe stores. At the end of last year, 45% of the company’s stores were concentrated in just four states — California, Florida, New York, Texas — and Florida had the most stores with a total of 61.

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