Vitamin Shoppe Gets Energy Boost from High Health Care Costs

Last Updated Apr 22, 2010 5:50 PM EDT

Add Vitamin Shoppe (VSI) to the short list of companies that appears to be benefiting from tough economic times. One possible reason for its strong financial results: People are substituting vitamins for expensive pharmaceuticals.

That, mixed with an aging population and a more health-conscious consumer, is driving the 450-store chain's growth, said Anthony Truesdale, company president, during the retailer's first-quarter earnings call.

Same-store sales rose an excellent 6.2 percent year over year and net income nearly doubled, hitting $8.7 million.

The timing is right for the company. Vitamin Shoppe went public last year, and Wall Street is rewarding the retailer. Its stock is trading at more than $25 per share, and has risen much more briskly than the S&P or Dow Jones Index.

With unemployment stuck near 10 percent, there is anecdotal evidence that Americans who have lost their health insurance are turning to vitamins instead of prescription drugs. Moreover, an aging population with spending power is intrigued by the idea that vitamins could help stay healthy and youthful.

Can it? The answer to that question is hotly contested. Critics say the value of multivitamins is over-rated, while supporters are convinced they are life savers.

Regardless of the science, Vitamin Shoppe seems to have the economics down cold: The chain will add 42 stores in 2010.
Store image by Flickr user inju.