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NBTY reports sharply lower net income as sales fall

Supplements being manufactured at NBTY facilities in Bohemia

Supplements being manufactured at NBTY facilities in Bohemia on Aug. 13, 2007. Credit: Newsday / Ken Spencer

Ronkonkoma-based vitamin and dietary supplement company NBTY Inc. reported on Wednesday that its net income dropped more than 89 percent as first-quarter net sales decreased, and the company booked charges for exiting a business.

The maker, distributor and retailer of health products, with brands including Nature’s Bounty, Ester-C, Osteo Bi-Flex, Balance Bar and Vitamin World, posted net income of $3.80 million in its fiscal first quarter ended Dec. 31, down from $35.91 million in the same quarter a year earlier. NBTY posted total net sales of $801.99 million, down from $825.77 million a year earlier.

The decline comes after sales were hurt by foreign exchange rates due to a strong U.S. dollar, the Paris terror attacks last November and the subsequent security lockdown in Belgium that resulted in the closures of stores, company officials said. They also attributed the lower net income to asset purchases and disposal costs, write downs of Vitamin World assets and facility restructuring charges.

Net sales for the Vitamin World segment decreased 8.1 percent from the prior-year period to $49.55 million, primarily due to store closures, lower same store sales as a result of lower sales of sports nutrition and weight loss products, as well as decline in mall traffic.

Earlier this month, NBTY announced it would sell Vitamin World, including its headquarters in Bohemia and 378 stores, to Manhattan-based private equity firm Centre Lane Partners LLC for about $25 million.

After the deal, NBTY will no longer run retail stores in the United States.

“Although we will record a book loss on the sale, this is a win-win situation,” NBTY chief financial officer Dipak Golechha said during an earnings conference call Wednesday. “It allows us to focus on our core brand.”

NBTY is looking to shrink its contract manufacturing and private label business, although it will continue to make some private label products, NBTY president and CEO Steve Cahillane said. It also plans to continue to grow its business in Europe and its core brands, he said.

“Our goal is to grow year-over-year,” Cahillane said.

NBTY is owned by the Carlyle Group, a Washington, D.C.-based investment fund. Because the company’s debt is publicly traded, it discloses its financial results. NBTY employs about 13,000 globally, of whom 6,000 are in the United States, including 2,600 on Long Island.


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