Vitamin Shoppe Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Vitamin Shoppe (NYS: VSI) dropped 15% in intraday trading today, despite reporting a seventh consecutive quarter of healthier-than-expected earnings.

So what: Second-quarter non-GAAP EPS of $0.41 increased 41% year over year, and beat the consensus estimate of $0.38. Investors may have been expecting more: The $0.03 beat was nothing compared to last quarter's $0.08-per-share outperformance. GAAP EPS of $0.40 rose 54%, and revenue of $216 million climbed 12% year over year.

Now what: Guidance was confusing, comparing a 52-week year to a 53-week year, and did not mention revenue or EPS. For 2011, management expects comparable-store sales growth of 7%. That suggests it will slow to 6% in the second half, from 8% in the first half of the year.

Management also plans to spend about $1 million on "additional investments to support long-term growth, primarily for the e-commerce business." That's an increase of more than 10% from its recent capital expenditure run rate. Slowing comparable store sales and management's plan to step up investments suggest that this company's growth story is aging.

Interested in more info on VSI? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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