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Vitamin Shoppe Sells Company
Vitamin Shoppe has sold their company! The second largest sports supplement retailer in the U.S. has entered into an agreement with Liberty Tax Inc. to sell their chain of more than 750 company-operated retail stores (under The Vitamin Shoppe and Super Supplements stores) for approximately $208 million. The transaction is expected to be completed in the fourth quarter of 2019. This is huge news in the supplement industry as Vitamin Shoppe used to be one of the strongest supplement retailers in America and catered to a slightly more informed consumer than other retailers. With Amazon, Walmart, Costco, Sam’s Club, Target, Walgreens, CVS and Dick’s Sports Goods now selling sports supplements, specialty channel retailers like Vitamin Shoppe have faced a historic degree of competition in recent years. This move is a smart one for Vitamin Shoppe shareholders as the immediate payout of the acquisition will be a 43% premium being paid on the current value of their shares! Longer term, Liberty Tax has the money to completely change the Vitamin Shoppe business model to allow the brand to be more competitive.
Why Would Liberty Tax Buy Vitamin Shoppe?
Here’s what Scott Welch had to say on the Vitamin Shoppe acquisition:
“Liberty has already stated that they intend to buy companies that are "franchise-oriented" or those not presently subject to franchising arrangements but that have the potential to be. Since Vitamin Shoppe does business through roughly 750 stores under the names The Vitamin Shoppe and their sister chain Super Supplements, perhaps we'll see Liberty start franchising Vitamin Shoppe locations in the US and overseas. Afterall, Liberty Tax previously announced that it had planned to change its name to Franchise Group! If this rumour is true, then supplement retail stores in the US may face added pressure if more franchise locations open. We might also see Liberty close down some of the lower foot traffic Vitamin Shoppe corporate locations and license these off to franchisees willing to take on the risk. It’s anyone’s guess at this point but companies as financially strong as Liberty Tax do not buy struggling companies without a plan to make money from it. One of the benefits to having all corporate ran stores is consistency in the shopping experience and strong buying power. Unfortunately, it also restricts the flexibility to lower prices to be more competitive and prevents the ability to carry a wide variety of products or those from smaller brands which consumers may want.”
Pat Cozza, an independent member of the Board of Directors of Liberty Tax, stated, “We have great confidence in the value of The Vitamin Shoppe, its ongoing strategic reinvention plan and the outstanding efforts of The Vitamin Shoppe leadership team and associates. We believe that The Vitamin Shoppe is an excellent fit for Liberty Tax’s previously announced strategy to acquire franchise-centric businesses, and demonstrates the commitment of Liberty Tax, its board and management team to implement the previously announced strategic transformation of Liberty Tax.”
Sharon Leite, CEO of The Vitamin Shoppe, stated, “Following a careful and disciplined assessment, the board of directors has concluded that the acquisition proposal from Liberty Tax maximizes value for our shareholders. The transaction also delivers long-term benefits to our associates, customers and business partners. It provides an immediate premium to our current shareholders and aligns The Vitamin Shoppe with a partner that shares our strategic vision to unlock the further potential of The Vitamin Shoppe as a leader in health and wellness. We are committed to transforming into an agile, customer-first organization that differentiates our brand through best-in-class quality, innovation and expertise across our products and services.”
More About Liberty Tax, Inc.
Liberty Tax, Inc. is the indirect parent company of Liberty Tax Service and Buddy’s Home Furnishings. In the U.S. and Canada, last year, Liberty Tax prepared approximately two million individual income tax returns in more than 3,100 offices and online. Liberty Tax also owns Buddy’s Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. Liberty Tax is focused on the evaluation and acquisition of franchise-oriented or complementary businesses. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor to many charitable causes.
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