April 8, 2011, 2:44 PM

The web wasn’t the biggest loser for Nutrisystem in 2010

E-commerce revenue grew 1.1% while total sales fell 2.9%.

Mark Brohan

Research Director

Lead Photo

After two years of declines, web sales rose modestly for Nutrisystem Inc. in 2010.

In its recently filed annual report with the U.S. Securities and Exchange Commission, Nutrisystem, No. 56  in the Internet Retailer Top 500 Guide, reported:

  • For the year ended Dec. 31, web sales rose 1.1% to $312.1 million from $308.6 million in 2009.
  • Total sales fell 2.9% year over year to $509.5 million from $524.6 million.
  • Net income rose 16.7% to $33.6 million in 2010 from $28.8 million in 2009.

Internet Retailer calculates the web accounted for 61.3% of total sales compared with 58.8% in 2009.

“2010 was a challenging year, with two very different stories,” said CEO Joe Redling. “We enjoyed strong sequential revenue and new customer trends in the first half, followed by softening customer demand and deteriorating year-over-year comparisons in the second half.”

Nutrisystem doesn’t break out quarterly web sales but for Q4 did report:

  • Total sales fell 16.7% year over year to $87.9 million from $105.5 million in the fourth quarter of 2009.
  • Net income rose 163% to $7.1 million in 2010 from $2.7 million in Q4 2009.

Nutrisystem also was off to a slow start in 2011, Redling told Wall Street analysts on the company’s year-end earnings call. “There are three primary factors impacting our results in January,” Redling said. “First was the intense competitive pressure from a major new product launch in the category, the first of its kind in many years from the largest player in the category. Second, the dieting consumer was actively seeking deals and bargain shopping. We witnessed this behavior online as we tracked conversion of shopping to buying. And third, our new campaign and offer was ineffective and did not resonate with consumers.”

Despite only a modest increase in annual web sales, Nutrisystem continues to invest in new Internet technology, including mobile commerce. In February, Nutrisystem rolled out a new iPhone app that lets subscription plan members and non-members calculate and track their body mass index. “With the introduction of this new, free BMI app for the iPhone, we’re making it simple for anyone—members and non-members alike—to measure their BMI and make positive changes to improve their health,” says chief marketing officer Chris Terrill.

 

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