Online vitamin and health products retailer VitaCost.com Inc. has gone public, aiming to net $47.7 million from an estimated $132 million, based on an average share price of $12. The company said it would use the funds to repay debt, fund capital expenditures and provide working capital.
Vitacost.com planned to offer 4,428,445 shares of its common stock while its existing stockholders were offering 6,571,555 shares of common stock. The company plans to use proceeds from the IPO to repay $7.6 million owed to a lender and about $1 million owed to one of its directors. It also plans to use about $20 million to fund capital expenditures, such as purchasing fulfillment and manufacturing equipment and retrofitting and expanding its manufacturing and distribution facilities, and the balance for working capital and general corporate purposes, according to its S1 filing with the U.S. Securities and Exchange Commission. An S1 is required for companies wishing to sell stock or debt publicly that have not been regularly reporting to the SEC.
For the fiscal year ended Dec. 31, 2008, Vitacost reported sales of $143.6 million, a 44% increase compared with sales of $99.3 million in the previous year. Net income for fiscal 2008 was $17,407 versus net income of $1.8 million for fiscal 2007.
The company carries 23,000 SKUs from 1,000 suppliers, such as New Chapter, Atkins, Nature’s Way, Twinlab, Burt’s Bees and Kashi, and its own brands, Nutraceutical Sciences Institute, Cosmeceutical Sciences Institute, Best of All, Smart Basics and Walker Diet. As of June 30, 2009, Vitacost had approximately 957,000 active customers—those that have purchased in the preceding 12 months—representing an increase in active customers of 37% since June 30, 2008, according to the S1.
On average, Vitacost customers make purchases two to three times a year, and over the last twelve quarters the retailer’s average order value has ranged between $72 and $77. Approximately half of the visitors to the web site arrive through natural search results and direct navigation, according to the S1 filing. In 2008, its average conversion rate for unique visitors was approximately 15%, the filing says.
Vitacost filed an S1 in June 2007 but never completed the offering. A comparison between the two documents shows that total SKUs have gone up 229%, from 7,000; total brands increased 150%; active customers increased 118%; and about 74% of sales now come from repeat customers, compared with 70% two years ago.
Jefferies & Co., Oppenheimer & Co, Needham & Co. LLC and Roth Capital Partners are acting as underwriters. Vitacost.com’s common stock will trade on The NASDAQ Global Market
Vitacost is No. 114 in the Internet Retailer Top 500 Guide.
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