DM Channels Lead NBTY Fourth Quarter Results

NBTY Inc., a nutritional supplement manufacturer and marketer, generated $602 million in sales during its most recent fourth quarter, up from $496 million a year ago. The company’s net income fell from $48 million a year ago to $18 million.

The company attributed the falloff in net income to lower gross profit margin, weak sales within its European retail operations, investment in information technology, increased freight costs, and integration costs related to its July acquisition of Leiner Health Products.

For the year, NBTY racked up $2.2 billion in sales, up from $2 billion during fiscal 2007. The company’s net income amounted to $158 million, down from $208 million. The most recent quarter and the year ended Sept. 30.

During the quarter, the company’s direct response and e-commerce operations generated $55 million, up from $47 million during fourth-quarter 2007. But gross margin fell due to increased promotions geared at increasing the firm’s Internet presence, as well as an additional $4 million in marketing and advertising costs.

Online sales represented 45% of all direct sales during the quarter, compared with 40% a year ago. The company is aggressively trying to drive direct sales onto the Web.

North American retail sales amounted to $50 million a drop from the $57 million these operations generated a year ago. During the quarter, NBTY closed nine underperforming stores, and added four new outlets.

Its European operations generated $138 million, down from $155 million a year ago. While some of the drop is attributable to foreign exchange rates, most was the result of general slowness in the European market.