, Inc. (NASDAQ:VITC), a leading online retailer and direct marketer of health and wellness products, announced updates from the conclusion of its previously announced Strategic and Internal Reviews and announced results for the third and fourth quarters of 2010 and the first quarter of 2011. The Company further announced today that its Board of Directors has voted to terminate the Company's stockholder rights plan by accelerating the expiration date of the plan to June 16 th, 2011. "Our decision to terminate the stockholder rights plan reflects the Board's continuing commitment to corporate governance best practices," said Jeffrey J. Horowitz, the Company's Chief Executive Officer.

Strategic Review

The Board of Directors has concluded its Strategic Review of the Company’s operations, previously announced on July 30, 2010. Key updates are as follows:
  • Management Changes – As previously announced, the Board has made several changes to its executive staff over the past nine months including appointing Jeffrey Horowitz as Chief Executive Officer and Steve Markert as interim Chief Financial Officer. In addition, the Company has recently named a VP of Human Resources and also named a new Director of Manufacturing. The Company is currently conducting a search for a Chief Operating Officer.
  • Revised Marketing Plan – New customer additions are a top priority in 2011 as the Company believes that due to the high number of repeat purchases made by customers – an expanded base will create long-term value. To that regard, the Company has decreased spending on print advertising and is reallocating advertising dollars to on-line and other media channels to accelerate the pace of customer growth. Also, the Company has instituted ‘free-shipping’ and other promotional measures which should continue throughout the year.
  • SKU Expansion in Key Categories – The Company has accelerated the pace of new product launches for its proprietary products and expects to launch more than 100 new SKUs in 2011. The Company continues to add third party SKUs in faster growing categories such as personal care, organic foods and sports nutrition.
  • Moving Virtual Inventory In-House – The Company is in the process of bringing more than 12,000 former virtual inventory SKUs in-house to accelerate order fulfillment and delivery time. This would effectively eliminate virtual inventory offerings.
  • Vitacost Brand – The Company is in the process of rebranding its proprietary NSI supplement line to a new ‘Vitacost’ label to increase brand and Company awareness. This process began in April 2011 with the majority of the transition to be completed by the end of the year.
  • Shipping Policy – In order to improve customer service, the Company changed its shipping policy in the fourth quarter of 2010 to allow for splitting and transferring orders between warehouses to expedite the fulfillment process.
  • Increased In-House Manufacturing – The Company performed a formal review of the products it manufactures in-house and brought back 83 proprietary products that were previously manufactured by third party suppliers.
  • Operational Investments – The Company is making infrastructure investments in 2011 to position the Company for future growth. The Company will spend an estimated $3 to $5 million in 2011 for further improvements on its two distribution centers and its manufacturing facility.

“We are encouraged by the double-digit sales momentum experienced in the fourth quarter 2010 and the first quarter 2011. We believe the implementation of our new go-to-market strategy will enable us to achieve strong growth throughout 2011 and beyond,” stated Jeffrey J. Horowitz. “Our value proposition to consumers has not changed. We continue to offer the broadest selection of products at competitive prices with superior customer service. As the largest on-line provider of dietary supplements in the market today, we believe the changes outlined in our Strategic Review will provide us with the necessary foundation to continue to grow the business and increase profitability long-term.”

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