Vitacost.com (VITC) Details 5-Year Growth Plan

Vitacost.com, Inc. (Nasdaq: VITC), provided additional details on its long-term growth initiatives. The Company also announced its 5-year financial targets as it continues to focus on accelerating top-line growth, improving operational efficiency, and leveraging investments in infrastructure. In addition, the Company announced it will host an analyst day in New York City in June 2012.

The Company provided additional details on its long-term growth initiatives. Key initiatives include:

• Increase Brand and Company Awareness: The Company is focused on increasing customer awareness of Vitacost.com, including its vast healthy living and proprietary brand offerings. To facilitate this, during 2011, the Company transitioned its legacy NSI VMHS brand to a new Vitacost label to increase brand and overall Company awareness. In January 2012, the Company unveiled a fresh new brand identity, complete with a new logo and corporate slogan, "take the cost out of healthy living" and launched a national radio and print ad campaign. In addition, the Company relaunched its website, www.vitacost.com, with a cleaner look and feel and improved usability features. The Company is also expanding its online content through a broader initiative to develop a deeper connection to its customers.
  
  
• Expand Customer Base: New customer additions continue to be a top priority, as the Company markets consumable products and its customers have high repeat order rates and lifetime values. The Company believes future top-line growth will stem from an expanded customer base and is increasing its touch points on the internet to target customers directly where and how they shop. This is being achieved by participating in on-line marketplaces, such as Amazon.com, growing the network of affiliates, and becoming more effective at search engine marketing (SEM) and search engine optimization (SEO). In addition, the Company is leveraging its referral networks to attract more customers to its site with the launch of 'Refer a Friend' in October of 2011. The Company has also increased its focus on attracting mobile customers with the relaunch of its mobile application which offers an enhanced technology platform designed to improve the mobile user experience.
  
  
• Expand Product Offerings: The Company continues to increase its product offerings of both proprietary and third party products to drive traffic to its site and increase basket size as it strives to become the leading online destination of health and wellness products. The Company continues to add brands and line extensions in its core VMHS categories as well as in faster growing healthy living categories such as food, sports nutrition/body building, and personal care. During 2011, the Company added over 5,200 net new SKUs, broken down as follows: 2,099 in VMHS, 1,273 in personal care, 886 in food, 462 in sports nutrition/body building, and 500 in other categories such as household products and pets. The Company ended fiscal year 2011 with over 34,000 SKUs.
  
  
• Increase Lifetime Value by Increasing Frequency of Purchases and Improving Customer Retention: As the Company continues to diversify its product offerings in the healthy living space, there is a renewed effort to educate customers on the breadth of Vitacost.com's product offerings to increase total basket size and the frequency of purchases in order to drive greater lifetime value. The Company is also focused on increasing lifetime value per customer by improving customer retention through the use of targeted, personalized emails and promotional offers as well as offering an improved overall customer experience.
  
  
• International Expansion: The Company currently ships products internationally to 39 countries including Canada, Hong Kong, Japan, Taiwan and the United Kingdom, despite limited marketing efforts outside of the United States. The Company is now beginning to focus on creating an enhanced in-country experience for customers by increasing awareness of the Company's international shipping destinations and improving the overall web and shipping experience for international customers. International represents a large, growing opportunity for the Company with international accounting for only 4% of total orders in 2011.
  
  
• Expand and Optimize Distribution: The Company is in the process of increasing capacity of its distribution network to support higher level of sales growth. The Company believes increased capacity will also lead to an improved customer experience as order processing and delivery times are reduced. Construction on a third distribution center is expected to commence in the second half of 2012 with completion expected in the early part of 2013. The Company is currently in the process of completing the expansion of its existing distribution centers.
  
  
• Improve Operating Efficiencies: The Company is focused on improving operating efficiencies by reducing costs at its existing distribution centers through improved labor productivity and the introduction of new technologies designed to reduce special handling costs. Finally, the Company expects to gain sales leverage on its fixed cost structure as sales continue to accelerate.

Long Term Financial Goals

The Company provided initial 5-year financial targets as it continues to accelerate top-line growth and works to improve margins to return the Company to profitability.

• Top-Line Growth: The Company expects to generate sales growth in the range of 15% to 20% per year over the next five years benefiting from the sales initiatives previously outlined.
  
  
• Adjusted EBITDA Margin: Once achieving economies of scale, the Company expects its Adjusted EBITDA margin to be in the range of 6% to 10%, benefiting from sales leverage on fixed costs and improvements in operational efficiencies.

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