Vitamin World to File for Bankruptcy
Vitamin World Inc. plans to file for bankruptcy protection to restructure the business and renegotiate its store leases. The retailer of vitamins, nutritional supplements, and sports nutrition and beauty products will file next week for Chapter 11 reorganization to restructure its 334-store real estate portfolio and have the ability to renegotiate “problematic lease agreements” with store landlords, President and Chief Executive Michael Madden told Newsday.
“Since I took over, one of my main priorities is to restructure our real estate portfolio,” said Madden, a corporate turnaround expert who was hired to run the company in May 2016. “We have been working with the landlords, and a small handful of them have worked with us to get out of leases and restructure them, but some have not." Under Chapter 11, companies can reorganize their operations, break long-term leases without major penalties, and renegotiate their debt with lenders.
Total Retail's Take: Like the other major players in the $41 billion vitamins, supplements and sports nutrition industry, including GNC and Vitamin Shoppe, Vitamin World has been under pressure due to declining mall traffic, discount and online retail competitors, and studies critical of supplements’ contents and effectiveness. However, while bankruptcy can be perceived as a black eye on a company, in some cases a Chapter 11 filing can make a business stronger going forward. Using bankruptcy to help restructure its store portfolio is a smart move for Vitamin World. This gives the company the opportunity to shrink its network of stores while still remaining in business.