Vitacost.com CEO Ira Kerker steps down and Jeffrey Horowitz takes the post after logistics challenges and a proxy fight shook up the company's board of directors.

Horowitz founded retailer Vitamin Shoppe in 1977, launching VitaminShoppe.com in 1998, and expanded the chain from one location to 200 as its chief executive.

Vitacost introduced Horowitz as a director and consultant on Aug. 3, then appointed him interim CEO Aug. 16.

Great Hill Equity Partners, majority shareholder in the supplement retailer and manufacturer, criticized Vitacost's directors in May for lacking e-commerce experience. Shareholders subsequently voted to replace four Vitacost board members with candidates backed by the private equity firm (¹ 'The Tan Sheet' July 26, 2010, In Brief).

Horowitz should "help stabilize Vitacost as the board looks for a full-time replacement," Jefferies & Co. analyst Youssef Squali said in an Aug. 16 note. While more senior-level turnover is likely in the near term, Squali said he expects a stronger business operation to result from the changes.

Vitacost reported its second-quarter results the same day, noting earnings were hurt by a logistics issue that increased back orders of products under its Nutraceutical Sciences Institute brand (² Also see "Sales & Earnings In Brief" - Pink Sheet, 10 May, 2010.). Deep discounts flooding the market forced the firm to deploy free shipping promotions and raise promotional spending.

Net sales reached $54 million in the April-June period, a jump of 14.1 percent. However, sales and marketing costs grew 62.9 percent to $5.1 million, dragging Vitacost down to a net loss of $1.4 million compared to income of $3.5 million in the year-ago period.

In the first half of 2010, the Boca Raton, Fla., company said sales rose 19.3 percent to $111.1 million, though net income fell 84.9 percent to $1.1 million.

- Dan Schiff ( ³ d.schiff@elsevier.com )

Vitacost.com Turns To Vitamin Shoppe Founder To Right Ship

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