BUSINESS NEWS: NBTY Reports Down Second Quarter

According to a Reuters report, NBTY Inc. posted a quarterly profit that missed market expectations by a wide margin, sending the Company's shares down 22 percent.

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NBTY Q2 profit misses Wall Street view, shares dive

* Q2 EPS 73 cents vs est 93 cents

* Q2 sales $705 mln vs est $681.6 mln

* Hurt by jump in TV advertising spending

* Sees private label margins under pressure in future

* Shares fall 22 pct (Adds details, analyst comment, updates stock activity)

BANGALORE, April 27 (Reuters) - NBTY Inc (NTY.N) posted a quarterly profit that missed market expectations by a wide margin, hurt by increased spending on television advertising, sending the U.S. nutritional supplements maker's shares plunging 22 percent.

Sales in the quarter grew 18 percent to $705.2 million, while advertising, promotion and catalog expenses jumped 54 percent to $50.9 million.

"The earnings miss can almost entirely be attributed to an unexpected $18 million boost in television advertising during the second quarter, which management noted they do not expect to recur in future quarters," Wedbush analyst Rommel Dionisio said.

NBTY said the additional TV spend in support of its supplements Nature's Bounty, Osteo Bi Flex, Ester C and Pure Protein, should result in a a boost to branded sales in the full year.

But the company also warned that it would see future gross margin pressure in its private label business.

"Because of the increasing competitive nature of the private label business, we anticipate gross profits for (this) business to decrease for the remainder of fiscal 2010," Chief Executive Scott Rudolph said.

Wedbush's Dionisio cut NBTY to "neutral" from "outperform" citing potential deceleration of industry growth.

Industry growth levels, which were above trend are now starting to crack as swine flu concerns moderate, Dionisio, who cut his price target on the stock to $41 from $56, said.

Sales growth of mass market vitamins -- like the ones sold by the company -- have historically trended up 5 percent to 6 percent, but accelerated to 14 percent to 15 percent during last year's swine flu, Dionisio said.

Shares of the Ronkonkoma, New York-based company were trading down 20 percent at $37.60 Tuesday on the New York Stock Exchange. They touched a low of 36.38 earlier.

For the second quarter, the company earned $46.7 million, or 73 cents a share, compared with $23.1 million, or 37 cents a share, a year ago.

Analysts on average were looking for a profit of 93 cents a share, before items, on revenue of $681.6 million, according to Thomson Reuters I/B/E/S. (Reporting by Vidya Lakshmi in Bangalore; Editing by Jarshad Kakkrakandy, Anthony Kurian)

SOURCE: Reuters