By Jessica DiNapoli
NEW YORK (Reuters) - Vitamin World, a Long Island, New York-based seller of vitamins and nutritional supplements, plans to file Chapter 11 bankruptcy, hoping to end costly lease agreements for some of its stores, the company's chief executive officer said on Tuesday.
Vitamin World plans to file bankruptcy in order to exit real estate leases that were negotiated by its previous owners, according to CEO Michael Madden's statement.
The vitamin seller, which has about 345 stores, plans to file bankruptcy as soon as this month, people familiar with the plans said. They declined to be named because they were not authorized to speak to the media.
"This action will empower us to move forward as a stronger organization that can and will continue to service our millions of loyal customers with premium offerings via retail and online channels," Madden said in the statement.
Private equity firm Centre Lane Partners acquired Vitamin World from global vitamin maker NBTY Inc last year for about $25 million. NBTY sold the business because it had shifted to investing in its core brands, such as Nature's Bounty and Sundown Naturals, found in major retailers across the U.S.
Madden said in the statement he has been working on solving the issues with the company's real estate portfolio since he became CEO in 2016.
"While a handful of landlords cooperated, the vast majority have not," he said in the statement. "At this time we have no other option than to restructure the company's real estate portfolio by filing for Chapter 11 protection."
Centre Lane declined to comment.
Vitamin World was started in 1976 by Arthur Rudolph in a kiosk in Williamsville, New York.
Specialty retailers selling vitamins, herbs and supplements have also been under pressure due to the rise in e-commerce, with customers able to shop on competing websites. Shares of Vitamin World's larger competitors, GNC Holdings Inc (N:GNC) and Vitamin Shoppe Inc (N:VSI), have both fallen by more than 60 percent over the past 12 months.
Many U.S. adults take a vitamin or supplement every day but concerns about the veracity of promised benefits prompted federal and state investigators to scrutinize the industry.
NBTY agreed in 2016 to put in place tighter quality control measures to ensure the authenticity of their products, according to the New York State Attorney General's Office. NBTY followed GNC and vitamin maker Nature's Way in reaching a settlement with the regulator.