2010 was another very successful year for your company and was also the first full year as a public corporation. At The Vitamin Shoppe, our dedication and discipline to our core values allowed us to significantly improve the profitability of our business, while also pursuing targeted initiatives that have positioned us well for future growth. Our commitment to delivering both the knowledge and products that meet our customers' health and wellness needs continues to set us apart from the competition and drives our business across all channels.

We are focused on enhancing shareholder value by maintaining our operating and financial disciplines. To this end, we significantly reduced our long-term debt, invested in future stores and leveraged our existing infrastructure for greater efficiency. As a result of these and other initiatives, we are excited about the company's potential for value creation, both in the short term and the long term.

Our associates enjoy a positive work environment where they can make a difference in peoples' lives while achieving their own professional goals in our stores and at our national office. All of this would not be possible without a strong culture of knowledge and caring at every level.

Understanding and meeting our customers' needs has also contributed to our success. Our Healthy Awards database now exceeds four million customers and continues to provide us with extensive consumer research. It enables us to gain a more in-depth understanding of our existing customers' needs and to better understand what excites new customers. By more strongly aligning our value proposition to the needs and expectations of our customers, we can drive increased market share and customer loyalty.

As we look ahead, we are fortunate to have a strong foundation from which to grow our business and deliver consistent growth in revenue and profits. We made some exciting changes to our management team for 2011 by promoting our existing senior management team into new roles and adding key leaders throughout our company. We have the experience and the passion to lead this company forward and continue to outperform the marketplace.

2010 Operational Highlights

From merchandising to operations to marketing to finance, in every aspect of our business, we continued to improve our execution in 2010.

Strong top-line growth, coupled with solid cost controls, and a reduction in interest expense continued to drive overall profitability. We experienced solid growth in all business segments. We delivered double-digit revenue growth, up 11.4% overall, and record net income of $29.3 million. Comparable store sales growth was 7.1% for the full year, the 17th consecutive year of positive growth. In our direct business, we are pleased with the momentum exhibited during the year that resulted in a 6.1% increase in segment sales to $83.5 million. We opened 47 new stores for the full year bringing our store total to 484.

Following our successful IPO in late 2009, we continued to strengthen our financial position throughout 2010. We significantly reduced our financial leverage, and remain focused on continuing to generate free cash flow to drive increased shareholder value. We reduced our long-term debt to $42 million in the past year and we remain committed to ongoing debt reduction.

Our solid performance in 2010 can be summarized with three key messages:

• Both our retail stores and our direct business continue to meet our expectations.
• A disciplined focus on costs drove our margin improvement.
• Our financial position remains strong and we are well positioned to fund our growth.

The financial success of this past year is just part of our story. We generated strong returns while simultaneously positioning the company for future growth as we continue to strategically invest in new products, categories, stores, and our brand. We are a growth company and continue to drive higher profits through square footage expansion, comparable store sales growth and margin increases. We have shown that disciplined growth is sustainable, and we have a lot of momentum going into 2011.

2011 Outlook

Based on our strong competitive and financial position, we are excited about our prospects going forward. As we look to 2011, we will continue to focus on those initiatives that are driving customer acquisition and customer engagement, as well as profitable multichannel growth.

We anticipate we will grow at a healthy pace by providing greater customer value and satisfaction. We will continue to leverage our cost advantage and maintain our relentless focus on high-quality products.

As an organization we have a very high level of optimism and focus and are very encouraged with how the business is moving ahead. The base of our ongoing strategy is our unparalleled assortment and customer-focused culture. The Vitamin Shoppe emphasizes caring about our customers and sharing our knowledge with them whenever and wherever they choose to shop.

The management team truly appreciates the hard work and dedication of all our Health Enthusiasts and the support from our manufacturers. However, we are not resting on our laurels, and are committed to building upon that success. We have a strong, profitable foundation and a leading market position in our industry. We continue to pursue specific growth opportunities with attractive returns on investment. As we grow, we expect to generate increased cash from operations; and we anticipate our balance sheet to remain strong, and our liquidity position to provide the financial flexibility to fund our growth. We will accomplish this by focusing on the consistent execution of our strategic initiatives.

At The Vitamin Shoppe we are fortunate because no one has a better job than we do to affect people's lives through their health and wellness goals, and to affect change just by sharing ideas and knowledge about dietary supplementation.

We recognize that the long-term success of any organization depends upon the employees and support of our shareholders. The hard work and insights of our associates throughout the organization have been integral to the company's past success and will continue to be critical for our future. As always, we want to thank all of our employees for their hard work and dedication and appreciate their contribution to the success we achieved in 2010. We would also like to extend a welcome to our new shareholders.

On behalf of The Vitamin Shoppe, thank you for your interest and support.

Yours in Health,

Richard L. Markee

Chairman of the Board,
Executive Chairman and
Health Enthusiast

Anthony N. Truesdale

Chief Executive Officer,
Chief Health Enthusiast