Dive Brief:

• Shares of GNC Holdings, Inc. soared 30% Tuesday morning after the supplements retailer beat first quarter revenue expectations and demonstrated some traction with its new loyalty and pricing schemes. Q1 net income was $23.9 million or 35 cents per share, compared with $50.8 million or 69 cents per share in the year-ago quarter. But Q1 adjusted earnings of 37 cents per share beat the FactSet expectation for 34 cents cited by MarketWatch. 

• Q1 revenue was $644.8 million, down from $668.9 million in the year-ago period, but it bested FactSet’s forecast for $623 million. Q1 same-store sales fell 3.9% in domestic company-owned stores (including e-commerce sales), while Q1 same-store sales in U.S. franchise locations fell 4.6%. But transaction growth continued in the quarter, rising 9.3% and contributing to sequential improvement in same-store sales, according to a company press release.

• Partially offsetting the decreases in revenue was a $4 million increase associated with the company’s change in its loyalty programs. Gold Card revenue rose from $15.6 million in Q1 last year to $23.9 million in the current quarter, due to the impact of the recognition of $24.4 million in domestic Gold Card deferred revenue in the first quarter of 2017, net of $1.4 million of coupon redemptions. 

Dive Insight:

It looks like GNC was blessed with the patience that executives requested last quarter: Shares rose Tuesday morning with the signs of life demonstrated by the company’s significant transaction growth.

Among the company’s moves early this year — in addition to ongoing benefits from the mass shuttering-and-reopening event late last year that was both a literal and symbolic rebirth of the company’s approach — GNC this past quarter opened a storefront on Amazon (sales from that are included in its e-commerce sales, the company said). The Amazon business is exceeding expectations, the company said Tuesday, with higher-margin products doing well there.

The company is also seeing positive results from the changes to its loyalty program: The retailer estimates that under its current program, its loyalty members will be shopping six times per year (compared to four under the previous model), spending more than its previous Gold Card customers, CFO Tricia Tolliver told analysts on a conference call Tuesday morning.

The stores have also shifted the emphasis of the customer experience from driving staff to boost loyalty membership to training associates to have conversations around how supplements can solve customer problems, like marathon or sports training regimens or addressing health issues like sleep problems. To help sales associates, the company has provided them with tablets so that information is at their fingertips, executives told analysts. The company is also being more mindful about discounts, moving to cut prices in a way that is more targeted, more “meaningful” to customers and will drive traffic, executives said.