GNC to shutter 200 stores

Dive Brief:

GNC Holdings, Inc. on Thursday said that consolidated revenue in the first quarter fell to $607.5 million from $654.9 million in the year-ago quarter, mostly due to its sale of Lucky Vitamin last September, which resulted in a $22.7 million reduction to revenue and the termination of its U.S. Gold Card Member Pricing program a year ago, which resulted in a $23 million revenue decrease.
Same-store sales rose 0.5% in domestic company-owned stores (including GNC.com) in the first quarter of 2018, according to a company press release. In domestic franchise locations, same-store sales fell 1.9%.
The company plans to close some 200 stores this year, depending on the outcome of lease renegotiations or relocation opportunities, which are ongoing, and expects few new stores to open this year, the company also said.

Dive Insight:

GNC continues in turnaround mode, and is seeing some of its best results overseas. Revenues in the U.S. and Canada segment fell 4.5% or $24.2 million to $512.4 million in the period, down from $536.6 million a year ago. But revenues in the international segment rose 0.8% or $0.3 million to $40.1 million from $39.8 million in the prior-year quarter, primarily due to an increase of $3.4 million in China cross-border e-commerce sales, according to a company press release. Earlier this month the company announced plans to expand into Australia.

GNC on Wednesday tabled a special meeting of stockholders that had been called to approve a proposed strategic partnership and China-based joint venture with Chinese pharmaceutical company Harbin Pharmaceutical Group Holding Co., known as Hayao; it will be reconvened May 9. The company noted that, while over 92% of the proxies received to date had voted in favor of the deal, only about 36% had submitted proxies to vote at the special meeting, which wasn't the required quorum of a majority of the outstanding shares of the company's common stockholders.

GNC is also getting a handle on its debt. In the first quarter, the company said it improved its financial flexibility through the extension of its debt maturities and that its strong sustainable cash flow will continue to be used to pay down debt. CreditRiskMonitor, a service that tracks bankruptcy risk through analyzing several data streams, has found that GNC has between a 10% and 50% chance of filing for bankruptcy within the next 12 months.

There was other good news at home. Loyalty membership under a revamped program rose 12.3% from the last day of 2017 to 12.8 million members. As of March 31, the retailer has 935,000 members enrolled in its new PRO Access, a 23.6% increase compared to Dec. 31. GNC brand mix for domestic system-wide sales rose to 50% in the quarter, up from 48% in the fourth quarter of 2017 and 43% in the first quarter of 2017, the company said. Its weight loss product Slimvance has attracted new customers, driven a larger basket and, despite overall sales declines, increased the company's share of the U.S. weight management market, according to a press release.