GNC to close 100 stores, reports $433 million fourth-quarter loss
GNC, who has now rebranded themselves as a health and wellness retailer has reported a $433 million dollar fourth quarter loss according to this Pittsburgh Post report.
The bad news doesn’t end there as GNC reported a 64% decline in sales and the closing of 100 stores.
GNC officials on Thursday took pains to distance the company from the “old” GNC after reporting a $433.4 million fourth-quarter loss, marking the end of a dismal 2016 that saw a 64 percent decline in the Pittsburgh health supplement retailer’s share price.
For the year, GNC Holdings Inc. recorded a net loss of $286.3 million, compared with a $219.3 million profit the year before, as sales declined 6.5 percent and 6.8 percent respectively in company-owned and franchise stores. GNC’s consolidated revenue of $2.54 billion was a 5.3 percent drop from 2015’s $2.68 billion. Its adjusted earnings per share was 7 cents, far off Wall Street’s estimate of 36 cents per share.
“This is certainly not what any one of us wanted to see,” said interim CEO Robert Moran of GNC’s fourth-quarter performance during the company’s quarterly financial briefing to analysts.
The losses, said Chief Financial Officer Tricia Toliver, “are not a good indication of where the business is headed,” adding later that, “We are building an entirely new business model.”
Ms. Toliver was referring to the “One New GNC” campaign, launched Dec. 29 to rebrand the health and wellness retailer. The “new” GNC now features simplified pricing, reduced prices on about half of its products, and a free customer loyalty program, with plans to offer new proprietary products.
Mr. Moran said company officials are encouraged by the campaign’s early results, with sales transactions up 7 percent among company-owned stores and an even more promising performance among the GNC stores that have been piloting the program.
It undoubtedly can’t come soon enough for investors who, shortly after the GNC financials were released early Thursday, learned the GNC board was suspending the company’s quarterly dividend. Shares briefly fell below $7 for the first time since the company went public in 2011.
The stock closed at $7.72 Thursday, down 7.21 percent.
Ms. Toliver said the fourth quarter had notable one-time expenses such as a $10 million investment to clear inventory and launch the One New GNC campaign. As part of its preparation, GNC closed all of its stores for the day on Dec. 28, which also cut into sales. She also said the company expects to close about 100 stores this year as leases expire.