US: GNC To Sell 84 Stores After Weak Q1

GNC Holdings has announced plans to sell off 84 of its retail outlets, after reporting weak figures for its fiscal first quarter.

For the three months to 31 March 2016, revenue was down 1.8% to $668.9m, hurt by a 1.5% decline at its Retail unit and by a 5.6% drop in its Franchise units. Revenue, excluding intersegment sales, in its Manufacturing / Wholesale segment was however up by 3.5%. Like-for-like sales were up 2.6% in US company-owned stores, but they fell by 5.6% in US franchise outlets. Meanwhile, adjusted net profit was down 23% to $50.8m.

CEO Mike Archbold noted: “Although we experienced positive sales trends across parts of our business, these trends were more than offset by challenges in the vitamin business, driven by the decline in Vitapak sales, and pricing pressure created by our clearing of expiring product which impacted both sales and margin during the quarter. While we are working to address the challenges in our vitamin business, we expect to face headwinds in the business for the balance of the year and are adjusting our guidance accordingly.”

The company now plans to sell and refranchise 84 corporate stores in the second quarter of 2016, which is expected to result in a pre-tax gain of $17m. Archbold said the deal was “part of our strategic plan to transition approximately 200 company-owned store locations to an asset light franchise model this year and 1,000 company-owned store locations over the next three to four years.”

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