GNC moves to strengthen its financial position
Ventures with China, Australia in the works
It’s been a busy 12 months at GNC, the near-$300 million health and wellness retailer with world headquarters at Sixth and Wood, Downtown.
The 18-month-old One New GNC marketing strategy gained some footing in the past year, and new CEO Ken Martindale came on board in September. In addition, the company is partnering with China’s second-largest drug maker and has reached a master franchise agreement with its Australian counterpart to sell GNC products down under.
The marketing strategy brought simplified pricing and a new loyalty program to strengthen GNC’s customer base.
The ventures in China and Australia are about strengthening the company’s balance sheet.
Mr. Martindale said much of the $300 million investment from GNC’s new Chinese partner, Harbin Pharmaceutical Group Co. Ltd., will go toward paying down a $1.38 billion debt load that has been weighing down its books.
Earlier this year, GNC was able to push back the March 2019 due date to 2021 on a $1.1 billion loan, giving the company some breathing room. But attempts to refinance its debt were met with terms so unfavorable that the company decided not to proceed.
“Clearly the amount of debt has been a little bit challenging,” Mr. Martindale acknowledged.
Ravindranath Madhavan, a professor of business administration and director of the International Business Center at the University of Pittsburgh’s Joseph M. Katz Graduate School of Business, says the Harbin joint venture should buy GNC some time.
“The key is going to be whether