Pittsburgh Post-Gazette

GNC revenue down, shares soar

- By Steve Twedt Pittsburgh Post-Gazette

GNC Holdings Inc. saw its firstquart­er net income halved from the previous year, falling to $23.9 million from $50.8 million, while its earnings per share of 37 cents compared with 69 cents a year earlier, the company reported Tuesday.

In a marked departure from 2016, however, both its earnings results and quarterly sales of $644.8 million beat analysts’ estimates of 33-34 cents per share and $623 million-$630 million in sales, sending the Pittsburgh vitamin retailer’s stock rocketing up more than 30 percent at one point.

Shares closed Tuesday at 9.03, up just under 25 percent.

Interim CEO Robert Moran says GNC has been encouraged by key early trends since the December launch of its One New GNC marketing campaign featuring simplified pricing, including lower pricing on many products, and a new free customer loyalty program, myGNC Rewards, which had signed on 5.4 million members by the end of the first quarter.

“It’s a new, fundamenta­lly transforme­d business model designed around the customer,” he said.

Although domestic sales at establishe­d stores, or same-store sales, fell 3.9 percent, Mr. Moran pointed to a 9.3 percent growth in transactio­ns during the first quarter as a sign GNC is bringing back customers to its products.

Within that number he sees more good news: Pilot stores that implemente­d One New GNC’s business model last fall are starting to see results, both in sales and return visits.

“You see where there is momentum that is continuing to build,” chief financial officer Tricia Toliver said. Mr. Moran and Ms. Toliver said they expect to see positive same-store sales later this year.

“It’s clear that customers are coming back to the stores,” Mr. Moran said.

To keep them coming, GNC is planning product launches and personaliz­ing its marketing to address individual customers’ needs. In that regard, Mr. Moran said there is a heightened focus on associates’ training to help them learn “how to be a trusted adviser” for customers.

Wall Street’s positive response to GNC’s first-quarter results undoubtedl­y comes in part because of low market expectatio­ns following last year’s performanc­e, which included a $433.4 million operating loss in the fourth quarter that ended a year in which GNC shares lost 64 percent of their value.

The first quarter was not without its major disappoint­ments, most notably GNC’s plans for its first-ever Super Bowl ad buy that got sidelined a week before the broadcast over NFL objections that some GNC products contained substances banned by the league.

GNC, which has about 600 employees at its Downtown headquarte­rs, has 8,983 stores worldwide including 3,499 in the U.S. and Canada.

 ??  ?? GNC’s 2016 earnings and quarterly sales surpassed analysts’ estimates of 33-34 cents per share.
GNC’s 2016 earnings and quarterly sales surpassed analysts’ estimates of 33-34 cents per share.

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