GNC looks to stabilize domestic business
After a year of major announcements and big deals, GNC Chairman and CEO Ken Martindale suggested Tuesday the company will be more inwardly focused, at least for now.
The short-range goal: Whittle away at a still-sizable debt, accelerate the health and wellness retailer’s global business and push forward on GNC’s transition from bricks-and-mortar stores to an “omni-channel” enterprise engaging customers wherever they are shopping.
At Tuesday’s annual stockholders meeting in Downtown, a key theme for Mr. Martindale was “stabilizing the U.S. business.”
The ultimate goal, of course, is stabilizing GNC’s share price, which has hit 52-week lows multiple times this year. A year ago, GNC shares traded at $3.39. On Monday, those shares closed at $1.63, continuing a slide that seemed to quicken four years and two CEOs ago.
Mr. Martindale, who was named CEO in September 2017 and elected board chairman a year later, would not speculate on what’s driving GNC’s stock price. He does know what can turn it around, he said: “Results.”
To that end, GNC has completed some big-news deals this year, most notably the strategic partnership with Harbin Pharmaceutical Group Holding Co. and the joint venture with International Vitamin Corp. in California.
Combined, those two deals have allowed GNC to pay off $400 million of debt, a debt that Mr. Martindale said stood at $1.5 billion two years ago and is now under $900 million.
That lower debt ratio could put GNC in a position to consider refinancing the remaining debt, something the company tried to do 18 months ago but had to abandon when it could not obtain terms favorable to justify the move.
The Harbin deal is hoped to open up the Chinese market for GNC, which plans to use Harbin’s manufacturing and distribution know-how to build brand recognition in that country. Its online Amazon retail store similarly sets a larger net for capturing new customers, Mr. Martindale said, although he acknowledged during an analyst call last month that the e-commerce business has “underperformed.”
On Tuesday, he reiterated plans to close “a couple hundred” GNC stores yearly, targeting underperforming locations as their leases expire. “We just have too many stores out there, so we’re going to shrink.”
With more customers shopping online, Mr. Martindale added, it’s not a question of maintaining freestanding stores or going all-in on ecommerce.
“To be a successful retailer in the future, you have to do both.”