GNC on track for healthy growth

Gina Acosta
Executive Editor
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GNC's new strategy and investments are reshaping the company's business model and reversing negative sales growth trends.

Just a few weeks after settling in to his new job as CEO, Ken Martindale expressed confidence in the company's turnaround plan after posting improved earnings results for the third quarter.

"GNC made good progress in the third quarter, returning to positive same store sales," Martindale said during an earnings call with analysts. "Transactions, the e-commerce business and enrollment in our new loyalty programs continued to improve, and it is clear that our strengthened model is creating a solid foundation for growth. This year, the team laid a strong foundation for us to build upon.  Going forward, we will continue to focus on growing sales and on giving customers innovative, highly differentiated products and experiences."

For the third quarter ended Sept. 30, GNC saw revenue from its U.S. and Canada operations decrease $18.4 million to $507.1 million, a 3.5 percent drop when compared with the same period a year earlier. GNC also saw $21.5 million in net income, compared with $32.4 million for the third quarter of 2016.

But the company saw transaction growth continue in the third quarter, up 12.4%, resulting in positive same store sales of 1.3%. As of Oct. 25, 9.6 million consumers had joined the company's loyalty programs, of which approximately 585,000 were enrolled in the PRO Access membership.

As an element of the company's omnichannel strategy, early in 2017 the company launched a GNC storefront on Amazon that continues to exceed the company's expectations, Martindale said.

GNC’s e-commerce business is improving on both and the new GNC Store on Amazon. E-commerce sales were 10.2% of U.S. and Canada revenue for the quarter compared with 8.2% in the prior year third quarter. sales were up 41.9% for the quarter.

"Our e-commerce business continues to grow as does the GNC storefront on Amazon which carries our full product line. In the second quarter, we completed the replatforming of the website, moving from a third-party to a company-controlled platform. This allowed us to introduce new features resulting in more flexibility to add enhancements including advanced personalization and improved merchandising, the benefits which are evident in our sales results. Additionally, we made major adjustments to promotional cadence and pricing in the third quarter of 2016, thereby eliminating bulk sales and opening the door for a successful launch on Amazon. There is real opportunity for growth and long-term upside as we continue to drive forward with our omnichannel strategies," Martindale added.

The company also says it continues to take steps to improve the customer experience through technology to make it easier for store associates to engage with the customer. For example, tablets can now be used by store associates to enroll customers into the loyalty programs and facilitate product recommendations supporting customer regimens.

GNC Holdings has 3,468 corporate stores in the U.S. and Canada, 1,126 domestic franchise locations, 2,414 Rite Aid franchise store-within-a-store locations and 2,075 international locations.