Market Overview

GNC Holdings 'Not Pleased' With Q1 Results, Forced To Revise 2016 Outlook Lower

Share:

Shares of GNC Holdings Inc (NYSE: GNC) plunged more than 27 percent on Thursday after the company reported its first quarter results and provided an update to its full year outlook.

GNC Holdings said it earned $0.75 per share in the first quarter on revenue of $668.9 million. Wall Street analysts were expecting the company to earn $0.76 per share on revenue of $667.8 million.

Net income for the quarter fell to $50.8 million from $66.0 million in the same quarter a year ago as same-store sales fell 2.6 percent in domestic company-owned stores while domestic franchise locations saw a same-store sales decrease of 5.6 percent.

Retail segment revenue fell 1.5 percent from a year ago to $496.0 million while revenues in the company's franchise segment fell 5.6 percent to $6.8 million.

The company cited its poor same-store sales results to an ongoing negative trend in the vitamin category, including the impact of deep discounting to clear excess vitamins that were close to expiration.

Mike Archbold, Chief Executive Officer, said, "We are not pleased with the reported results for the quarter and find them unacceptable. While we are making progress on our strategic evolution which we started in 2014, the turnaround is taking longer than expected and the progress is insufficient. Our number one priority is our vitamin business and the steps we need to take to grow same store sales in this category through new promotions and a renewed marketing focus. In addition, we are reducing the significance of aged inventory, optimizing our assortment and training store associates to emphasize the vitamin solution to our customers."

Looking forward to the rest of fiscal 2016, GNC said that if current sales trends continue throughout the remainder of the year, the company expects to earn $2.80 to $2.90 per share, marking a decrease from its prior guidance of $3.15 to $3.35 per share.

Archbold added, "We are taking actions to offset the headwinds in our business by driving improvements in our vitamin category and our franchise business. We also remain focused on driving improved business performance by successfully executing on our refranchising initiative, driving product innovation, and evaluating pricing opportunities that drive incremental gross margin dollars. We believe that GNC's reputation as one of the most trusted and recognized brands in the industry, coupled with our strong cash flows, and clear strategic plan will enable us to build positive momentum and drive long-term growth and value."

Posted-In: GNC Mike Archbold Vitamins Vitamins SellersEarnings News

 

Related Articles (GNC)

View Comments and Join the Discussion!

Pressure From Japan: Interest Rate Decision Weighs, But Earnings In Focus

Dehaier Medical Systems Gets $20 Million Investment From Liaison Interactive