GNC says profit jumps 14%; spending $3M on marketing campaign
GNC Holdings Inc. will expand its member discount program nationwide in May, backed by a $3 million marketing campaign, which should push up the retailers' sales, company executives said on Friday.
The Downtown-based retailer of health and wellness products described its plans to offer the program at all 6,200 U.S. stores in a conference call with analysts to review quarterly earnings, which increased 14 percent.
The “Member Pricing” discount program, which was test marketed in Kansas City, New York and Chicago, resulted in sales increases “in the mid-single digits” in those markets, said CEO Joe Fortunato. The program offers discounts to consumers for a $15 annual membership fee.
Key to Member Pricing program is GNC's ability to capture data on consumer purchases and tailor its marketing and product offerings to their individual tastes and preferences.
The Member Pricing programs in test markets initially provided 20 percent discounts for only seven days a month. The national roll-out will feature lower percentage discounts that remain in place for the whole month.
“We will target consumers based on their buying habits,” Fortunato told analysts. “Now we'll know what customers buy and how often they visit the store, and we can send out direct-mail pieces to them,” including email promotions to about 10 million consumers.
Combined with the target marketing GNC will roll out nationally, both in-store and online, the Member Pricing program “should be a positive for them as they go forward,” said Kurt Frederick, an analyst at Wedbush Securities, Los Angeles.
GNC, which has 8,200 locations worldwide, reported earnings in the first three months of the year grew to $73 million from $64 million a year earlier. Per-share results increased to 73 cents from 59 cents, beating analysts' consensus estimates by 1 cent.
Revenue increased 6.6 percent to $665 million from $624 million, as sales rose across its retail, franchise and manufacturing/wholesale segments. Same-store sales increased 1.9 percent at GNC's 5,242 company-owned stores in the United States.
The company also maintained its full-year earnings guidance of between $2.75 and $2.80 a share.
Separately, Fortunato said GNC's Jack3d workout stimulant within three months would contain a different ingredient from the controversial dimethylamylamine, or DMAA. Federal health regulators warned in early April that the ingredient, which is in GNC's and other health-product retailers' products, raises blood pressure and heart rate and could lead to heart attacks. GNC was sued in state court in San Diego in February by parents of a man who they claim died after taking the supplement.
Fortunato said Jack3d was “pretty much safe” because the Food and Drug Administration has not ordered products containing DMAA pulled from shelves. He added that Jack3d represented less than 6 percent of sales.
Frederick said “it's not a big issue” for the company.
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Thousands of American steel jobs believed lost to import surge
- Utility regulator seeks $639,000 in penalties from electric supplier
- Microsoft keeping $93B offshore, off U.S. tax rolls
- GM’s legal team targeted in federal investigation
- Advocacy group requests investigation of Chrysler power system failures
- Beware mergers’ bad spawn
- Central banks around globe moving in different directions
- Google Maps opens business doors to online views for shoppers
- Instead of clarity, Federal Reserve Chair Yellen offers more uncertainty on interest rate hikes
- Few homeowners expected to benefit from Bank of America’s $16.65B settlement
- Deere to lay off about 460 from Iowa tractor plant