Share This Page

GNC earnings fall short of analyst expectations

| Friday, Feb. 14, 2014, 12:01 a.m.

Investors hammered GNC Holdings Inc. in after-hours trading on Thursday, when the vitamin and supplement retailer's 2014 profit forecast fell far short of analyst expectations.

The Downtown-based company said it started the year with poor sales in January and so far this month. Shoppers have been staying out of stores because of bad weather and because they stocked up on products during promotions in November and December, CEO Joe Fortunato told analysts in a conference call to discuss fourth-quarter earnings.

“Two hundred fifty of our stores were closed yesterday. That's just yesterday,” Fortunato said. “We're struggling like a lot of other retailers.”

The slow start to the year led GNC to predict adjusted net income this year of $3.18 to $3.24 a share. Analysts on average had estimated $3.46 a share, according to data from Bloomberg.

GNC shares fell more than 16 percent, or $8.64, to $43.75 at 6 p.m. Thursday.

Sales should rebound in the second and third quarters, Fortunato said.

GNC expects its gold card membership program to continue boosting sales this year. The card, which GNC gave away last year, allows members to receive discounts on purchases.

Fortunato said gold card members are shopping more often and are beginning to pay to renew their memberships.

GNC will continue its store-building pace this year. The company said it plans 200 new U.S. stores, 200 to 225 new international stores and 45 new stores-within-a-store at Rite Aid pharmacies.

In 2013, GNC added 212 stores in the United States, 199 international locations and 34 Rite Aids. GNC has a total of 8,593 stores.

In the October-December quarter, GNC reported net income of $47.7 million, or 50 cents a share, compared with net income of $47.4 million, or 47 cents a share in the same quarter of the year before.

Excluding one-time expenses, GNC said its adjusted net income was $60.6 million, or 63 cents a share, compared with adjusted net income of $49.8 million, or 50 cents a share, the year earlier.

The adjustments in the 2013 quarter included charges related to changes in its transportation network.

GNC announced plans in October to open a fourth U.S. distribution center near Indianapolis in early 2014. It also eliminated all 140 of its drivers at its three distribution centers across the country and outsourced their jobs.

Revenue was $613.7 million, up 9 percent from $565.0 million. Sales from stores open for at least a year increased 5 percent.

Analysts had predicted adjusted net income of 64 cents a share on revenue of $631.5 million in the fourth quarter.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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.