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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.

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