GNC revenue, sales drop, but vitamin retailer says plan in place
GNC Holdings Inc. will try to wean shoppers off discounts and simplify pricing to combat declining sales, CEO Joe Fortunato said on Tuesday after the company reported a drop in revenue and falling same-store sales.
The Downtown-based vitamin and supplement retailer will begin implementing changes at its stores later this year aimed at reducing reliance on promotions, buy-one-get-one deals and other price reductions, Fortunato said.
“We are not getting credit from the consumer no matter how much we escalate discounting,” he told analysts during a conference call.
“What we let go further and further over time was the amount of discounting and the look and feel of our stores. It just looks like we're a Kmart on sale,” he said.
Kurt Frederick, an analyst with Los Angeles investment firm Wedbush, called the planned moves “positive steps” for a company that is struggling with a pricing strategy that is confusing to customers.
“I think it addresses some of the issues that they've been having,” he said. “I think that's why the stock came back to life after an initial drop.”
GNC closed up 19 cents, or 0.5 percent, to $32.75 after opening the trading day down more than 1 percent. The company's stock is down 46 percent from its 52-week high of $60.98.
For the April-June quarter, GNC reported a 4 percent decline in same-store sales, a lowered prediction for full-year profit and quarterly net income that missed analyst expectations. Same-store sales are a key guage of a retailer's health because it excludes revenue from newly opened stores.
GNC dropped its estimate for full-year net income to $2.85 a share — which would equal 2013 net income. In May, the company had predicted full-year earnings of $3.05 to $3.10 a share.
Frederick said the updated outlook “looks achievable” for this year. He expects improvements to be realized in 2015.
Net income was $69.9 million in the April-June quarter, down 2.5 percent from $71.7 million a year earlier. On a per-share basis, GNC boosted net income to 77 cents, up from 73 cents, through share repurchases that allocated the profit among a smaller portion of outstanding stock.
Analysts on average expected net income of about 80 cents a share, according to data from Bloomberg.
Revenue was down to $675.2 million in the quarter, from $676.3 million a year earlier.
“We are taking the necessary steps to ensure the long-term growth and evolution of the GNC brand,” Fortunato said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
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.
- Ambridge’s PittMoss takes off with help from TV show, Mt. Lebanon native Cuban
- U.S. Steel to debut oil, gas pipeline connector
- Alcoa among 13 firms in $140B carbon-footprint pledge
- Israel’s Teva drops bid for Mylan, buys Allergan for $40.5B
- Muni bond funds stressed
- Pitt to start Energy Law and Policy Institute
- Plummeting natural gas prices slash revenue of Marcellus shale producers
- Federal safety regulators go into bulldog mode on how automakers handle recalls
- Wabtec moves to buy France-based transport company
- Invasive beetle costs Pittsburgh-area power companies plenty
- Bayer sets sights beyond aspirin