GNC names CEO as parent's profit declines
Slightly more than a year after a management shakeup at General Nutrition Cos. Inc., the company has named a new chief executive officer.
Mike Meyers, who had been president and chief operating officer at GNC, replaces Greg Horn as CEO, who will retain his position as chairman of the U.S. executive board of Royal Numico NV, the Dutch conglomerate that bought GNC just over two years ago.
The unannounced change came Wednesday, the same day that Royal Numico reported net income for the third quarter which was worse than expected. Last month, Royal Numico said it did not expect to make profit this year. Royal Numico share's had declined by 46 percent this year before Wednesday's report.
Wednesday, Royal Numico said it doesn't expect 2001 profit before goodwill to be higher than last year's $339 million after third-quarter net income fell 21 percent to $37 million. Sales during the quarter rose 1 percent to $957 million, crimped by a 2 percent decline in sales in the United States. Sales of vitamins and herbs dropped 13 percent to $308 million.
In the immediate aftermath of the Sept. 11 attacks in New York and Washington, same store sales at GNC fell as much as 9 percent. In the third quarter, however, GNC sales rose 1.7 percent, Meyers said.
"Retail has been poor, but we are not doing that bad," Meyers said. "It is good to see year-over-year growth."
Meyers characterized his promotion as "a continuation of the restructuring that Numico is undertaking."
Numico entered the U.S. market with its $2.5 million acquisition of GNC in 1999 and added Florida-based Rexall Sundown last year in a $1.8 billion deal. The company now relies on the United States for 60 percent of total sales.
Numico restructured its U.S. activities this year by grouping them into GNC, Rexall Sundown. In addition to naming Meyers as CEO of GNC, a new CEO for Rexall Sundown is expected soon after Damon DeSantis stepped down last month.
As chief operating officer, a position he was named to earlier this year, Meyers said he was already running the company in many ways. Horn, whose focus is on all of Royal Numico's U.S. subsidiaries, lives in Florida.
Vitamins and food supplements are not large ticket items, and Meyers hopes their relatively low cost will enable GNC to keep up sales growth, even as the economy slumps.
GNC has been working to put some problems behind it.
Two weeks ago, the company reached a settlement with 75 percent of the franchisees who had filed a class-action lawsuit against the company. The lawsuit accused GNC of undermining franchisees with its pricing schemes.
Throughout this year, GNC has taken a number of steps to patch up its relations with disgruntled franchisees - everything from better wholesale prices to new health insurance plans.
Even so, GNC still faces several lawsuits from individual franchisees.
Yesterday, GNC announced an expansion of the products it sells by opening a new concept called "Smoothie Bars."
The healthy frozen fruit drinks at the new bars come in 28 flavors, and GNC plans to open the bars in some 300 stores across the country. In Pittsburgh, there is already a Smoothie bar at GNC's 5th Avenue store. Another will open Saturday at the Waterfront Mall in Homestead.
The bars, Meyers thinks, may lure people into GNC stores who otherwise would not go there. "Smoothie bars increased foot traffic in stores and created increases in supplement sales."
Meyers, 40, is a 20-year veteran of GNC. He first worked for the company in Clearwater, Fla., before moving through several local and regional management posts.
Ten years ago, he came to the company's headquarters in Pittsburgh to head GNC's Northeast division. He was named chief operating officer earlier this year.
Last year, when Horn was named GNC's chief executive, GNC also replaced several longstanding high-ranking executives.