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GNC third quarter 2017 marks turning point

GNC's new CEO plans to build on the chain's turnaround strategy as company-owned stores hit positive sales territory for the first time in almost two years. Here's how the company did in the third quarter and how it hopes to grow.

GNC’s new CEO believes the right combination of old and new will drive success for the supplement retailer.

During his first earnings call at the helm, Ken Martindale, who joined the company in September, briefly outlined his vision for building on the One New GNC strategy launched by interim leadership last year.

Key to the vision is building on GNC’s legacy as an innovator, he said. This includes identifying opportunities for new products and services the retailer will roll out early next year and into mid-2018 that he said will help differentiate GNC from other supplement sellers. Plan details were not released.

Meanwhile, in the last year, the company took margin reductions to compete better on price and remains committed to its revised pricing strategy.

Martindale also sees opportunity to drive GNC’s branded products, as they are “running substantially behind where we were several years ago.”

New 1-to-1 selling and marketing driven by technology and database development also continues to be a focus for the company.   

“This year, the team laid a strong foundation for us to build upon,” Martindale said via press release. “Going forward, we will continue to focus on growing sales and on giving customers innovative, highly differentiated products and experiences."

The third quarter 2017 marked the first time that same-store sales grew for company-owned stores in almost two years.

Highlights for the third quarter 2017 include:

  • Positive same-store sale growth of 1.3 percent for company-owned stores. In domestic franchise locations, same-store sales decreased 1.7 percent.
  • Transactions up 12.4 percent.
  • Reported consolidated revenue of $609.5 million in the third quarter 2017, compared with consolidated revenue of $628 million in the third quarter 2016.
  • Reported third quarter diluted EPS of 31 cents and, on an adjusted basis, EPS of 32 cents.
  • Supply chain optimization drove approximately $40 million reduction to inventory at Sept. 30, 2017, compared with June 30, 2017.

Additionally, GNC noted its $1.7 million loss in its $7.1 million sale of LuckyVitamin. Excluding this loss on sale and $19.4 million of long-lived asset impairments recorded in the second quarter of 2017, Lucky Vitamin revenue and operating loss was $66.2 million and $0.1 million in the nine months ended Sept. 30, 2017, respectively, of which $20.8 million and $0.1 million relates to the third quarter of 2017, GNC reported via press release.

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