General Nutrition Centers reports 6.8% revenue increase in 2010

General Nutrition Centers reports 6.8% revenue increase in 2010

General Nutrition Centers, Inc. reported net income of $19.8 million in its financial results for the year and quarter ended December 31, 2010.

General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, reported its financial results for the year and quarter ended December 31, 2010.

For the fourth quarter of 2010, the Company reported net income of $19.8 million, a $7.1 million, or 56.3%, increase over net income of $12.7 million for the fourth quarter of 2009. Net income as a percentage of revenue was 4.6% in the fourth quarter of 2010, as compared to 3.1% in the fourth quarter of 2009.

For the fourth quarter of 2010, the Company reported consolidated revenue of $435.7 million, an increase of 7.9% over the consolidated revenue of $403.9 million for the fourth quarter of 2009. Revenue increased in each of the Company's segments: retail by 6.4%, franchise by 12.8%, and manufacturing/wholesale by 10.7%. Same store sales improved 5.8% in domestic company-owned stores (including e-commerce sales), representing the 22nd consecutive quarter of positive same store sales.

Earnings before interest, income taxes, depreciation, amortization, non-cash stock-based compensation, and strategic alternative costs, ("Adjusted EBITDA") for the fourth quarter of 2010 was $58.4 million, a $7.8 million, or 15.3%, increase over the Adjusted EBITDA of $50.6 million for the fourth quarter of 2009. Adjusted EBITDA was 13.4% as a percentage of revenue in the fourth quarter of 2010, compared to 12.5% in the fourth quarter of 2009.

The Company recognized $4.9 million of income tax expense during the fourth quarter of 2010. This represented 19.8% of pre-tax income and was affected by non-recurring income tax benefits related principally to an adjustment to the Company's valuation allowance.

For the fourth quarter of 2010, the Company generated net cash from operations of $44.2 million, incurred capital expenditures of approximately $11.6 million, and paid approximately $0.4 million in principal on outstanding debt. At December 31, 2010, the Company's cash balance was $150.6 million.

In the fourth quarter of 2010, the Company opened 46 net new domestic company-owned stores, six net new domestic franchise locations, 36 net new international franchise locations and 20 net new franchise store-within-a-store Rite Aid locations.

Joe Fortunato, Chief Executive Officer, said, "Our fourth quarter concluded another strong year for GNC. Our leadership in health and wellness, particularly in our core vitamin and sports categories, continues to position us to drive retail segment revenue and profit growth, provides opportunities for unique partnerships like Pepsi and PetSmart, and establishes a platform for long term expansion, both domestically and internationally."

For the year ended December 31, 2010, the Company reported net income of $98.2 million, a $28.6 million, or 41.0%, increase over net income of $69.6 million for the year ended December31, 2009. Net income as a percentage of revenue was 5.4% for the year ended December 31, 2010, compared to 4.1% for the year ended December 31, 2009.

For the year ended December 31, 2010, the Company reported consolidated revenue of $1,822.4 million, an increase of $115.4 million, or 6.8%, over the consolidated revenue of $1,707.0 million for the year ended December 31, 2009. Revenue increased in the Company's retail and franchise segments by 7.0% and 11.2%, respectively, and declined in the manufacturing/wholesale segment by 1.2%. For the year ended December31, 2010, same store sales improved 5.6% in domestic company-owned stores (including e-commerce sales).

Adjusted EBITDA was $268.2 million for the year ended December 31, 2010, a $37.5 million, or 16.3%, increase over the Adjusted EBITDA of $230.7 million for the year ended December 31, 2009. Adjusted EBITDA improved to 14.7% as a percentage of revenue for the year ended December 31, 2010, compared to 13.5% for the year ended December31, 2009.

For the year ended December 31, 2010, the Company generated net cash from operations of $141.7 million, incurred capital expenditures of $32.5 million and paid approximately $1.7 million in principal on outstanding debt.

For the year ended December 31, 2010, the Company opened 83 net new domestic Company-owned stores, two net new Company-owned stores in Canada, 130 net new international franchise locations and 134 net new franchise store-within-a-store Rite Aid locations, and closed six net domestic franchise locations.

General Nutrition Centers, Inc., headquartered in Pittsburgh, Pa., is a leading global specialty retailer of health and wellness products, including vitamins, minerals, and herbal supplements products, sports nutrition products and diet products. General Nutrition Centers, Inc. is an indirect wholly owned subsidiary of GNC Parent LLC, which was acquired by affiliates of Ares Management LLC and Ontario Teachers' Pension Plan Board through a merger on March 16, 2007.

As of December 31, 2010, GNC has more than 7,200 locations, of which more than 5,600 retail locations are in the United States (including 903 franchise and 2,003 Rite Aid franchise store-within-a-store locations) and franchise operations in 46 countries (including distribution centers where retail sales are made). The Company -- which is dedicated to helping consumers Live Well -- also offers products and product information online at GNC.com. GNC has scheduled a conference call and webcast to report its fourth quarter 2010 financial results on Friday, February 25, 2011 at 11:00 am EST. To listen to this call, dial 1-866-468-1032 inside the U.S. and 1-706-679-4448 outside the U.S. The conference identification number for all participants is 45800271. A webcast of the call will also be available through the "About GNC" link on www.gnc.com through March 25, 2011.

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