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GNC strategy makeover to launch by end of year

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Technology, pricing and customer service key to 'The New GNC.'

Saying he "found a badly broken business model in need of change," GNC’s interim CEO Robert F. Moran announced the launch of "The New GNC" Thursday during the supplement retailer’s third-quarter earnings call.

The New York Stock Exchange-traded company plans to focus on improvements to technology, customer acquisition and service, the new product pipeline and pricing. The effort also includes new free and paid loyalty programs. "The New GNC" will launch by the end of 2016, with $8 million to $10 million dedicated to training, marketing and store signage.


A $15 million investment in new registers, tablets and wi-fi in all company-owned stores will improve associate and customer experience at checkout, drive loyalty program signups and give employees easy access to customer history, said Moran and Chief Financial Officer Tricia Toliver. The company also will launch a new and improve the support system.


GNC will move to a single-tier pricing model that focuses on promotional everyday low pricing. The changes have affected margins, Toliver said, and will continue to do so, but company leaders expect customer traffic growth to help offset the impacts.


In a seven-market pilot testing free loyalty and pricing changes, Moran reported 250,000 loyalty opt-ins, 35 percent of which were not Gold Card customers. The paid program, expected later next year, will include customized lifestyle offerings such as nutrition and exercise recommendations, new product sampling, survey inclusion and Birchbox-style subscription boxes.

Additionally, the announced strategy includes focusing on the one-to-one customer experience through solutions-based selling that quickly identifies customer needs and advances brand story. Reducing out-of-stocks is key, too. 


Earning highlights compared with third quarter 2015 include:

  • Net income of $32.4 million compared with $45.8 million.
  • Consolidated revenue of $628 million, a decrease of 8.1 percent compared with $683.4 million.
  • U.S. and Canada reporting segment decreased 7 percent, with the international segment falling 18.7 percent.
  • GNC’s manufacturing and wholesale business was down 0.5 percent.
  • Same-store sales decreased 8.5 percent, with GNC’s franchise locations dropping 8.9 percent.
  • Diluted earnings per share ("EPS") was 47 cents, compared with 54 cents in the third quarter of 2015. Adjusted diluted EPS was 59 cents, compared with adjusted diluted EPS of 75 cents in 2015.

Moran, an independent director of GNC and former chairman and chief executive officer of PetSmart, took the helm of GNC in the third quarter as interim CEO.

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