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Sales challenges continue at GNC

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Trends are positive but sales are still down as GNC continues its attempt to reframe itself with customers and investors. Here's how the numbers shaped up in the first quarter of this year.

GNC sales continue to fall, but increased transaction numbers and customer visits has leadership and Wall Street reacting positively as the company reported its first-quarter 2017 earnings April 18.

Interim CEO Bob Moran touted 9.3 percent transaction growth, even as the average transaction amount fell 12.1 percent. Meanwhile, the vitamin and supplement store chain reported that its new loyalty program has attracted customers for an average of 1.5 visits in the first quarter. The former Gold Card program members averaged four visits a year. If visits continue at this pace, loyal customers will visit six times this year.

"Getting customers in store is the first critical step, and that is what we are doing," Moran said.

Building out recommended regimens and staff training are next key efforts to build sales.

The stock spiked 32.6 percent to $9.60 a share early Tuesday.

Under the interim CEO, the company launched the One New GNC effort to revitalize the vitamin store that some had seen as overpriced and confusing with its membership and many pricing levels.

"The One New GNC represents a fundamental change in our business model, and in the first quarter of 2017, we saw those transformational changes begin to bear fruit," Moran said via press release. "We're encouraged by positive trends in transactions, and by the early performance of our new loyalty programs, which are demonstrating their power to increase consumer frequency and spending."

One New GNC highlights include:

  • The enrollment of 5 million members in the myGNC Rewards loyalty program as of March 31. About 78,000 joined as PRO Access members. GNC plans to us CRM to better reach these customers.
  • In the third quarter of 2016, prices at were aligned with stores to eliminate any competition between selling channels, including franchisees.
  • Early in the first quarter of 2017, the company launched a GNC storefront on Amazon. Sales are exceeding initial expectations.
  • The company also has increased its online marketing program, reporting pleasure with the traffic lift that resulted.

To better reflect product sales, GNC released revised same-store sales figures. Previous reports included Gold Card membership sales. This chart shows recent quarterly results.

Key first-quarter results include:

  • Consolidated revenue came in at $644.8 million in the first quarter of 2017, compared with consolidated revenue of $668.9 million for the first quarter of 2016.
  • Net income of $23.9 million was reported, compared with $50.8 million in the prior year's first quarter.
  • Same-store sales fell 3.9 percent in domestic company-owned stores (including sales). In domestic franchise locations, same-store sales decreased 4.6 percent. sales decreased 7.2 percent, compared with a 49 percent drop in the fourth quarter.
  • The company ended the quarter with 8,983 store locations globally versus 9,064 stores a year ago.
  • Reported first quarter diluted EPS was 35 cents, and on an adjusted basis, EPS was 37 cents.
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