Pittsburgh, PA—GNC Holdings reported its second quarter 2019 results–including plans to close up to 900 stores. Q2 saw an adjusted net income of $18.3 million, an 8.3% increase compared with the second quarter 2018.
Key updates include:
- U.S. and Canada achieved second consecutive quarter year-over-year operating income growth.
- GNC brand mix increased to 53% from 51% in the second quarter of 2018.
- Reduced debt by $34 million during the quarter
- Domestic same store sales decreased 4.6%, compared with the second quarter of 2018
- International revenue, excluding China, increased 1.3%
- Adjusted EBITDA of $61.6 million, improved 125 bps as a percentage of revenue compared with the second quarter of 2018.
The decrease in revenue, according to a press release, was primarily due to the transfer of the Nutra manufacturing and China businesses to the newly formed joint ventures, negative same-store sales and the closure of company-owned stores under the company’s store portfolio optimization strategy.
Up to 900 store closures planned
In GNC’s Q2 2019 Earnings Conference Call, Ken Martindale, GNC’s chairman and CEO, noted that negative trends in traffic at mall stores–which make up 28% of the company’s existing store base–has accelerated during the past few quarters. He added, “We remain on pace to achieve our 2019 and 2020 cost savings targets. And the results from our store optimization effort continue to meet our expectations. As a result of the current mall traffic trends, it’s likely that we will end up closer to the top end of our original optimization estimate of 700 to 900 store closures.”
Martindale also said in the press release: “During the second quarter of 2019, although we experienced some softness in our sales, we delivered meaningful growth in our operating income margins consistent with our long-term strategy. The quarter represented solid progress towards our store optimization and cost savings initiatives. Recently, Ryan Ostrom joined us as Chief Brand Officer, bringing extensive marketing and digital experience with industry-leading brands. We are confident he will expand our omni-channel capabilities, and look forward to his leadership to grow our brand across the globe.”
This article has been updated with additional details from GNC’s Q2 2019 Earnings Conference Call on July 22, 2019 08:30 AM ET.