What's good for the GNC customer is great for the company's bottom line. GNC Holdings operates the world's leading nutritional-supplements retail chain devoted to items such as vitamins, supplements, minerals, and dietary products. The firm manufactures private-label products for Rite Aid, Sam's Club, and PetSmart and drugstore.com. Altogether, GNC boasts more than 9,000 stores, consisting of some 3,500 company-owned stores in the US, Canada, and Puerto Rico, and 3,130 franchised stores in about 50 countries, and 2,360 store-within-a-store sites in Rite Aid locations. Fast-growing GNC Holdings was founded as a health food store in Pittsburgh in 1935.
While sales at company-owned and franchised GNC stores account for 90% of sales, GNC also operates a growing manufacturing/wholesale business.
The company's manufacturing plants are located in Greenville and Anderson, South Carolina, where it makes products for its own stores and for other retailers, including its longtime partner Rite Aid, as well as Sam's Club and PetSmart (GNC produces a line of GNC-branded pet supplements for the pet supplies retailer). GNC supplies Rite Aid with vitamins under the PharmAssure brand, as well as a number of Rite Aid private-label supplements.
GNC rings up 94% of its sales in the US. Currently, GNC does business in about 50 other countries. Mexico, South Korea, and Chile are home to nearly half of the GNC's approximately 2,085 international franchise stores. GNC has more than 188 company-owned stores in Canada.
Sales and Marketing
GNC sells through company-owned stores, franchised stores, and online.
Fiscal 2016 (ended December) was a difficult year for GNC. Revenue fell 5% to $2.5 billion, as product sales fell across a number of product categories. The poorest performing product categories were vitamin, food/drink, protein, and weight management, while health and beauty and performance supplements improved. GNC's online sales dropped notably due to a reduction in web promotions. US and International revenues were both down, while manufacturing/wholesale was flat.
The company swung hard into net loss, losing $286.3 million which included $476.6 million in long-lived asset impairments. Cash provided by operations of $208.2 million was 40% lower than the previous year, weighed on by the company's poor performance and high inventory purchases.
The retailer has worked hard to shed its "muscle head" image by redesigning all of its US stores to attract more women and seniors and shake off negative brand associations. The company signaled a clean break from its previous image when it shut all its owned stores on 28th December 2016, launching its new model the following day.
GNC made its pricing consistent across physical and online sales, introduced a new loyalty program (scrapping the Gold Card in the process), and upgraded its point-of-sale terminals. Tablets were issues to sales associates to better prepare them for questions and product recommendations. It also reduced prices across roughly half its range.
To support the campaign, GNC undertook the largest marketing campaign in its history, leveraging social media, radio, print ads, and digital. The company's attempt to put forwards a Super Bowl ad failed as some of its products are banned substances under NFL rules.