The recent journal paper that claimed fish oil may increase the risk of prostate cancer is ‘one of the craziest articles I’ve read’, says GNC CEO Joe Fortunato, who says fish oil is ‘the most clinically tested, scientifically-based product we sell’.
In a call with investors yesterday, Fortunato said the fish oil category is performing very well, and he doesn’t think the category will be affected by the recent media coverage of the report by Brasky et al. in the Journal of the National Cancer Institute .
“In the past, we've never seen anything have any substantial impact,” he said. “The only thing, I think, going back 7, 8, 9 years, was Vitamin E, which have more of a permanent effect on sales.
“We're seeing some ups and down with fish oil. Overall, the category is performing very well, and we're going to get aggressive with a marketing campaign to go out to all consumers in our magazines and our catalogs and everything, making sure our doctors' opinions [are heard].
“People who take fish oil know the benefits of it, and we are going to make sure that we hit it off just in case anybody's getting any negative perception of anything in all of our marketing materials.”
The company has reported its second quarter performance, with revenue increasing in each of the company's segments: Retail increased by 9.6%, franchise by 6.8%, and manufacturing/wholesale by 11.1%.
The company’s online activity is also delivering results, with unique customers to GNC.com increasing by more than 1 million in Q2 2013, representing an increase of over 10%.
LuckyVitamin.com, GNC’s ‘price value expanded assortment space’, delivered a 12.9% comp this quarter, added the company.
“We had an exemplary execution of our transition to Member Pricing, our new products are delivering above expectations, and our web businesses are both growing the top and bottom line,” said Fortunato.
“Internationally, our commitment to increasing the penetration of GNC products – along with other efforts – continues as we seek to gain market share globally. And, we opened our first standalone store in China.”
‘We’re the largest’
Commenting on a question about GNC’s relationship with suppliers, and the early introduction of new products to market, Fortunato said: “If you go back in history, we've always had the advantage of suppliers coming to us because we're the largest. And obviously, if they want to get a boost in sales and get their products marketed across 4,000, 5,000 stores, the place to come is to us.
“Almost every vendor comes in here once a month. So we are tied, joined at the hip with them on everything they're doing, and we plan various things with them, whether it's exclusive, separate flavors, certain sizes, various things, they come to GNC before they go to other places.
“So that relationship continues, and I think it's stronger than it's ever been because their reliance on us gives us the leverage to go out and be able to cut deals and do things with them. And we insist on getting the supplies as fast as we can get it.”