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GNC boss: Vitamins and death headlines had 'no impact’ on sales

By Elaine Watson , 24-Oct-2011
Last updated on 24-Oct-2011 at 15:08 GMT

Recent ‘your multi-vitamin may be killing you’ headlines have had “no impact” on sales at supplements giant GNC, bosses have revealed.

Speaking on a conference call with analysts on Friday about the firm’s third quarter results, chief executive Joe Fortunato said industry-bashing headlines prompted by recent scientific papers on multivitamins and vitamin E had not dented sales.

He added: “We’ve been going through this for years, the media just isn’t a big supporter of the dietary supplements industry, it likes sensationalism. But those two studies were really poorly conducted.

"But we’ve literally seen no impact on our business. I think we had a one day blip and it bounced right back.”

Double-digit growth

GNC, which notched up double-digit growth in all of its divisions in the quarter, posted a 35% rise in adjusted profit to $94.7m in the three months to September 30 and a 15.5% rise in revenues to $538m.

Retail revenues were up 13.9% to $385.2m, driven primarily by a 10.3% rise in like-for-like sales in US stores and a 38% rise in e-commerce sales via GNC.com.

Franchise sales were up 18.2% to $90.9m while manufacturing/wholesale revenues were up 22.5% to $61.9m driven by a 21.3% increase in third party manufacturing contract sales, plus strong sales to Rite Aid and Sam's Club stores.

LuckyVitamin.com acquisition

GNC, which recently acquired discount supplement retailer LuckyVitamin.com, saw the deal as "the foundation for our entry into the broader assortment price competitive online marketplace”, said Fortunato.

We expect the supply chain transition to be in place by the end of the year allowing us to realize margin benefits from transportation and distribution.

“We also anticipate achieving enhanced buying power and efficiencies in merchandising and marketing and see potential for further margin rate expansion through the introduction of LuckyVitamin proprietary lines.”

Raised guidance

GNC, which has recently begun trading on the New York Stock Exchange, has more than 5,800 stores in the US and 1,700+ overseas selling a range of products under GNC proprietary brands including Mega Men, Ultra Mega, GNC Wellbeing, Pro Performance, and Longevity Factors, and third party brands.

The Pittsburgh-based firm, which also has a manufacturing and wholesale arm, reported consolidated sales of $1.56bn in the first nine months of 2011, up 12.7% compared with the first nine months of 2010.

Full-year 2011 sales estimates were raised to approximately $2.05bn, a 12.5% increase over 2010 revenues – compared with earlier estimates of a 9-10% increase, thanks to higher the expected same-store-sales in the US.

Meanwhile, full-year 2011 adjusted earnings were likely to be $334m, up 26% on 2010, compared with earlier estimates of an 18-19% rise.

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