GNC CEO: ‘Amazon is not a death knell for brick-and-mortars, but a great advertising platform’

By Stephen Daniells contact

- Last updated on GMT

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Amazon is not a threat to brick-and-mortar retailers but an opportunity to be put in front of countless new consumers, says Bob Moran, CEO of GNC in a recent earnings call.

Earlier this year GNC launched an Amazon storefront, with performance exceeding company expectations, said the company.

“Because more than 50% of online products searches happen on Amazon, and of those, 37% buy that product in the store, we believe Amazon is not a death knell for brick-and-mortars, but a great advertising platform that puts us right in the path of countless new customers,” ​Moran told analysts after the company reported its second quarter results.

“Our dotcom business is improving driven by our work to fix the assortment and get pricing right, and we're pleased with the performance of the GNC Store on Amazon, which features our best products and is consistently priced with gnc.com and our retail locations.”

“Through Amazon and our digital marketing initiatives, we're working to increase the likelihood that when the consumer surfs social media or search the web for wellness solutions, they find GNC.”

E-commerce represents about 10% of the company’s US and Canada revenue.

One New GNC & loyalty

The company reported a 4.8% decrease in revenues in the US and Canada for the three months ended June 30, 2017, compared to Q2 in 2016, which was primarily associated with the discontinuation of its Gold Card Member Pricing program, said the company.

The company launched a new loyalty program called myGNC Rewards to replace its old Gold Card system at the end of 2016. As of June 30, 2017, 7.3 million members are enrolled in myGNC Rewards.

It also launched the One New GNC model at the end of December 2016,​ which created a single pricing structure across brick-and-mortar and dotcom channels.

Despite the decrease in revenues, the company did report that transaction growth continued to grow, and increased 12.3%, resulting in sequential quarterly improvement in same store sales.

“We made good progress in the second quarter, and our investments in pricing, loyalty and improving the customer experience continued to deliver positive results,” ​said Moran.

“For the second quarter in a row, we saw meaningful transaction growth, improvement in our dot.com business and increased enrollment in our loyalty programs. We believe this business is headed in the right direction, and we remain focused on execution and sales growth.”

International

Growth was also reported internationally, with revenues from China growing $3.6 million compared with the prior year quarter. Overall, revenues in the international segment increased $0.5 million, or 1.3%, to $43.6 million in the current quarter.

A transcript of the analysts call was posted on Seeking Alpha.

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