GNC said to be close to resolving credit burden

By Hank Schultz contact

- Last updated on GMT

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Getty Images

Related tags: Supplements, Market

Supplement retailing giant GNC is said to be close to restructuring its debt, something which has weighed on its financial condition as sales continue to weaken.

“We are in the process of reviewing a range of refinancing options to further optimize our capital structure and enhance our financial flexibility. This work builds on the progress we made over the past year, as we reduced our indebtedness by approximately $400 million,” ​said CFO Tricia Tolivar in a recent Q3 2019 earnings call with analysts.  A transcript of the call is available on the site seekingalpha.com​.

Tolivar said GNC is exploring a wide range of refinancing options to help the company weather its restructuring storm. Even with the progress made on the company’s debt, GNC is still carrying obligations of $858.6 million on its books.

“We are working with an independent committee of the Board, supported by independent financial and legal advisers as we conduct a review and have had a series of discussions with financing sources in the United States and Asia.  . . . And while there can be no assurances, we are on track to complete our process in the fourth quarter,” ​she said.

Earnings details

GNC reported second quarter revenues of $499.1 million, compared to $580.2 million for the same quarter a year previous.  For the first three quarters of the company’s fiscal 2019, total revenues were $1.68 billion, a decrease of $208 million from the first three quarters of fiscal 2018, when the company brought in $1.8 billion.

Some of this drop was attributed to transferring of its manufacturing arm to a joint venture with International Vitamin Corp. And the company has continued its program of closing underperforming corporate own stores in shopping malls.  The company is on pace to close 300 stores in 2019, with a planned closure of 900 stores by the end of 2021.

This is the first quarter in which GNC has reported top line revenues below $500 million since 2010. The company’s top line year end revenue peaked at about $2.68 billion in 2015 and has been falling steadily since then. 

GNC’s share price, at more than $2.80 a share, has more than doubled from the low the stock hit in July at $1.37 a share.  But it’s a far cry from the company’s heyday almost six years ago, when the company’s shares briefly traded at more than $60 a pop.

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