Last year, over 9,300 stores closed their doors. This year, that number may be over 15,000, according to Deborah Weinswig, CEO and founder of retail research firm Coresight Research. Weinswig said those store closures are largely due to the coronavirus pandemic.
GNC announced plans last July to close up to 900 stores, about half of which are located inside malls.
Last week the company notified the Securities and Exchange Commission (SEC) that it does not expect to have enough revenue to cover its nearly $700 million in debt.
The health and wellness retailer requested additional time to finalize its annual report and financial statements. According to their filing, they are preparing statements “on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.”
Joshua Schall, a consumer packaged goods strategist and owner of J. Schall Consulting, said GNC’s mall locations should have been the first to go — even before the coronavirus.
“I've been bearish on malls for years, but this pandemic is going to create long-term issues with consumer confidence to shop in crowded places. Through the first week of March, recent data is showing that mall traffic is down 30% YoY.”
That number is only expected to increase, as more and more states order enclosed shopping malls to close to slow the spread of coronavirus.
“In my opinion, GNC's expansion of ‘retail partnerships’ means they no longer need the high traffic, high cost mall locations in their portfolio...especially in this extreme need to cut costs,” added Schall.
GNC started selling its products at retailers such as Dick’s Sporting Goods. GNC’s Chief Financial Officer Tricia Tolivar told Bloomberg that it is expanding through its existing partnership with Harbin, which includes international franchisees and new e-commerce platforms. They are also set to announce more partnerships this year.
Last year the health and wellness retailer introduced a personalized vitamin pack subscription service and followed up with a new ad campaign that essentially renamed their sales associates ‘wellness coaches.’
Earlier this year, GNC announced a new multi-year partnership deal with TV personality and training Guru Jay Glazer.
GNC has been trying to get back on track for years. In 2018, the company avoided a default after refinancing its loans and receiving a $300 million investment from Harbin. China-based Harbin is now GNC’s single largest shareholder.
The outbreak of coronavirus layered on to existing financial woes only complicates matters, leaving some to speculate about a possible bankruptcy filing.