On Friday the company announced a hiring freeze, a headcount reduction, and the freezing of management bonuses. The company did not announce a specific number for the layoffs.
Market shifts put company in difficult position
Sales of many categories of dietary supplements, particularly immune health products, have increased markedly during the current disease crisis. Pre workout products are one subset of the market that reportedly has suffered, as almost all gyms are closed and consumers have turned to other priorities. Sports nutrition products have been one of GNC’s hallmarks over the years. In addition, consumers who are seeking to minimize their potential infection risks have been making online purchases of many goods normally purchased in person, such as groceries.
These shifts seem to have caught GNC flat footed. The company does have an online presence but still operates a huge lineup of retail outlets from which it derives the lion’s share of its revenue. Some of these are located in traditional shopping malls, where foot traffic was already down before the disease crisis hit.
The company has announced the following specific measures:
- A reduction in operating expenses including a hiring freeze, eliminating corporate merit increases and other cost saving initiatives
- A decrease in the number of field leadership roles as the company continues to optimize the store fleet
- Reducing costs across the business with the exception of digital capabilities
- Temporary furloughs for a significant portion of our store and corporate associates across all levels of the organization.
GNC said furloughed workers will have paid health insurance coverage through the end of April.
“These decisions were extremely difficult but necessary as we navigate the challenges ahead of us. We are focused on our people and our business, and because of that we had to take decisive action,” said Ken Martindale, GNC’s chairman and chief executive officer. “We expect these measures will give us the footing to continue to provide solutions to help others live well.”
Long, painful slide
GNC has been on a downward slide side since its halcyon days of around 2010-2013. Revenue has been contracting for a number of years in a row. The company’s high point for trailing 12 months revenue was in late 2015 at about $2.7 billion. That figure fell to slightly more than $2 billion at the end of 2019. The last time GNC posted year over year quarterly revenue growth was in late September of 2015. The company’s stock once traded at more than $60 a share; a share of GNC stock can be had for 42 cents today.