Tough times for GNC

GNC Holdings Inc. on Thursday posted dismal results for its fourth quarter and said it was suspending its quarterly dividend in a move to reduce its debt.



The nutritional supplements retailer posted a loss of $433.4 million, or $6.35 a share, compared to a profit of $42.9 million in the year-ago period. Excluding certain items, earnings came in at 7 cents per share, well below the 36 cents that Wall Street analysts expected.



The loss reflected a 12% decrease in domestic company-owned same-store sales and also expenses related to the new “One New GNC” rebranding initiative.



In December, GNC rolled out a single-tiered pricing strategy across its U.S. stores, closing all locations one day to implement the changes. It also launched new loyalty programs.



“GNC's performance in the fourth quarter, while well below expectations, does not reflect the fundamental changes we have made to the business model,” said Bob Moran, interim CEO. “Customers are responding well to the new model, which launched in late December and includes simplified, more competitive pricing and new loyalty programs.



GNC’s revenue in the quarter fell 9% to $569.9 million.



The retailer said it was suspending its 20 cent quarterly dividend to free up $55 million a year to pay down its debt.



“The company remains focused on creating long-term shareholder value by returning GNC to sustainable growth, strengthening its balance sheet and restoring financial flexibility and strong liquidity,” GNC stated.



For the year, the company reported a loss of $286.3 million. Revenue was reported as $2.54 billion, down from $2.68 billion last year.



“We are aware that the changes we have made have short-term financial impacts and while it is still in the early days, and it will take time for our investments to bear fruit, we are encouraged by the trends we're seeing and believe the One New GNC can help the company return to profitable growth,” Moran stated.