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GNC ‘gaining traction’ despite profit plunge?

July 27, 2017

GNC officials on Thursday said the health and wellness retailer’s One New GNC marketing campaign is gaining traction, with transactions up 12.3 percent in the recently concluded second quarter as well as improvements in its online business and enrollment in its revamped loyalty program.

Other key metrics, though, show the Downtown retailer still has work to do.

In its quarterly financial disclosure Thursday morning, GNC reported net income of $15.7 million for the three months ending June 30, a nearly $50 million drop from last year’s $64 million result.

Revenues in North America were $543.4 million, down 4.8 percent from last year’s $570.9 million. Officials attributed the decline mostly to a $15.1 million revenue decrease linked to the company’s discontinuation of its Gold Card Member program.

Operating income also fell, going from $104.5 million for the second quarter of 2016 to $32.5 million this year, which the company said was due to changes in its pricing and loyalty program since the launch of its One New GNC marketing program.

Meanwhile, adjusted earnings per share of 41 cents compared with 79 cents a year ago but it still beat analysts’ estimates by one cent.

One New GNC, launched in late December, features simplified pricing and a cash-back loyalty program meant to improve the customer experience. Pittsburgh-based GNC is also reaching out more to customers through email and other formats, targeting their specific interests and needs, said interim CEO Robert Moran.

“It is still early days and we have work to do but it looks like we’re headed in the right direction,” Mr. Moran said, noting that GNC stores that had piloted the One New GNC strategy nearly a year ago continue to outperform other stores.

Mr. Moran also said he has agreed to serve as interim CEO for another six months as GNC continues its search for a permanent replacement. GNC has about 600 employees at its corporate headquarters Downtown.

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