GNC Beats Economy with 4Q, FY08 Gains

General Nutrition Centers, Inc. (GNC) has posted positive gains for its fourth quarter (4Q) and fiscal year 2008 (FY08) ended Dec. 31, 2008.

For the quarter, consolidated revenues rose to $391.7 million, up 4.2 percent from the same quarter the year prior, and included increases in each of its business segments: retail inched up 2.2 percent; franchise was up 6.8 percent and manufacturing/wholesale jumped 13.8 percent. Also 4Q same store sales increased 2.5 percent in domestic company-owned stores (including internet sales) and 3.2 percent in Canadian company-owned stores (in local currency). Net income was $8.1 million compared to $7.3 million in 4Q07.

For FY08, consolidated revenue reached $1.657 billion, an increase of 6.7 percent over FY07 figures, with each segment—retail, franchise and manufacturing/wholesale—posting gains. Same store sales rose 2.7 percent in domestic company-owned stores (including internet sales) and 4.1 percent in Canadian company-owned stores (in local currency). Net income for the year shot to $54.8 million, a marked improvement from a loss of $34.3 million logged the previous year.
GNC reported it did not have any meaningful concentration of sales from any single product or product line. For FY08, sales increased in most product categories: vitamins, minerals and health supplements (VMHS); sports nutrition; and other wellness products. The only category suffering a slight year-over-year decline was diet products.

For its success in FY08, GNC credited strategic initiatives implemented a few years ago, focusing on improving parts of its core retail fundamentals, unifying its corporate and franchise operating systems, and implementing strategies to take advantage of key assets of its business, primarily the strength of the GNC brand.

The company further reported its domestic franchise business is now in line with GNC corporate operating standards, and key performance indicators of its domestic franchise stores are more in line with corporate store results. It also applauded the positive impact of its store-within-a-store concept that has resulted in more than 1,700 GNC locations inside Rite Aid stores.

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Sources: GNC Web site: SEC filings