GNC Holdings Inc (GNC) Investors Run for the Hills as Earnings Disappoint


Investors weren’t impressed with GNC Holdings Inc (NYSE:GNC) latest earnings report, sending shares 12% lower Thursday. The nutritional supplement maker swung to a net loss of $433.4 million, or $6.35 per share, after reporting a profit in the same period a year earlier. Excluding certain items, earnings came in at 7 cents per share, which was still well below consensus estimates of 36 cents.

Bob Moran, Interim Chief Executive Officer, commented, GNC’s performance in the fourth quarter, while well below expectations, does not reflect the fundamental changes we have made to the business model. Customers are responding well to the new model, which launched in late December and includes simplified, more competitive pricing and new loyalty programs. 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.”

On the ratings front, GNC has been the subject of a number of recent research reports. In a report issued on December 23, Piper Jaffray analyst Sean Naughton maintained a Sell rating on GNC. On December 13, Barclays’ Karen Short downgraded the stock to Sell and has a price target of $11.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Sean Naughton and Karen Short have a yearly average return of 6.3% and 3.7% respectively. Naughton has a success rate of 55% and is ranked #870 out of 4460 analysts, while Short has a success rate of 53% and is ranked #1453.

GNC Holdings, Inc. is a global retailer of health, wellness and performance products, including vitamins, minerals and herbal supplements products, sports nutrition products and diet products. The company operates through following segments: Retail, Franchise, and Manufacturing & Wholesale. The Retail segment sells products to customers through company owned stores in the United States, Canada, Puerto Rico and Ireland through its website, GNC.com and LuckyVitamin.com. The Franchise segment is comprised of domestic and international franchise operations; and product sales to franchisees, royalties on franchise retail sales and franchise fees. The Manufacturing & Wholesale segment is comprised of manufacturing operations in South Carolina and the wholesale sales business. This segment supplies to Retail and Franchise segments, as well as various third parties with finished products.