Vitamin and nutrition chain GNC Holdings has filed for Chapter 11 bankruptcy, with plans to close as many as 1,200 of its 5,200 U.S. stores as it searches for a buyer.
GNC — General Nutrition Centers — has struggled for years to shore up sales as it tried to pay down more than $900 million in debt. Then came the coronavirus pandemic, which forced it to shutter about 40 percent of its stores. The company reported a $200 million loss during the first quarter of this year, and last month it warned that some of its temporary store closures could become permanent.
Pandemic bankruptcies: A running list of retailers that have filed for Chapter 11
The Chapter 11 filing late Tuesday came days after GNC paid nearly $4 million in cash bonuses to top executives, including $2.2 million for CEO Kenneth Martindale. The chief financial officer received $795,000 while three other C-level executives were paid a combined $918,000, according to company documents filed Wednesday with the Securities and Exchange Commission.
The bonuses were issued on June 18, five days before the bankruptcy filing. Executives will have to return 25 percent of their after-tax bonuses if the company does not emerge from Chapter 11 protection within a year, documents show.
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The chain, founded in 1935 in Pittsburgh, is the sixth major U.S. retailer to file for bankruptcy protection during the pandemic, which has already led to thousands of permanent store closures and billions in lost sales across the industry.
Retailers furloughed nearly 1 million workers this week. But the industry’s troubles are just beginning.
In its bankruptcy filing, GNC said it had both assets and liabilities between $1 billion and $10 billion. Annual revenue fell 12 percent last year to $2.07 billion. GNC has 5,200 U.S. stores, as well as 1,600 locations inside Rite Aid pharmacies.
For years, GNC was the country’s go-to retailer for vitamins, protein powders and nutritional supplements. But by 2015, analysts said, it was rapidly losing market share to chains like Walmart, Target, CVS and Costco. The rise of e-commerce also chipped away at GNC’s dominance, as shoppers turned to Amazon and other discount websites for health and wellness products. (Jeff Bezos, the founder and chief executive of Amazon, owns The Washington Post.)
There were other missteps, too. The retailer, which was “best known for its muscle-building formulations,” was slow to pivot to natural health, nutrition and wellness products popular among baby boomers, according to David Silverman, a senior director at Fitch Ratings. Further adding to the pain: Many GNC stores are located in second- and third-tier malls, where traffic has dwindled for years.
‘It’s become a gold rush’: Inside the race to create smart shoes, custom razors and high-tech devices for the over-65 crowd
By 2016, both sales and profits had begun to decline. The company was also aggressively buying back shares of its stock using large swaths of borrowed money, which left it deeply indebted at the same time that profits fell off a cliff.
That debt cast a shadow over the company’s finances. Profits, which totaled $219 million in 2015, swung to a $286 million loss a year later. More recently, GNC was facing a $160 million in debt payment due in August, and another $450 million due next March.
“There are typically two reasons for bankruptcy filings — you either run out of cash or you’re unable to meet upcoming debt obligations, and this was the latter,” said Silverman, who downgraded the company’s credit rating in March. “GNC had liquidity, it was able to manage the covid crisis fairly well, but it was facing significant [debt] maturities that it was unable to meet."
Shares of the company’s stock tumbled nearly 25 percent on Wednesday to close at 61 cents per share, down from a peak of $60 in 2013. Shares are down nearly 80 percent so far this year.
FAQs
GNC will continue operating, but it will become a smaller company. It plans to close up to 20% of its 5,800 retail stores, which amounts to as many as 1,200 locations across the United States. GNC also sells its products in an additional 1,200 Rite Aid (RAD) stores.
What is the bankruptcy plan for GNC? ›
GNC Holdings Inc. won approval of its bankruptcy reorganization plan that centered on a $770 million sale to its largest shareholder, keeping open at least 1,400 of its nutrition supplement stores and saving thousands of jobs.
Why did GNC close their stores? ›
But GNC declining sales and a high debt load have made the company strapped for cash, and it's been difficult to make capital investments in its outdated stores. GNC tried to address this by focusing more of its efforts on the franchising side of its business, but it wasn't enough to right the ship.
What company has filed bankruptcy the most? ›
As of February 2024, the largest all-time bankruptcy in the United States remained Lehman Brothers. The New York-based investment bank had assets worth 691 billion U.S. dollars when it filed for bankruptcy on September 15, 2008.
Is GNC doing well? ›
In June 2020, GNC filed for Chapter 11 bankruptcy protection and indicated plans to close at least 800 stores. Effective on June 30, 2020, the stock was delisted from the New York Stock Exchange and shifted to the OTC Markets Group.
Is GNC owned by Walmart? ›
In September, a bankruptcy court judge approved the sale of GNC Holdings Inc. to Harbin Pharmaceutical Group Co. for $770 million when no higher bids for the financially troubled company were received. GNC had already shuttered 1,200 stores.
How is GNC doing financially? ›
For the three months ended 31 March 2020, GNC Holdings Inc revenues decreased 16% to $472.6M. Net loss applicable to common stockholders increased from $19M to $205.3M.
What company owns GNC? ›
Harbin Pharmaceutical Group Co., Ltd. The company owns both Renmintongtai (人民同泰), a drugstore chain and medical wholesaler for the domestic market, and GNC, a U.S.-based international retailer of supplements and wellness products.
Who is GNC biggest competitor? ›
GNC main competitors are Vitamin World, Abercrombie & Fitch Co, and Oakley.
Is GNC a trusted brand? ›
Being the most trusted brand in fitness and wellbeing supplements do not come easy. GNC fulfills its commitment of excellence to you by ensuring that only products of the highest quality reach you, the consumer.
Health Care Costs Number One Cause of Bankruptcy for American Families | ABI.
What business is going out of business in 2024? ›
LL Flooring, Formerly Lumber Liquidators, Is Going Out of Business and Closing All of Its Stores. Sept. 6, 2024, at 11:26 a.m.
What state files the most bankruptcies? ›
Delaware ranks as the state with the highest number of business bankruptcy filings (1,912 per 100,000 businesses), while South Dakota experienced the fewest filings (39 per 100,000 businesses). Alabama has the highest rate of personal bankruptcies, with 349 filings per 100,000 residents.
What is the future of GNC? ›
Future of GNC and Healthcare
“Next on our radar is a weight-loss virtual healthcare solution that we know is in high demand for consumers. The most important thing for us is to tap into the voice of our consumers and be mindful of where they want us to take GNC Health next.”
Is GNC a good franchise to own? ›
We have been the industry standard of health and wellness solutions since 1935, partnering with our franchise operators to help them achieve their dreams since 1988. For over two decades, Entrepreneur magazine has consistently ranked us the #1 Vitamin Retail Franchise.
What is GNC famous for? ›
GNC sets the standard in the nutritional supplement industry by demanding truth in labeling, ingredient safety and product potency, all while remaining on the cutting-edge of nutritional science.
Bankrupt GNC to close nearly 1,400 stores, pay ...CBS Newshttps://www.cbsnews.com ›
Bankrupt GNC to close nearly 1,400 stores, pay CEO a $2 million bonus ... GNC, the 85-year old seller of vitamins and dietary supplements, filed for bankruptcy ...
GNC filed for Chapter 11 bankruptcy protection late Tuesday night. It will close between 800 and 1,200 stores as part of the restructuring process. In a letter ...
GNC — General Nutrition Centers — has struggled for years to shore up sales as it tried to pay down more than $900 million in debt. Then came the coronavirus...
Vitamin and nutrition chain GNC Holdings has filed for Chapter 11 bankruptcy, with plans to close as many as 1,200 of its 5,200 U.S. stores as it searches for a buyer.
How much debt is GNC in? ›
In a recent presentation for investors, GNC reported having $96 million in cash and $905 million in total debt.
What is bankruptcy seasoning? ›
A two-year waiting period from the discharge or dismissal date is permitted if extenuating circ*mstances can be explained and documented. Chapter 13 Bankruptcy. A two-year seasoning period is required from the Chapter 13 discharge date. You cannot obtain a conventional mortgage while you are in a Chapter 13 bankruptcy.
GNC Holdings, Inc. Identification No.) * On June 30, 2020, the Company's common stock was suspended from trading on the New York Stock Exchange (the “NYSE”) because of the Debtors' filing of the Chapter 11 Cases.
