Offering the same price across all channels and fewer promotions hurt online sales in the first quarter for health products retailer GNC Holdings Inc.
GNC, No. 187 in the just-released Internet Retailer 2017 Top 1000, reported online accounted for 9.3% of revenue in the U.S. and Canada during the first quarter of 2017 ended March 31. That amounts to $51.4 million in online sales, down 3.7% from $53.4 million a year ago, when e-commerce also accounted for 9.3% of sales in the region.
Sales through its flagship GNC.com site declined by 7.2% year over year, but the company did not specify an exact figure. GNC also sells via Amazon.com Inc.’s marketplace.
GNC attributed its online and total sales declines to the implementation of its One New GNC omnichannel pricing campaign, which offers shoppers the same price whether they buy online or in stores. Previously, there had been different prices on the same products that were sold in store and online. The pricing policy also means fewer product discounts, and that’s causing what GNC executives hope will be a short-term sales loss that will lead to longer-term gains.
“GNC.com sales decreased in the current quarter compared with the prior-year quarter due, in part, to better aligning web promotions to stores, partially offset by sales through third-party websites,” the company wrote in its earnings release.
The decision to sell GNC products on Amazon (No. 1 in the Top 1000) helped make up the decline in online sales through GNC.com. GNC began selling on Amazon in January, and executives say they’re encouraged by early returns.
“(Amazon) is contributing to closing the gap in the declines in GNC.com,” chief financial officer Tricia Tolivar told analysts on the retailer’s Q1 earnings call, according to a transcript from Seeking Alpha. Sales growth via Amazon should help GNC return to positive comparable online sales in the second half of the year, Tolivar said.
Despite across-the-board declines in revenue, the number of transactions in company-owned stores increased 9.3%, “the strongest growth this company has seen in years,” interim CEO Bob Moran said.
While transactions in the company’s stores are growing, GNC now has fewer of those locations. The retailer finished the first quarter with 3,499 company-owned stores in the U.S. and Canada, down 2.1% from 3,573 in the year-ago period.
For the first quarter ended March 31, GNC reported:
- Net revenue of $644.8 million, down 3.6% from $668.9 million in Q1 2016.
- Revenue in the U.S. and Canada of $552.9 million, down 3.8% from $574.6 million.
- A year-over-year same-store sales decline of 3.9% compared with a 2.3% decline.
- Net income of $23.9 million, down 53.0% from $50.8 million.