While it is still early days for GNC Holdings Inc.’s omnichannel pricing initiative that created a uniform price on all products sold online and offline that rolled out, the nutritional supplements retailer’s executives say they’re encouraged by the progress they’ve seen so far, even as online and overall sales slide.
GNC, No. 187 in the Internet Retailer 2017 Top 500, generated $543.4 million in sales in the U.S. and Canada during the second quarter ended June 30, down 4.8% from $570.9 million during the same time last year. E-commerce accounted for 9.5% in sales in the second quarter, or $51.6 million, down 4.8% from $54.2 million during the same time last year, when online also accounted for 9.5% of total sales.
Interim CEO Robert Moran credited the pricing initiative, which GNC calls “One New GNC,” with driving a 12.3% year-over-year gain in overall transactions, compared with a 5.5% decline during the same period last year.
“We are attracting new customers to GNC, they are shopping more frequently and we’re converting more of them,” he told analysts on the call, according to a transcript from Seeking Alpha.
Moran, who was named interim CEO a year ago, has agreed to stay on as interim CEO for another six months, he said on the call. He also acknowledged that there is still work to do.
“Through Amazon and our digital marketing initiatives, we’re working to increase the likelihood that when the consumer surfs social media or searches the web for wellness solutions, they find GNC,” he said. “Pricing, loyalty and fixing the dotcom business requires significant investments. Those investments are starting to deliver returns, but we have work to do on the margin front.” Moran did not specify what those investments are going to be.
GNC began selling on Amazon.com Inc.’s (No. 1) online marketplace in January. Moran said he views Amazon as a potential asset to GNC’s growth plans.
“We believe Amazon is not a death knell for brick-and-mortars, but a great advertising platform that puts us right in the path of countless new customers,” he said. “Our dot-com business is improving, driven by our work to fix the assortment and get pricing right, and we’re pleased with the performance of the GNC Store on Amazon, which features our best products and is consistently priced with GNC.com and our retail locations.”
For the second quarter ended June 30, GNC reported:
- Net revenue of $641.0 million, down 4.8% from $673.2 million during the same time last year.
- Revenue in the U.S. and Canada of $543.4 million, down 4.8% from $570.9 million last year.
- Online sales in the U.S. and Canada of $51.6 million, down 4.8% from $54.2 million last year.
- Net income of $15.7 million compared with $64.0 million.
For the first six months of fiscal 2017, GNC reported:
- Net revenue of $1.286 billion, down 4.2% from $1.342 billion last year.
- Revenue in the U.S. and Canada of $1.096 billion, down 4.4% from $1.146 billion.
- Online sales in the U.S. and Canada of $103.1 million, down 5.2% from $108.8 million.
- Online accounted for 9.4% of sales in the U.S. and Canada, same as last year.
- Net income of $39.5 million compared with $114.8 million.