Yahoo Finance How Did GNC Holdings’ Segments Fare in 1Q16?
How Did GNC Holdings' 1Q16 Revenue and Earnings Turn Out?
Total sales
GNC Holdings (GNC) reported 1Q16 revenue of $668.9 million, a fall of 1.8% compared to the corresponding period last year.
Retail
GNC’s retail segment reported revenue of $496.0 million, a fall of 1.5% compared to 1Q15 due to the sale of discount supplements. GNC saw negative same-store sales due to negative trends in the vitamin category, deep discounts related to excess vitamin inventory nearing expiration, the timing of the Easter holiday, and unfavorable January weather. Operating income fell to $80.6 million from $92.4 million. Operating income also fell due to a lower domestic retail product margin rate with high discounts, a rise in advertising expenses, and negative same-store sales.
Franchise
In 1Q16, the franchise segment reported revenue of $115.5 million, a fall of 5.6% compared to the corresponding period last year. Domestic franchise revenue fell by 4.8%, which was partly due to nonparticipation in all corporate promotions. International franchise revenue also fell due to low wholesale sales and challenges with royalties in Turkey and Australia. There was a rise in the company’s China business, but operating income fell to $36.0 million from $39.7 million in 1Q15.
The manufacturing/wholesale segment reported revenue of $120.5 million, a fall of 1.1% compared to 1Q15. Operating income fell from $21.1 million to $19.3 million.
Performance of GNC Holdings’ competitors
Walgreens Boots Alliance (WBA) reported fiscal 2Q16 net sales of $30,184.0 million, a rise of 13.6% compared to net sales of $26,573.0 million in fiscal 2Q15. Its net income and EPS (earnings per share) fell to $930.0 million and $0.85, respectively, in fiscal 2Q16, compared to $2,042.0 million and $1.93, respectively, in fiscal 2Q15.
WBA has declared a quarterly dividend of 36 cents per share on its common stock. The dividend will be paid on June 10, 2016, to shareholders of record at the close of business on May 18, 2016.
Rite Aid Corporation (RAD) reported fiscal 4Q16 revenues of $8,270.1 million, a rise of 20.8% compared to revenues of $6,847.9 million in fiscal 4Q15. Its net income and EPS fell to $65.6 million and $0.06, respectively, in fiscal 4Q16, compared to $1,836.4 million and $1.79, respectively, in fiscal 4Q15.
GNC’s key activities in 1Q16
Below are some of GNC Holdings’ key activities in 1Q16:
GNC Holdings engaged ICR to enhance its strategic financial communications program.
The company declared a quarterly cash dividend of $0.20 per share of its common stock. The dividend will be paid on or about June 24, 2016, to shareholders of record at the close of business on June 10.
In February 2016, GNC entered into a settlement agreement involving two California wage and break class-action lawsuits against the company, including the Brewer case and an immaterial case raising similar claims. Under the terms of the settlement agreement, the company agreed to pay up to $9.5 million, including plaintiffs’ attorney fees and costs, to resolve these claims. This results in a pretax settlement charge of $6.3 million, or a reduction of $0.07 per share in 4Q15.
The Vanguard Small-Cap Growth ETF (VBK) invests 0.31% of its holdings in GNC. The iShares Morningstar Small Value ETF (JKL) invests 0.55% of its holdings in GNC.
In the article in this series, we’ll compare GNC Holdings with its peers and ETFs based on various metrics, including PE (price-to-earnings) multiple and PBV (price-to-book value) multiple.
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