GNC Releases 2Q09 Financials

PITTSBURGH—General Nutrition Centers Inc. (GNC) reported revenue for the second quarter of 2009 (2Q09) was up 2.3 percent over the same quarter in 2008, hitting $432.4 million. Additionally, revenue was up in each of the company’s business segments, from a slight increase in retail (0.8 percent) to a greater step-up in manufacturing (7.4 percent). The retail side was particularly impacted by the May 2009 recall of certain Hydroxycut products; GNC estimated without the recall and related lost sales, same store sales would have been up 3.8 percent in the quarter compared to the comparable 2008 period. Other notable figures:

·        2Q09 net income was $18.0 million, a 5.6 percent increase over 2Q08.

·        EBITDA in 2Q09 increased by $200,000 compared to 2Q08, hitting $57.4 million.

·        GNC generated net cash from operations of $22 million, incurred capital expenditures of $5.8 million, and paid $14.7 million in principal on outstanding debt.

Joe Fortunato, CEO, said, “Once again GNC’s financial results were strong despite the continuing recession and the impact of the Hydroxycut recall. The strength of our brand and core product categories of vitamins and sports nutrition compensated for the short term loss of sales and margin in the diet category as a result of the recall. Also, our performance highlights the fact that we are significantly less dependent on the diet portion of the business than in the past. Overall, our strong and stable core categories, vertical integration advantages, and ongoing solid performance of our franchise and manufacturing areas, provide GNC with a substantial foundation for future growth.”