GNC Financials Up in 3Q

PITTSBURGHGeneral Nutrition Centers Inc. (GNC) reported its financial results for the third quarter of 2010 (3Q10), ended Sept. 30. GNC reported net income of $26.8 million, a 37.2 percent increase over net income of $19.5 million for the comparable 2009 period (3Q09). Net income as a percentage of revenue was 5.8 in 3Q10, compared to 4.5 percent in 3Q09.

Consolidated revenue also increased, rising 8.1 percent from the $430.8 million reported in 3Q09 to hit $465.7 million for the three months ended Sept. 30, 2010. A 1.9 percent decline in revenue in the manufacturing/wholesale segment was offset by gains of 8.4 percent and 14.3 percent in the retail and franchise segments, respectively.

GNC continued to expand its retail operations during 3Q10, opening 15 net new domestic company-owned stores, five net new domestic franchise locations, 20 net new international franchise locations and 11 new franchise store-within-a-store Rite Aid locations. GNC also closed two company-owned stores in Canada.

Joe Fortunato, GNCs CEO, commented: "I am pleased with the results of the third quarter, which represented our 21st consecutive quarter of positive same stores sales growth at domestic, company owned stores. Overall, our retail and our franchise businesses continued to drive revenue and adjusted EBITDA margin expansion. In particular, our strong brand, performance in the growth categories of Vitamins and Sports Nutrition, and science and innovation capabilities have enabled us to continue to offer differentiated premium products targeted at consumers focused on health and wellness as an integral part of their lifestyles. The third quarter was also highlighted by the launch of our GNC Pets products line in PetSmart stores, which demonstrates our ability to effectively partner with other strong consumer companies and leverage our brand. "

GNC also released positive results for the first nine months of 2010, with net income up 37.6 percent over the comparable 2009 period to hit $78.3 million. Net income as a percentage of revenue was 5.6 percent in the first nine months of 2010, compared to 4.4 percent in the 2009 period. As reported in the third quarter, revenue was up in the retail (7.2 percent) and franchise (10.7 percent) segments, and down (-5.2 percent) in the manufacturing/wholesale segment. In the first nine months of 2010, GNC opened 37 net new domestic company-owned stores, two net new company-owned stores in Canada, 94 net new international franchise locations, and 114 net new franchise store-within-a-store Rite Aid locations; it closed 12 net domestic franchise locations.