GNC announced plans to close 900 stores or about half of its total portfolio, with a focus on underperforming mall locations, part of the overall trend of thousands of store closures as fewer people hit the doors with ecommerce growing.
“The negative trends in traffic that we’ve seen in mall stores over the past several years has accelerated during the past few quarters putting additional pressure on comps,” said Ken Martindale, GNC’s Chairman and CEO during a second quarter earnings call.
Martindale said the fact that GNC has short-term leases across its store portfolio, especially at malls, give it a good deal of flexibility in executing the closure plan.
“It’s important to note that our strip center locations are relatively stable from a comparable sales perspective,” he said. “Sixty-one percent of our existing store base is located in strip centers while only 28% reside in malls.”
USA Today reported that 192 company-owned and franchise GNC locations have already closed. The company said in late 2018 it would close up to 900 more stores over the next three years in the U.S. and Canada as leases expire, and now says it will be toward the top end of that range.
GNC’s ecommerce sales were up 1% in Q1, and have been softer in recent quarters due to challenges with its Amazon business, Martindale said.
“Our team has been working closely with our counterparts at Amazon to identify and implement sales-driving initiatives,” he said.
In the second quarter same-store sales at GNC, including ecommerce, were down 4.6%, after falling off 1.6% in Q1. Ecommerce sales represented 8.1% of GNC’s U.S. and Canada revenue in the quarter, compared to 8.3% a year earlier. Revenue from domestic franchise locations was down nearly $4 million, driven by a 1.8% drop in comps.
Martindale talked about the launch of additional personalization tools through new media channels such as mobile app notifications and e-receipts. In the third quarter, GNC will expand further into personalized text messaging. By early 2020, it will complete the implementation of its new order management system.
“Our team is in the midst of building a robust compelling digital ecosystem that gives customers exceptional personalized experiences, however, wherever and whenever they want to engage with GNC,” he said.