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GNC PLANS TO OPEN 325 NEW STORES IN 1993

This article was originally published in The Tan Sheet

Executive Summary

GNC PLANS TO OPEN 325 NEW STORES IN 1993, up from the company's original store-opening target of 300 stores, General Nutrition Companies, Inc. announced in a Nov. 2 press release reporting third quarter sales and earnings. GNC said it is "ahead of its [1993] plan" for store openings due to the "exceptionally strong demand for the company's franchise program." GNC reported a 25.3% increase in net revenue to $ 122 mil. for the three-month period ended Oct. 16. The company cited its "retail division's strong comparable store sales increase of 12.6%" as the primary reason for the company's strong sales growth in the quarter. For the nine-month period ended Oct. 16, GNC posted revenues of $ 368.4 mil., a 21% jump over the same period the previous year. Net earnings for the quarter were $ 4.9 mil., up from $ 951,000 in the same period last year. Through the first nine months of 1993, GNC's net earnings grew seven-fold to $ 14.3 mil. Net income for the quarter and nine-month period would have been higher except for an "extraordinary charge of $ 1.4 mil . . . net of income taxes associated with the early retirement of debt," the company noted. GNC said the impact of these charges for the nine months was $ 5 mil. GNC President and CEO William Watts attributed the significant growth in earnings and revenues to "the continued strength of the fundamental market for vitamins, minerals and other supplements" as the "growing trend of self-care is accelerating." Menley & James reported that net sales were off 37% in the third quarter ended Sept. 30 to $ 5.7 mil., which resulted in a net loss of $ 274,000. Menley & James president and CEO Larry White commented that the low third-quarter sales reflect "the absence of the strong sell-in of Garfield Children's Multivitamins and the introductions of several line extensions in the prior year." He also attributed the loss to the "continued slowdown of our secondary brands." For the nine months ended Sept. 30, net sales were down 15.7% to $ 18 mil. while net earnings were up slightly to $ 776,000. Nine-month net income includes "the effect of a non-recurring $ 1.6 mil. expense for the settlement of litigation" and a $ 1.9 mil. benefit in deferred tax assets arising from an accounting change, according to the company. Chart omitted.
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