PITTSBURGH—General Nutrition Centers Inc. (NASDAQ: GNCI) released positive financials for the second quarter (2Q), ended June 30, 2010. Net income of $25.6 million was up $7.6 million—42.5 percent—over 2Q09, even as net income as a percentage of revenue rose to 5.6 percent in 2Q10 from 4.2 percent in 2Q09. GNC noted its 2009 second quarter was negatively impacted by the May 2009 Hydroxycut product recall.
Consolidated revenue hit $455.9 million in 2Q10, an increase of 5.4 percent over the similar 2009 period. Adjusted EBITDA was also up, hitting $68.6 million for the 2010 period, an 18.1 percent increase over the adjusted EBITDA of $58.1 million in 2Q09.
On the retail side, revenue increased in GNC’s retail and franchise segments by 8.2 percent and 5.5 percent, respectively. Company-owned stores posted a gain of 6.5 percent in same-store sales, the 20th consecutive quarter in positive same-store sales growth. GNC opened 13 net new domestic company-owned stores during 2Q10, as well as 1 net new company-owned store in Canada, 43 net new international franchise locations, and 49 net new franchise store-within-a-store Rite Aid locations.
CEO Joe Fortunato said the quarterly results underscore the company’s ability to consistently grow its financials. He added GNC is actively reaching out to grow the brand, citing its partnership with PepsiCo on the launch of the G Series Gatorade products exclusively through GNC stores, as well as the agreement, announced in 2Q10, with PetSmart to produce a line of dietary supplements for dogs and cats exclusively for sale through PetSmart. He stated, “As a leader in the health and wellness industry focused on science and innovation, GNC is well positioned to continue to build on the valued brand that gives us an edge in the marketplace and allows us to continue to enhance financial leverage."
GNC’s six-month financials were also quite positive, with a 37.8 percent increase in net income, rising to $51.6 million, compared to the first six months of 2009. Both net income as a percentage of revenue and consolidated revenue rose 5.6 percent for the first six months of 2010 versus the same period a year previous. As of June 30, 2010, GNC has more than 7,100 locations including 5,500 retail locations in the United States, with franchise operations in 50 countries.
