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GNC reports strong Q4; to open 180 stores in U.S. in 2013

BY Marianne Wilson

Pittsburgh — GNC Holdings is bullish on expansion. Reporting impressive results for the fourth quarter, the retailer plans to open approximately 150 net new U.S. stores in 2013, along with 30 net new domestic franchise locations, and 175-200 net new international franchise locations. It also will open 30 net new GNC-Rite Aid store-within-a-store locations.

GNC reported consolidated revenue of $565.0 million, an increase of 10.9% over consolidated revenue of $509.6 million in the previous year. Same store sales increased 7.1% in domestic company-owned stores (including GNC.com sales), representing the company’s 30th consecutive quarter of positive same store sales growth.

Adjusted net income for the fourth quarter of 2012 was $49.8 million, an $11.5 million or 30.1% increase over adjusted net income of $38.3 million for the fourth quarter of 201

For the full year, the company reported consolidated revenue of $2,430.0 million, an increase of 17.3% over consolidated revenue of $2,072.2 million for the full year 2011. Same store sales increased 11.5% in domestic company-owned stores (including GNC.com sales). In domestic franchise locations, same store sales increased 15.0%.

For the full year, GNC reported net income of $240.2 million, compared with $132.3 million for 2011.

"2012 was a year of tremendous execution and financial performance across every segment of the business. We expanded our customer base, gained market share, improved operating margins, generated strong free cash flow and effectively returned capital to shareholders," said Joe Fortunato, chairman, president & CEO.

At year end 2012, GNC has more than 8,100 locations, of which more than 6,100 retail locations are in the United States (including 949 franchise and 2,181 Rite Aid franchise store-within-a-store locations) and franchise operations in 54 countries (including distribution centers where retail sales are made).

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OfficeMax, Office Depot reportedly discussing merger

BY Marianne Wilson

New York — Office Depot and OfficeMax are in talks to merge, according to reports by the Wall Street Journal and Bloomberg.

The retailers are discussing as potential stock swap that would result in a single company with nearly $18 billion in revenue, reports said. The combined company would be better positioned to take on Staples, Walmart and other competitors.

"The merger makes sense with both companies suffering from falling revenue since the 2008 recession and struggling to generate a profit margin of 3.0% (while Staples generates a margin greater than 8.0 percent)," explained IBISWorld office supply industry analyst, Dale Schmidt. "The hope is that the resultant company could cut redundant costs, raising its profit margin, while retaining a market share that will compete with Staples. However, with the ever-increasing popularity of online sales and big-box retailers, the brick-and-mortar chains of both Staples and the merged company will struggle to grow significantly."

Any deal that is struck, however, may be challenged by the Federal Trade Commission, Bloomberg said. In 1997, a lawsuit by the FTC prevented Staples from acquiring Office Depot.

"We think there is a fair amount of risk that the FTC would not look favorably on a potential merger of the number two and number three players in the office product space," said Citi Investment Research analyst Kate McShane in an Associated Press report.

Rumors of a merger between the two office supply chains, both of which have been struggling, have been circulating since last year.

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Build-A-Bear Workshop widens Q4 loss; reports annual loss of $49 million

BY Marianne Wilson

St. Louis — Build-A-Bear Workshop, which is in the midst of a major turnaround initiative, reported a net loss of $36.5 million for its fourth quarter ended Dec. 29, compared with a net loss of $9 million during the prior-year quarter.

Total revenue for the quarter was $118.2 million, down 1% from the prior-year quarter.

For the full year, Build-A-Bear Workshop reported a net loss of $49.3 million in fiscal 2012, compared with a net loss of $17.1 million in fiscal 2011. The 2012 loss included a $33.7 million goodwill impairment in the fourth quarter.

The company reported total revenue of $380.9 million in 2012, down 3% from the previous year.

Founder and CEO Maxine Clark, who announced her retirement Jan. 31, said that the company was “disappointed” with its overall results. But she noted that in the fourth quarter the company increased same-store store sales in North America to show a marked improvement from the third quarter.”

“This increase was driven by the initial benefit of our brand building marketing campaigns, particularly in the U.S., and a return to traditional holiday product offerings,” Clark stated. “The U.K. remained challenging, which drove down our consolidated comparable store sales.

Clark also said: “We are in the midst of a multi-year turnaround initiative that includes closing an additional 50 to 60 stores by the end of 2014, updating our experience with a new design that builds our destination appeal and refocusing on brand messaging in our marketing programs.”

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