GNC’s profits fall in Q2
Despite online and in-store transaction growth, GNC’s income and revenue declined in the second quarter.
Net income for the quarter ended June 30, totaled $15.7 million compared with $64.0 million in the prior year quarter. Excluding non-cash long-lived asset impairment charges in the current quarter and gains on refranchising in the same quarter last year, adjusted earnings was $0.41.This just beat analyst expectations of $0.40, according to Zacks Consensus Estimate. However, this is a drop from $0.79 for the same period in 2016.
Revenue hit $641.0 million, compared with consolidated revenue of $673.2 million for the second quarter of 2016. Same-store sales decreased 0.9% in domestic company-owned stores (including GNC.com sales) for the quarter. In domestic franchise locations, same-store sales decreased 1.1%.
Transaction growth was up 12.3%, which contributed to an improvement in same-store sales, compared to the first quarter. At the end of the quarter, the company had 7.3 million consumers enrolled in the My GNC Rewards Program. There are approximately 237,000 Pro Access subscription-based premium rewards members.
"We made good progress in the second quarter, and our investments in pricing, loyalty and improving the customer experience continued to deliver positive results," said GNC’s interim CEO, Bob Moran.
"For the second quarter in a row, we saw meaningful transaction growth, improvement in our dot.com business and increased enrollment in our loyalty programs,” he added. “We believe this business is headed in the right direction, and we remain focused on execution and sales growth.”
Rent-A-Center investors are seeing red
Investors at the nation’s largest rent-to-own company are their losing patience.
Activist hedge fund Marcato Capital Management LP demanded in a letter on Tuesday, July 25, that Rent-A-Center start the process of selling itself. If the company doesn’t, the hedge fund threatened to throw out board members up for re-election at next year's annual meeting, according to Reuters.
In the report, a letter from Marcato partner Shawn Badlani, said, “Unless Rent-A-Center promptly commences a full sale process, Marcato plans to initiate and/or support efforts to remove all incumbent directors who are up for election at the 2018 annual meeting.”
The letter added that at least one unidentified party interested in buying Rent-A-Center might raise its offer if management was ready to negotiate. It also warned directors not to stall.
Marcato isn’t alone in its quest. Hedge fund Engaged Capital has been urging Rent-A-Center to sell itself for months, arguing that an overhaul of the company could be best achieved in the hands of private owners. Engaged Capital won a proxy contest in June, a move which afforded the company three board seats at Rent-A-Center, the report said.
Marcato and Engaged Capital believe the furniture company is "brazenly ignoring the will of the shareholders," according to the letter.
The document refers to Rent-A-Center’s rejection of takeover interest from private equity firms HIG Capital and Lone Star Funds. The snub took place prior to turning down an offer of $800 million from buyout firm Vintage Capital earlier this month, according to an earlier Reuters report.
Marcato also believes Vintage could pay more for the company if management negotiated. The company explained that the buyout firm’s $15 per share offer was an "opening offer, not Vintage's best and final offer," according to the letter.
Barnes & Noble is experiencing a similar situation. Activist investor Sandell Asset Management issued its own letter to Barnes & Noble’s board of directors on Tuesday, July 25, urging the company to sell itself. The firm believes a sale would not only improve the value of the brand, but protect itself against a volatile marketplace that continues to take a toll on sales.
Sandell recently started buying a stake in Barnes & Noble. It is now among the retailer's 10 biggest investors, according to Fortune.
Click here to read more.
Candy retailer acquired with eye to expansion
The nation's largest specialty candy retailer may soon get even bigger.
BBX Capital Corp. has acquired It’Sugar for approximately $57 million. BBX said it plans to expand It'Sugar, which currently operates 95 locations in 26 states, by opening new retail stores in high-traffic leisure locations.
BBX has taken a 93% majority stake in the company. Jeff Rubin, founder and CEO of It'Sugar, will remain in his current position and continue to hold a "meaningful" membership interest. The specialty retailer will operate within the BBX Sweet Holdings vertical, which also includes Hoffman's Chocolates, Anastasia Confections, Droga Chocolates, and several other candy makers.
“We are pleased to announce our investment in It’Sugar and believe the business is an excellent fit with the growth strategy of BBX Sweet Holdings," commented Jarett Levan, president of BBX Capital. "It’Sugar has had great success expanding its presence across the United States as a modern day candy playground, and we are very pleased to partner with Jeff Rubin and the It'Sugar management team to support continued expansion of its retail footprint and grow the brand in other channels.”
During the 12 months ended April 30, 2017, It’Sugar generated net revenues of $78.4 million. Headquartered in Deerfield Beach, the company was founded by Rubin in 2006. Stores are bright and colorful with an irreverent edge, and designed to immerse customers in the sights, smells and tastes of their favorite sweets.
Previously, Rubin created F.A.O. Schwartz's candy business, F.A.O. Schweetz, and co-founded Dylan’s Candy Bar.