GNC Files for Chapter 11 Bankruptcy, Plans to Close Up to 1,200 Stores
PITTSBURGH — Global health and wellness company GNC Holdings Inc. (NYSE: GNC) has filed for Chapter 11 bankruptcy. Over the past year, the company has executed a strategy to close underperforming stores, while investing further in alternatives to in-store sales, such as e-commerce. With the Chapter 11 filing, GNC expects to accelerate the closure of 800 to 1,200 stores.
Pittsburgh-based GNC expects to use the bankruptcy process “to improve its balance sheet and capital structure while continuing to advance its business strategy, right-size its corporate store portfolio and strengthen its brands to protect the long-term sustainability of its business,” according to a press release from the company.
Additionally, GNC has reached an agreement with its lenders and Harbin Pharmaceutical Group Holding Co. Ltd., an affiliate of GNC’s largest shareholders, for the sale of the company’s business. The sale transaction has a $760 million purchase price and “would be executed through a court-supervised auction process at which higher and better bids may be presented.”
The company expects to either complete the sale or the bankruptcy process this fall. GNC’s largest vendor and a joint venture partner, IVC, is working with the company to ensure a continued supply of products.
Looking ahead, GNC plans to introduce an option to buy online and pick up in store later this year. The company also says it has a “robust innovation pipeline of ingredients and products to bring to market over the next three years.”
GNC’s case is being heard in the U.S. Bankruptcy Court for the District of Delaware. Latham & Watkins LLP, FTI Consulting and Evercore are advising GNC. Bank of China Limited Macau Branch has been retained as debt advisor.
A current list of store closures can be found here. As of March 31, GNC had approximately 7,300 stores, of which 5,200 retail locations are in the United States, including a store-within-a-store presence at 1,600 Rite Aid locations.
GNC’s stock price closed at 81 cents per share on Tuesday, June 23, down from $1.38 per share one year ago.
— Kristin Hiller