DELAWARE (REUTERS, BLOOMBERG) - GNC Holdings, the parent company of nutrition supplement chain GNC, has filed for bankruptcy, with plans to close at least 800 to 1,200 locations and possibly sell itself.
The 85-year-old company filed for Chapter 11 protection late on Tuesday night, after its latest effort to manage its debt load unravelled amid the coronavirus pandemic.
ONI Global, the sole franchisee for GNC in Singapore, Malaysia, the Philippines and Taiwan, said in a statement on Wednesday that it is an independent company unrelated to GNC holdings. It is thus not part of GNC's financial restructuring.
"GNC franchise operations will continue expanding in countries under ONI Global Group," it said.
GNC had been trying to reduce its nearly US$900 million debt load amid falling sales at its brick-and-mortar stores when the coronavirus pandemic forced thousands of locations to close temporarily, cutting off a major revenue source. About 2,100 of its 11,000 employees remain furloughed.
The Pittsburgh-based company, whose name is an acronym for General Nutrition Centers, plans a "dual-path" restructuring where it would either be sold as a going concern, or improve its balance sheet by shedding more than US$300 million of debt.
GNC said it has agreed in principle with many lenders to sell itself to an affiliate of its largest shareholder, Harbin Pharmaceutical Group Co, for US$760 million in a court-supervised auction, subject to higher bids.
It also said it has lined up US$130 million in new financing, including support from Harbin and International Vitamin Corp, its largest vendor.
Chief financial officer Tricia Tolivar said GNC and 16 affiliates sought court protection with a goal of "operationally realigning their businesses" while minimising the impact on customers, employees, landlords and vendors.
Business operations will continue, and fewer than 500 stores remain closed because of the pandemic. The company hopes to emerge from Chapter 11 in the fall.
The chain sells health and nutrition products worldwide, including vitamins, supplements, minerals, herbs, sports nutrition, diet and energy supplements. GNC has about 7,300 locations, including 5,200 in the United States and 1,600 "store-within-a-store" locations in Rite Aid stores. The rest are in about 50 other countries. Roughly 2,633 US and Canadian stores are company-owned.
The company lost US$200.1 million in the first quarter, in part because of the forced closures. It had shuttered 596 underperforming stores from January 2018 to March 2020.
Most of GNC's outlets are in malls and strip shopping centres, forcing them to contend with the same declines in foot traffic that have affected other retailers. Sales at brick-and-mortar stores have fallen further amid stay-at-home orders and the wariness of some to venture out in public.
GNC traces its roots to 1935 when David Shakarian opened a health-food shop selling yogurt and sandwiches in Pittsburgh. The chain rode a wave of interest in nutrition, eventually expanding to over 9,000 outlets. It employed about 12,400 people at last year end.
- With additional information from The Straits Times.
