GNC Holdings Inc. is a Pittsburgh, Pennsylvania-based American company selling health and nutrition related products, including vitamins, supplements, minerals, herbs, sports nutrition, diet, and energy products.
History
In 1935, David Shakarian opened a small health food store, Lackzoom, in downtown Pittsburgh. He made US$35 on his first day and was able to open a second store within six months. A year later, Shakarian suffered from what appeared to be a fatal blow when the Ohio Riverflooded into downtown on St. Patrick's Day. Both of his stores were wiped out. But he opened a new store the next year and later began a mail-order business, shipping health foods and later vitamins and prescription drugs throughout the country. Major expansion began in the 1960s. Shakarian said the physical fitness movement, anxiety about smoking and the growth shopping centers brought success to his business venture. In the 1960s, the company changed the name of its outlets to General Nutrition Centers. He stepped down as chief executive officer in February 1984 but continued as chairman until his death later that year. Shakarian took GNC public in the 1980s. Gary Daum was named chief executive office in February 1984. In May 1985, Jerry Horn took on the role. In 1990 the company considered relocating but a public/private effort retained GNC headquarters in Downtown Pittsburgh. GNC was taken private and sold to Thomas H. Lee Partners a PE investment/management fund in the late 1980s. Thomas Lee ran GNC and took it public prior to selling the company to Royal DutchNumico and Numico acquired GNC in 1999; it sold GNC to Apollo Management in 2003. Ontario Teachers' Pension Plan and Ares Management bought GNC in 2007. GNC went public in 2011. In 2018, the Chinese Harbin Pharmaceutical Group agreed to acquire an approximately 40% stake in GNC. In June 2019, the company announced they would be shuttering 900 mall locations in 2020 due to slumping sales. In June 2020, the company filed for Chapter 11 bankruptcy protection and indicated plans to close at least 800 stores. Effective June 30, 2020, the stock was delisted from the New York Stock Exchange and shifted to the OTC Pink market. As part of a major downsizing after the bankruptcy filing, GNC will close 29 Canadian stores.
Retail stores
GNC stores typically stock a wide range of weight loss, bodybuilding, nutritional supplements, vitamins, natural remedies, and health and beauty products, in both its owned brands as well as third-party brands. As of December 31, 2018, GNC had approximately 8,400 locations, of which approximately 6,200 retail locations are in the United States and franchise operations in approximately 50 countries. In July 2019, it was announced that GNC plans to close up to 1,400 company owned retail locations, primarily those located within shopping malls.
Business model
Of GNC’s approximately 4,100 U.S. locations, 61% are in strip centers and 28% are in malls. GNC products are available on GNC.com, and as of January 2017 are also available on GNC’s Amazon Marketplace.
Lawsuits
In 1998, GNC was accused of purposely running its franchisees out of business in order to "retake" the stores into corporate control. An April 30, 2003 article states that the GNC corporate company was sued by numerous franchise owners. The complaint is that the parent company was allowing their corporate owned stores to sell products for less than the franchise stores are allowed to sell them for. The suit also claimed that GNC charged high "reset fees" to franchisees when there is new signage that needs to be changed in the store or an image facelift that must be done by GNC corporate. A similar lawsuit was filed again in an article written on October 20, 2004. In February 2015, New York Attorney GeneralEric Schneiderman sent cease and desist letters to GNC and other major retailers due to concerning laboratory tests regarding the accuracy of the claimed contents of supplements. GNC shortly afterwards removed some stock from sales while working with the Attorney General. In September 2016, GNC, the New York Office of the Attorney General, and other supplement retailers ultimately came to an agreement and retailers are now accomplishing more robust testing of supplements to ensure accurate labeling. In October 2015, the Attorney General of Oregon filed a lawsuit against GNC alleging that the company knowingly sold products containing the ingredients picamilon and BMPEA, which are banned by the FDA. On February 2, 2017, GNC threatened to sue the Fox Broadcasting Company for "significant economic and reputational damages, lost opportunities, and consequential damages", after an advertisement for the chain was blocked from airing during Super Bowl LI. Despite repeated approvals by Fox, the network stated that the ad had been vetoed by the National Football League because of GNC's placement on an NFLPA blacklist for selling products that contain substances banned by the NFL. The letter of intent claimed that Fox had not informed them of any such rules when they purchased the ad time, and cited that the purchase induced them to "spend millions of dollars in production costs and in the development of a national, coordinated marketing and rebranding campaign" around the commercial. The NFL itself does not prohibit ads for health stores unless they contain references to specific prohibited products; the GNC ad only contained motivational themes and no references to its products.
