GNC Files for Bankruptcy Due to COVID-19 Pandemic
This story was updated on June 25, 2020 to add a statement from the Philippines franchisee of GNC.
The parent company of health and nutrition retail brand GNC has filed for Chapter 11 bankruptcy protection, blaming the coronavirus pandemic for its woes.
In a filing with the US Bankruptcy Court in Delaware, GNC Holdings Inc. said it had reached a deal with its lenders but added the bankruptcy process could lead to its sale to another company.
The company said in a statement that it would pursue what it termed as a dual-path process, which could lead either to a standalone recovery or through a sale process.
“With the support of its lenders and key stakeholders, the Company expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process in the fall of this year,” the statement read.
GNC estimates its total debts at $895 million and total assets at $1.4 billion. The company said it plans to close down from 800 to 1,200 stores.
“This acceleration will allow GNC to invest in the appropriate areas to evolve for the future, better positioning the Company to meet current and future consumer demand around the world,” GNC said in the statement.
The company posted a letter to consumers on its website saying that it had been under financial pressure for the last several years.
"We were making significant progress and were focused on refinancing the business to allow us to position ourselves for long-term growth," the letter said. "However, the Covid-19 pandemic created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business."
According to GNC, as of March 31, 2020, it had approximately 7,300 locations worldwide. Approximately 5,200 of these retail locations are in the United States (including approximately 1,600 Rite Aid licensed store-within-a-store locations) and the remainder are locations in approximately 50 countries.
In the Philippines, GNC currently has at least 37 store locations throughout the country based on its website.
GNC bills itself as “a leading global health and wellness brand that provides high quality science-based products and solutions consumers need to live mighty, live fit, live long and live well.” It sells health and nutrition products like vitamins, supplements, minerals, herbs, sports nutrition, diet and energy supplements.
Most of its locations are found in shopping malls that closed down during the start of the coronavirus pandemic in mid-March. Some malls have only begun to open up this month.
In a statement, ONI Global Pte Ltd, the local franchisee for GNC in the Philippines as well as Singapore, Malaysia, and Taiwan reiterated that it is an independent company "unrelated to GNC Holdings and not part of GNC's financial restructuring."
"GNC franchise operations will continue expanding in countries under ONI Global Group and remain totally unaffected by GNC Holdings’ filing of Chapter 11 for its U.S. operations," the statement read. "ONI Global Group is financially robust with a highly successful and self-funding operation. We continue to expand our footprint across Asia with heavy investment in transforming the company digitally keeping up with trends, going omni-channel, and excelling staffs' capabilities."