GNC Declares Bankruptcy, Plans to Close Up to 1,200 Stores
The health and wellness retailer plans to become a smaller company and emerge from bankruptcy in the fall.
While the COVID-19 pandemic has caused online sales of dietary supplements to skyrocket, lockdown procedures put in place in order to prevent the spread of the virus have caused retailers of all kinds mostly dependent upon brick-and-mortar commerce to experience unprecedented customer shortages. According to the company’s Q&A page regarding the decision to file for bankruptcy, the ongoing effects of the COVID-19 pandemic had a “dramatic negative impact on [its] business.”
“As a result, we felt the best opportunity for us to continue to improve our capital structure and address certain operational issues was to restructure through a Chapter 11 reorganization,” GNC said. “This gives us the opportunity to improve our balance sheet while continuing to advance our business strategy, right-size our corporate store portfolio, and strengthen our brands to protect the long-term sustainability of our company.”
The company announced that it will continue its curbside pickup operations at shopping plaza locations, and will also continue its online sales. It anticipates an accelerated closure of at least 800 to 1,200 of the company’s locations, many of which it said were previously announced with a restructuring process that was already underway. GNC announced plans to close up to 900 stores in November 2018, most of which were located in shopping malls.
GNC has approximately 5,200 retail locations in the U.S., and 7,300 locations globally. About 2,200 of these locations are in rite aid stores. The company reported that GNC and all of its subsidiaries will remain open for business.
The company, a significant majority of the supporting secured lenders, and Harbin Pharmaceutical Group Holding Co., Ltd., an affiliate of GNC’s largest shareholder, have reached an agreement for the sale of the company’s business, which outlines a $760 million purchase price executed through a court-supervised auction process at which higher and better bids may be presented.
GNC Holdings, Inc. said that “the company expects to use this process to improve its balance sheet and capital structure while continuing to advance its business strategy, right-size GNC’s corporate store portfolio, and strengthen its brands to protect the long-term sustainability of its business.”
GNC also identified the first 248 stores that it will be closing in 42 states, as well as in Puerto Rico and Canada.