GNC Files for Bankruptcy after 85 Years in Business
Faced with millions of dollars of debt, GNC has declared Chapter 11 bankruptcy.
GNC’s Will Shut Down 1,200 Stores
GNC, the Pittsburgh-based supplement company, has declared bankruptcy after more than 80 years in business.
While the coronavirus pandemic did impact the company’s sales negatively, GNC was having trouble with low profits even before the viral outbreak.
“Our business has been under financial pressure for the past several years as we have worked to pay down debt and reposition GNC to be more competitive in a challenging operating environment. We were making significant progress and were focused on refinancing the business to allow us to position ourselves for long-term growth,” GNC said in a statement.
However, the pandemic did not allow the company to move forward with its plans for refinancing due to the negative effect the lockdown measures had on its business.
“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,” GNC explained.
During the period of stay-at-home orders, about 30 percent of its brick-and-mortar stores in Canada and the US remained closed. This resulted in losses of $200 million for the first quarter of this year, a sharp increase compared to the $15 million in 2019.
Faced with almost $1 billion in debt, the company has decided to file for Chapter 11 bankruptcy but will not stop being in business altogether.
It plans to restructure and shut down as many as 1,200 stores in the US. For the restructuring process, the company's joint venture partner, International Vitamin Corporation (IVC), has given it $130 million.
The Pittsburg-based company hopes that the bankruptcy will “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.”
GNC is not the only company to file for bankruptcy as a result of the COVID-19 pandemic and is joined by large retailers such as J.C. Penney and Neiman Marcus.