GNC Brand to Be Sold to China?
Back in the day it seemed like most people who were buying supplements shopped at their local General Nutrition Center (GNC). Bags full of supplements would go walking out the door with happy customers smiling from ear to ear. Then there seemed to be a power-shift of retailers in the industry. While the Gold Card Days are long gone, it seems many of the customers who shopped there are too. With other large chains like Vitamin Shoppe popping up everyone across the nation along with online retailers (the new-age of shopping), it’s getting harder to maintain brick-and-mortar locations due to all of the competition. While GNC has adjusted their prices to be more competitive, it seems like consumers aren’t necessarily running back to their local GNC store—which is a shame. Many consider GNC to be the “OG” of supplement retailers, and for good reason—they’ve been around forever.
With all the changes in the industry and ups and downs in terms of financial performance, there have been some whispers floating around the industry. Rumor has it that GNC might be the next business in the supplement industry to be swooped up by China. Lately, China-based companies have been targeting businesses in the supplement industry in an effort to work their way into the market. Should one of the China-based companies (there are multiple who are interested) decide to follow through with a purchase, the deal could be in the ballpark of around $4 billion including debt—making this one of the largest transactions to date for China in the supplement industry.
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GNC has apparently met with several potential buyers across the globe, but has not settled on a deal just yet. The two Chinese companies interested in acquiring GNC are Fosun Group and ZZ Capital International. They are hoping to negotiate a good price considering the lackluster sales coming from GNC lately.
Former GNC CEO, Michael Archbold, tried to fix the falling sales but nothing seemed to move the needle. Archbold tried everything from cutting promotions and restructuring product pricing on shelf along with trying to move towards more of a franchise model rather continuing to maintain corporate locations. In July 2016, Michael resigned as well as stepped down from his position on the board of directors. This didn’t come as much of a surprise considering sales have been dropping. Sales from the first quarter of this year (April through June) were down 2% (roughly $16.4 million).
The changeover from Michael Archbold to now new GNC CEO, Robert Moran, came during a strategic review of the company. When asked about the changing of the guard, GNC chairman Michael Hines said, “As we continue the strategic review process and move with urgency to improve performance, the board believes it is the right time to undertake this change to drive effective execution of our plans.” Expect more to come over the next several months surrounding the possible sale of GNC.
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