GNC Holdings Shares Plunge 11% As Q1 Results Miss View, Trims Outlook

(RTTNews) - Shares of GNC Holdings, Inc. (GNC) plunged more than 11 percent in extended trading on Tuesday after the health and wellness products retailer reported results for the first quarter that missed analysts' expectations. The company also trimmed its earnings and revenue growth guidance for the full-year 2014.

The company also reported a profit for the quarter that edged down from last year, despite revenue growth, reflecting lower margins amid higher costs.

"January and February were affected by severe weather across large parts of the country, resulting in a delayed start to the workout season. Recent trends have also been affected by an unusually significant amount of negative media, and year-over-year sales hurdles in the third-party diet and pre-workout categories. Based on our current information it looks like these recent trends will persist for the next few quarters," Chairman, President and CEO Joe Fortunato said in a statement.

The Pittsburgh, Pennsylvania-based company reported net income of $69.90 million or $0.75 per share for the first quarter, compared to $72.64 million or $0.73 per share in the prior-year quarter.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.76 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated revenues for the quarter grew 1.9 percent to $677.28 million from $664.69 million in the same quarter last year, but missed eleven Wall Street analysts' consensus estimate of $695.89 million.

Retail segment revenue grew 3.1 percent to $509.0 million, with same store sales decreasing 0.7 percent in domestic company-owned stores, and declining 3.2 percent at domestic franchise locations.

Meanwhile, franchise segment revenue declined 1.4 percent to $106.3 million, and manufacturing/wholesale segment revenue, excluding intersegment revenue, decreased 2.2 percent to $61.9 million from last year.

The company noted that it generated positive same store sales (including GNC.com sales) in March as results were negatively impacted by severe weather patterns in January and February.

Further, the company's Board of Directors declared a second-quarter cash dividend to $0.16 per share on its common stock, payable on or about June 27 to stockholders of record at the close of business on June 13, 2014.

Looking ahead to fiscal 2014, the company trimmed its consolidated earnings guidance to a range of $3.05 to $3.10 per share from the prior forecast range of $3.18 to $3.24 per share. It now expects consolidated revenues to increase in the mid-single digits, down from the previous projection for a high single-digit growth.

Street is currently looking for full-year 2014 earnings of $3.20 per share on annual revenues of $2.84 billion.

"We continue to be very confident in the strength of our brand and the long-term strategic growth profile of our business, and believe we have the right strategies in place to drive ongoing success," Fortunato added.

GNC closed Tuesday's regular trading session at $43.65, down $0.44 or 1.0% on a volume of 2.27 million shares. The stock plunged a further $4.98 or 11.41% in after-hours trading.