GNC Files for Bankruptcy and to Close up to 1,200 Stores
Another retailer falls into hard times during the coronavirus. The 85-year-old vitamin and dietary supplement company GNC is the latest company to file for Chapter 11 bankruptcy and announce store closings.
GNC says it plan to close as many as 1,374 of their stores, or nearly half of its company-owned locations, in the U.S. and Canada by the end of the year. They had previously been planning to close as many as 250 locations prior to filing for bankruptcy. GNC reported having $96 million in cash and $905 million in total debt.
The company reports it has lost more than $500 million over the past four years. With the coronavirus pandemic, they temporarily closed 30% of its stores. That made their financial situation worse. In May the company announced it lost $200 million in the first three months of this year. That's up from a loss of just $15 million in the first quarter of last year.
The company explained that the bankruptcy will give the company an "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."
GNC will continue operating while becoming a smaller company. GNC also sells its products in 1,200 Rite Aid stores. The plan is for GNC to emerge from bankruptcy in the fall.
According to the list of store closings on the GNC website, it looks like so far six Michigan stores will be closing. Those stores are located in Greenville, Ann Arbor, Sterling Heights, Caro, Rochester Hills, and Livonia.
In an interesting twist to the story, GNC paid their CEO Ken Martindale a $2.2 million bonus five days before filing for Chapter 11 bankruptcy. GNC called this a "retention bonus". Martindale was paid $7.1 million in 2019. He will get to keep 75% of the cash bonus even if GNC doesn't emerge from bankruptcy.