Vitamin and nutrition chain GNC Holdings on Wednesday identified four Indiana stores that will permanently close and seven others that could close as part of its bankruptcy reorganization. The closures could affect as many as six stores in the Indianapolis area.
GNC, short for General Nutrition Centers, filed for Chapter 11 bankruptcy late Tuesday and disclosed plans to close as many as 1,200 of its 5,200 U.S. stores as it searches for a buyer. The company posted an initial list of 248 stores that would close for good.
One Indianapolis store, in Nora Plaza at 1300 E. 86th St., is on the definite closure list.
The other three Indiana stores on the list are in South Point Plaza in New Castle, Putnam Plaza in Greencastle and Fairview Center in Kendallville.
A second list of stores in the company’s bankruptcy filing identified seven other stores in Indiana that are facing possible closures. That list includes five stores in the Indianapolis area:
– College Park Shopping Center in Indianapolis;
– Geist Crossing in Indianapolis;
– Northwood Plaza in Franklin;
– Heartland Village Shoppes in Camby;
– Shelbyville Shopping Center in Shelbyville;
– Town & Country Shopping Center in Columbia City;
– Southlake Mall in Merrillville.
GNC said the second list was “subject to change.” Lease adjustments would likely need to occur to save those stores.
The retailer would have about 20 stores remaining in the Indianapolis area even if all stores on both lists went out of business.
GNC has struggled for years to shore up sales as it tried to pay down more than $900 million in debt.
Then came the coronavirus pandemic. The company reported a $200 million loss during the first quarter of this year, and last month it warned that some of its temporary store closures could become permanent.
The bankruptcy filing comes days after GNC paid nearly $4 million in cash bonuses to top executives, including $2.2 million for CEO Kenneth Martindale.
Four other executives, including the chief financial officer and chief human resource officer, received a combined $1.7 million in bonuses, according to company documents filed Wednesday with the Securities and Exchange Commission.
The bonuses were paid June 18, five days before the bankruptcy filing. Executives will have to pay back 25% of their after-tax bonuses if the company does not emerge from bankruptcy within a year, according to the filing.
The chain, founded in 1935 in Pittsburgh, is the sixth major U.S. retailer to file for bankruptcy protection during the pandemic, which has already led to thousands of permanent store closures and billions in lost sales across the industry.
In its bankruptcy filing Tuesday, GNC said it had both assets and liabilities between $1 billion and $10 billion. Annual revenue fell 12% last year, to $2.07 billion. GNC has 5,200 U.S. stores and 1,600 locations inside Rite Aid pharmacies.
For years, GNC was the country’s go-to retailer for vitamins, protein powders and nutritional supplements. But by 2015, analysts said it was rapidly losing market share to chains such as Walmart, Target, CVS and Costco that moved quickly into the company’s health and wellness niche.
The rise of e-commerce also chipped away at GNC’s dominance as shoppers turned to Amazon and other discount websites for health and wellness products.
There were other missteps, too. The retailer, which was “best known for its muscle-building formulations” was slow to pivot to natural health, nutrition and wellness products popular among baby boomers, according to David Silverman, a senior director at Fitch Ratings.
Many GNC stores are located in second- and third-tier malls, where traffic has dwindled for years.
By 2016, sales and profit had begun to decline. The company was also aggressively buying back shares of its stock with large swaths of borrowed money, which left it deeply indebted at the same time that profits fell off a cliff.
That debt cast a shadow over the company’s finances. Profit, which totaled $219 million in 2015, swung to a $286 million loss a year later.
More recently, GNC was facing a $160 million in debt payment due in August, and another $450 million due next March.
“There are typically two reasons for bankruptcy filings—you either run out of cash or you’re unable to meet upcoming debt obligations, and this was the latter,” said Silverman, who downgraded the company’s credit rating in March. “GNC had liquidity, it was able to manage the COVID crisis fairly well, but it was facing significant [debt] maturities that it was unable to meet.”
Shares of the company’s stock tumbled nearly 25% on Wednesday to close at 61 cents per share, down from a peak of $60 in 2013. Shares are down nearly 80% this year.