Another business giant has fallen under the burden of the pandemic crisis in the United States. GNC, the vitamin and supplement company, announced in late May that it has filed for bankruptcy and that they plan to close up to a quarter of their 5,800 stores while they seek a buyer.
Sales were already declining across the company before the pandemic, and at the end of the first quarter, the country reported nearly $1 billion in debt and $200 million in losses. There were plans for refinancing and a rallying effort, but stay-at-home orders prevented those plans and outright shuttered approximately 30 percent of the brick-and-mortar locations.
Filing Chapter 11 bankruptcy will give GNC some additional time to settle down that large burden of debt, and the company plans to emerge from bankruptcy in the fall, more stable and more attractive to potential buyers.
“The Chapter 11 process will allow us to accelerate these strategies and invest in the appropriate areas to evolve in the future, while improving our capital structure and balance sheet,” GNC said in a letter to shoppers.
Debt is not the only skeleton in GNC’s closet. Over the past five years, the company has been involved in a number of lawsuits regarding the questionable properties of many of their advertised products. A 2015 lawsuit, so far unsettled, alleges that they were selling products explicitly banned by the FDA. Another from the same year, which reached a settlement, accused them of deceptive labeling of their products.
Recently, GNC has secured $130 million in financing from its chief vendor, the vitamin supplier IVC, to help pay for its restructuring. That and the bankruptcy proceedings 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,” said a statement from the company.
In the process, 1,200 stores will close, and GNC will become a smaller, tighter company, more focused on selling its products through other retailers like Rite Aid pharmacies.
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