PITTSBURGH — GNC is ready to pull the trigger on a long-anticipated initial public offering this Friday, according to several published reports.
It’ll be the third bite of the IPO apple for the Pittsburgh-based specialty chain. But if any time is a right time, that time is now, the company suggested in its prospectus, pointing to the graying of the baby boomer, coupled with increased pursuit of healthier lifestyles, which makes for a strong investment proposition for an already-established specialty channel retailer.
GNC originally filed for an IPO twice while owned by Apollo Management — in 2004 and again in 2006. GNC’s new owners, the Ontario Teachers’ Pension Plan, will be making the latest offering of 16 million public shares at an estimated price of between $15 and $17. That’s roughly half of the current share price of Vitamin Shoppe International, which traded at $34.16 as of late Wednesday morning.
The difference between then (2004 and 2006) and now, besides a change in ownership, is the fact that the smaller specialty operator Vitamin Shoppe — with some 500 locations versus GNC’s more than 3,800 U.S. corporate and franchised locales, excluding Rite Aid locations — has realized a 54.5% growth in share price from a year ago. Vitamin Shoppe opened its trading at $17.57 on Oct. 28, 2009.
In its most recent quarter, GNC posted same-store sales gains of 5.6% across its corporate stores and its website, and 2.9% comparable growth across franchised locations. Each of its corporate-owned-and-operated stores generated $438.2 million in annual sales, up from $422.4 million the year prior. For the 52 weeks ended Dec. 31, 2010, GNC recorded $1.8 billion in sales, up 6.7%. Revenue increased across the company's retail and franchise segments by 7% and 11.2%, respectively, and declined in the manufacturing/wholesale segment by 1.2%. Adjusted EBITDA was $268.2 million for the year, representing a 16.3% increase over adjusted EBITDA in 2009.
GNC has entered into two significant strategic partnerships within the past year — one with PepsiCo and another with PetSmart. PepsiCo launched its Gatorade G Series Pro first in GNC stores, and plans a similar course for its fortified coconut water Phenom, expected to reach GNC shelves in the second quarter of 2011. More recently, GNC launched an exclusive line of GNC-branded pet supplements through PetSmart.
The company also is growing, projecting square-footage increases of between 3% and 4% in 2011, and suggesting that there are a total of 4,500 potentially viable locations that GNC can continue to grow into without violating its store-within-a-store deal with Rite Aid.
As of Dec. 31, 2010, GNC operated 2,917 GNC Centers and 2,003 GNC-within-a-Rite-Aid locations. In addition, GNC had 903 domestic franchisees and 1,437 franchisees operating outside of the United States.