GNC Slumps After CEO Steps Down Amid Struggling Salesby
Nutrition retailer suspends full-year financial guidance
Michael Archbold replaced by Robert Moran as interim CEO
GNC Holdings Inc., a vitamin and supplement retailer, sank after Chief Executive Officer Michael Archbold resigned and stepped down from the board of directors. Former PetSmart CEO Robert Moran replaced him on an interim basis.
The shares plunged as much as 24 percent to $20.61 at 2:49 p.m. in New York, the lowest intraday level since October 2011. Through Wednesday, the stock had dropped 19 percent since Archbold was named CEO in August 2014, and was down 12 percent this year.
GNC on Thursday also suspended its 2016 financial guidance and said in a statement that second-quarter sales in domestic company-owned stores fell 3.7 percent, prompting some analysts to downgrade their rating on the stock or drop coverage.
Wellington Shields & Co. dropped its coverage because of “management’s inability to resuscitate its earnings momentum, ‘musical chairs’ in its leadership and the apparent death of corporate buyers,” analyst Elliott Schlang said in a note.
Piper Jaffray Cos. analyst Sean Naughton cut his rating to the equivalent of hold from the equivalent of buy, citing concerns about the CEO’s departure, the suspension of guidance and declines in same-store sales trends and mall traffic, he said in a note to clients.
Weaker demand for its products has forced the retailer to seek strategic alternatives, which could include selling itself, changing its capital structure or overhauling its operations, the company has said. While the strategic review process continues, it’s “too premature” to address, Moran said on a conference call Thursday.
“Our focus is really working on the critical items that will reverse the trends and the financial performance,” Moran said. “We have to have a healthy disrespect for the status quo. I’ll do whatever it takes.”
Moran, 65, joined the GNC board in July 2013. Prior to that he served as chairman and CEO of pet-supply retailer PetSmart, which was bought in 2015 by a group led by private equity firm BC Partners.
Peer Vitamin Shoppe, which reports results Aug. 3, fell as much as 6.2 percent on Thursday, its biggest intraday drop in more than two months.