Health and nutrition firm GNC Holdings Inc has filed for Chapter 11 bankruptcy protection. Amid the ongoing demand slump caused by the lingering effects of the coronavirus pandemic, the company announced that it will also be closing additional stores in the US.
The Pennsylvania-based company, which sells supplements, vitamins, diet, and sports nutrition products, revealed that is will be closing as many as 1,200 of its remaining 5,200 stores in the country. At the height of the pandemic in the country, the company had been forced to close nearly 40 percent of its stores nationwide. The ensuing economic downturn had also managed to rack up its debts, which now stands at about $900 million.
For the first quarter of the year, GNC reported a net loss of around $200 million. Last month, the company had warned its stakeholders that some of its temporarily closed stores may be shut down permanently.
GNC's share prices plummeted by as much as 25 percent on Wednesday, closing at 61 cents per share. The stock's current value is a dramatic fall from its peak of $60 per share back in 2013. Since the start of the year, the stock has fallen in value by more than 80 percent.
At its peak, GNC was the country's go-to retailer for nutritional supplements, generating billions of dollars in profit from its thousands of stores worldwide. By 2015, the company was slowly losing market share with the advent of e-commerce and increased competition from larger retailers such as Costco, Target, and Walmart. E-commerce sites such as Amazon and eBay also started to sell health and wellness products on their platforms, further chipping away at GNC's dominance.
GNC filed for bankruptcy protection late Tuesday, days after it released close to $4 million in cash bonuses to its top executive. This included a hefty $2.2 million bonus to its chief executive officer, Kenneth Martindale. The company's chief financial officer received around $795,000, while other executives were given a combined $918,000.
According to company documents filed with the Securities and Exchange Commission, the executives would have to return 25 percent of their after-tax bonuses if GNC does not come out of bankruptcy within the year. In the meantime, the company is actively looking for a buyer to fully take over.
GNC has become the sixth major US retailer to file for bankruptcy protection after the pandemic had ravaged the country's retail industry. In its bankruptcy filing, GNC revealed that it still had substantial remaining assets worth more than $1 billion.
