GNC filed for bankruptcy and could close up to 1,200 stores
- GNC filed for Chapter 11 bankruptcy protection late Tuesday night.
- It will close between 800 and 1,200 stores as part of the restructuring process.
- In a letter to shoppres, GNC blamed the COVID-19 pandemic for creating "a situation where we were unable to accomplish our refinancing."
GNC filed for Chapter 11 bankruptcy protection late on Tuesday night and said it is on the hunt for a buyer.
As part of the restructuring process, it plans to permanently close between 800 and 1,200 stores.
GNC has secured $130 million in financing — $100 million of it "new money" and $30 million in load amendments — to aid it in the restructuring. It has nearly $1 billion.
GNC's stores will remain operating as usual in the meantime, and it said its Pro Membership benefits would reman intact.
In a letter to shoppers, GNC said the COVID-19 pandemic "created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business."
GNC temporarily closed about a third of its stores to slow the spread of COVID-19 this spring. It began offering curbside pickup at locations located in shopping plazas.
The retailer said in a press release that it would be launching services for shoppers to buy online and pick up in stores later this year.
According to experts, GNC has struggled to keep up with competitors like The Vitamin Shoppe due to its large fleet of physical stores and slow adaption of digital. When consumers shifted to making purchases online during the coronavirus outbreak, GNC's e-commerce experience lagged behind, according to Shelly Socol, CEO of e-commerce agency One Rockwell.
"GNC has found itself in a similar situation to J.Crew, JCPenney, Sears, and any of those big retailers that were not on their game and investing in DTC," Socol told Business Insider in May. "They're playing catch-up with e-commerce that has not been upgraded or optimized at the level it needs to be at to navigate the time that we're in."
Ben Parr — co-founder and president of Octane AI a messaging platform designed to help Shopify brands boost their businesses — said the company has been bogged down by its vast amount of stores with their significant financial overhead.
"GNC relied too heavily on its retail locations," Parr said in May. "By investing in e-commerce over the past few years, The Vitamin Shoppe put itself in a place to weather the storm, while GNC may never be able to navigate its way out of plummeting sales, expensive real estate, and burdensome debt."