GNC rises on greater 4Q income and 2013 guidance

GNC rises as retail and franchise sales boost 4th-qtr income; profit forecast tops estimates

Associated Press

NEW YORK (AP) -- Shares of GNC jumped more than 10 percent in heavy trading after the nutritional supplement retailer topped Wall Street estimates for the fourth quarter and issued a better-than-expected outlook for 2013.

"2012 was a year of tremendous execution and financial performance across every segment of the business," said CEO Joe Fortunato. "We expanded our customer base, gained market share, improved operating margins, generated strong free cash flow and effectively returned capital to shareholders."

Sales improved at retail and franchise stores and on the GNC.com website. The company issued guidance of between $2.75 and $2.80 per share in earnings for this year, topping Wall Street expectations for $2.72. The company also projected revenue growth of 9 percent to 10 percent.

Net income grew to $47.4 million, or 47 cents per share, from $37.7 million, or 35 cents per share. Revenue rose 11 percent, to $565 million. If one-time items are excluded GNC said it earned 50 cents per share in the latest quarter.

Analysts were expecting net income of 46 cents per share and revenue of $574.8 million, according to FactSet.

Revenue from retail and franchise stores grew 13 percent, which countered a 2 percent decline in manufacturing and wholesale revenue. Sales at company-owned stores open at least a year and at GNC.com rose 7.1 percent compared to a year ago. The company said the effects of Superstorm Sandy reduced its revenue by about $4 million.

Wells Fargo analyst Kate Wendt said s profit margins were better than anticipated, and growth at GNC.com improved. If the effects of the storm are excluded, Wendt noted, sales at stores open at least a year were about equal to Wall Street estimates.

Net income rose almost 90 percent in 2012, reaching $240.2 million, or $2.29 per share. Revenue rose 17 percent to $2.43 billion.

The company expects $2.65 billion to $2.67 billion in revenue in 2013. On average, analysts expect net income of $2.72 per share and $2.67 billion in revenue.

Company shares jumped $3.77 to $39.74 in afternoon trading.

Rates