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GNC Holdings to Expand Portfolio With Alani Nutrition Deal

Zacks Equity Research

GNC Holdings, Inc. GNC recently announced a retail and Amazon partnership with Alani Nutrition. Notably, Alani Nutrition is a women’s supplement brand offering a variety of health and sports nutrition products. The company’s product lines use filler-free and simple ingredients and are manufactured in the United States. GNC Holdings will officially start selling the products online and in stores starting Mar 15.

With Alani Nutrition being a women-focused company, it is believed that the partnership might help GNC Holdings widen its customer base.

Market Potential

Per a Zion Market Research report, the global sports nutrition market is expected to witness a CAGR of 8.1% between 2017 and 2022.

It is further believed that increasing health awareness along with growing number of health clubs and fitness centers will help boost demand for sports nutrition. Furthermore, rising levels of disposable income and rapid urbanization are expected to drive demand. North America, dominated by the United States, is expected to be the largest market for sports nutrition products.

Domestic Retail Growth Strategy

In fourth-quarter 2018, GNC Holdings’ domestic retail comparable sales trend improved to negative 1.4. The company also gained from its modified sales incentive program. GNC Holdings has been seeing encouraging performance from the e-commerce business. However, management is of the opinion that maturity of its Amazon Prime relationship may pose a headwind in 2019.

The company has designed a go-forward strategy. In this regard, GNC Holdings is planning to expand its U.S. domestic retail business and enhance the productivity of its retail portfolio. The company is renegotiating lease terms, shutting down unproductive stores and moving resources to more profitable locations. Notably, GNC Holdings has shortlisted 700 to 900 unproductive stores for shutting down over the next three years.

Share Price Movement

GNC Holdings has outperformed its industry in the past three months. The stock has lost 1.9% compared with the industry's 22.5% decline.


Zacks Rank and Key Picks

GNC Holdings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Varian Medical Systems VAR, Illumina, Inc. ILMN and DexCom, Inc. DXCM. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Varian’slong-term earnings growth rate is projected at 8%.

Illumina’slong-term earnings growth rate is expected at 21.5%.

DexCom’s second-quarter earnings per share are estimated to grow 116.7%.

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