GNC GNC Holdings Inc

GNC Holdings Inc., the big vitamin and nutritional products retailer, must repair what its chief executive called "a broken business model" after reporting another quarter of slumping sales.

The remarks by Interim Chief Executive Robert Moran came during a conference call Thursday where he laid out a series of problems at the 9,000-plus store chain, including outdated cash registers that take too long to ring up sales, a rash of products left out of stock and confusing pricing schemes.

"We are moving forward with urgency to implement necessary changes, but there is no silver bullet or quick fix solution," Mr. Moran told analysts.

Shares, down 35% this year, were down 20% to $15.10 in after-hours trading Thursday.

The retailer has been working on a turnaround for more than two years, cycling through upper-management changes, the sale and refranchising of hundreds of its stores, and has considered putting itself up for sale. Still, the Pittsburgh-based company has battled declining sales and weaker profits.

GNC said sales at established stores in the third quarter dropped 8.5% at domestic company-owned stores, which include the company's website, and 8.9% at U.S. franchise locations.

Mr. Moran, who took over in July, said one of the biggest problems with the business is that pricing was different between the company's stores and website. Mr. Moran said GNC "completely aligned our dot com and store pricing" during the three months ended Sept. 30., and as a result online sales tumbled in the quarter.

GNC is also eliminating bulk sales of its nutritional products. Chief Financial Officer Tricia Tolivar said the company wanted to eliminate a conflict in which customers were getting products at steep discount in bulk which were then "being taken to online channels that were not sanctioned by GNC" and driving away brick-and-mortar customers.

Executives said the company is also refreshing its customer-loyalty programs, updating its paid loyalty card and launching an new free rewards card that it anticipates will be available nationwide by the end of the year.

In July, the company appointed Mr. Moran as interim chief executive, suspended earnings guidance and halted a stock-buyback program as it reported weaker second-quarter results.

For the third quarter, GNC reported a profit of $32.4 million, or 47 cents a share, down from $45.8 million, or 54 cents a share, a year earlier. Revenue decreased 8.1% to $628 million.

Write to Sara Germano at sara.germano@wsj.com

(END) Dow Jones Newswires

October 27, 2016 17:15 ET (21:15 GMT)

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