GNC Holdings Inc. has filed bankruptcy in an effort to accelerate store optimization and growth strategies. The Chapter 11 bankruptcy plan includes shuttering 800 to 1200 stores.
Prior to suffering major losses due to the coronavirus, the company was set to close at least 250 underperforming stores. That number has grown exponentially and GNC hopes to pull out of bankruptcy by Fall 2020 if all goes to plan.
The 85-year-old health and nutrition-related product company had nearly $1 billion in debt prior to the pandemic. In the statement released by GNC, the at-home orders prevented them from nailing down refinancing plans due to the abrupt “dramatic negative impact” on its business.
Over the past year, GNC has been investing in omnichannel and brand strategies while right-sizing the corporate-owned store portfolio. The plan hopes to “allow GNC to invest in the appropriate areas to evolve for the future”.
While the final list of store closures is not known, GNC updated their previously disclosed list of stores planned to close. The list currently includes 248 locations.
Of those locations, California currently has the most-planned closures of any other state with 27 stores on the list. In addition, there are 17 stores in Pennsylvania, 12 stores in Florida, 11 in New York, as well as 29 stores in Canada.
GNC’s bankruptcy case is currently being heard in the U.S. Bankruptcy Court. Until the bankruptcy plan has been approved through the court process, the stores set to close will remain open.
Once the case is approved by the courts, store closures will likely begin shortly after. GNC is among a growing list of large companies to file bankruptcy since early May. They join retailers J.Crew, Neiman Marcus, JCPenney, and Pier 1, among others.
Nearly every industry has been hit by the coronavirus, forcing bankruptcy filings and closures of big companies around the world. GNC has both franchisee locations, as well as, corporate-owned retail locations. The bankruptcy is limited to corporate-owned locations.
Previous filings by other retailers would indicate that GNC store liquidation sales could startup within the next month. For example, JCPenney filed for bankruptcy on May 15 and began liquidation sales on June 17.
In lieu of the announcement, GNC updated their Custom FAQ to answer questions related to loyalty benefits, Pro Memberships, and gift cards.
According to its FAQ, GNC has filed a customary motion with the bankruptcy courts which would ensure loyalty points are still valid “and will continue to accrue towards cashback rewards that can be redeemed in-store or online at gnc.com.” They also stated that they intend to uphold benefits for Pro Membership customers.
Both of these statements made by the company with best intentions will require court approval before they are finalized. As of right now, the company does intend to honor the benefits earned, as well as allow customers to continue earning benefits.
The same goes for gift cards. Provided the court approves the customary motion, gift cards will be honored at full value.