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Hey Fools!

Included below is the RM spreadsheet for General
Nutrition Centers (GNC) but I would like to qualify
it a bit before I throw it at you...

As many of you know, GNC is "the only nationwide
specialty retailer of vitamin and mineral supplements,
sports nutrition products and herbs, and is also a
leading provider of personal care, and other health-
related products" -- this from their annual report.

Notice above, dear Fools, that magical phrase: 'the
only nationwide specialty retailer...'. This is
in fact true... they have been facing increasing
competition from regional stores (in my area of Michigan
it's Vitamin Outlet and Vitamin World) but they are
the biggest and the baddest.

GNC has 3,757 General Nutrition Centers and GNC Live
Well stores, of which 2,513 are owned and operated
by the Company and 1,226 are franchised. They are located
in the US, Canada, the United Kingdom, and New Zealand.

Their three main businesses are Retail Products,
Franchising, and Manufacturing / Wholesale. Here are
the numbers:


General Nutrition Centers <Fill in Name>
Current PeriodYear-ago PerioYear-over-Year Current Period Current Period Current Period
Feb-99 Feb-98 Growth Mar-99 Mar-99 <Date>
Income Statement . . .
Sales 1,417,746 1,193,485 18.8%
Cost of Goods S 896,539 726,016 23.5%
Net Income 90,977 103,365 -12.0%
Shares Outstand 76,797 83,227 -7.7%

Balance Sheet . . .
Cash & Equivale 1 1 0.0%
Current Assets 429,564 362,965 18.3%
Short-term Debt 0 0 No Debt
Current Liabili 218,422 221,604 -1.4%
Long-term Debt 796,877 357,408 123.0%
0 0 0
Margins & Ratios . . . Competitors' Average
Gross Margins 36.8% 39.2% -2.4
Net Margins 6.4% 8.7% -2.2
Cash-to-Debt 0.00 0.00 -55.1%
Net Cash -796876.0 -357407.0 N/A
Fool Flow Ratio 1.97 1.64 20.1%


Continue Here

Ranking Rule Makers

1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 3
Openness 1 Gross Margins 1
Optimism 1 Net Margins 1
Legitimacy 1 Shares Outstandin 3
Inevitability 1 Cash-to-Debt 0
Solitariness 1 Fool Flow Ratio 0
Humor 1 Expansion Potenti 3
Subtotal 7 Subtotal 11

2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 2 Gross Margins
Gross Margins 0 Net Margins
Net Margins 0 Net Cash
Cash-to-Debt 0 Fool Flow Ratio
Fool Flow Ratio 0 Convenience 4
Your Interest 2 Subtotal 4
Subtotal 4
5) Your Enjoymen 1

Total Score 27


The reason they got such a low score is that I didn't
include any competitors. The problem is (if you can
call it a problem!) I don't know of any... like I
said, there are smaller, regional competitors but I
couldn't find any info on the ones in my area... does
anyone have any more info? Pass it on and I can update
the spreadsheet...

Nonetheless, they have pretty good margins...
The cash situation is not very good (none) and the
Flowie is a bit high but they are definitely the
gorilla in this game...

Margins

The reason I believe margins have gone down a bit is
because they have been expanding at a high rate. From
their annual report:
"During 1998, comparable store sales were down
0.2% in company-owned GNC locations and increased 6.9%
in franchise GNC locations. The comparable store sales
decrease at company-owned GNC locations was driven
by decreased branded sports products and certain commodity
vitamins, a slowing of the herb category sales as
strong publicity and a media campaign in 1997 were
not repeated in 1998, and the mass channel accelerating
their expansion into the market as well as new large
companies entering into the market"


Monopoly

GNC is gearing up to open 1,500 stores that will be
situated inside Rite Aid drugstores around the country,
a move that will definitely boost sales and visibility.
The retail supplement market is projected to grow at
12.6% and 13.8% in 2000 & 2001, respectively. This
growth is driven by a combination of an aging population
and increased consumer acceptance of supplements.
GNC is positioned well to take advantage of this
growth.

In Closing...

I think qualitatively this company may be a RM but
the numbers don't quite make the grade... one to
watch I think... any comments? criticism?

-- Chad
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