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GNC Holdings E-Commerce Business Solid, Competition Rife

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On Oct 8, we issued an updated research report on GNC Holdings, Inc. (GNC - Free Report) . We are upbeat about this Zacks Rank #3 (Hold) company’s significant progress with e-commerce business over the last few quarters. However, cut-throat competition continues to be a concern.

This leading global specialty retailer of products for health and wellness, including vitamins, minerals, and herbal supplement, sports nutrition and diet, has been outperforming its industry for the past three months. The stock has gained 16.1% compared with the industry's 12.8% growth.

Of late, GNC Holdings has made major changes in e-commerce pricing and promotion strategy in August 2016. This eliminated channel conflict as well as bulk sales. These changes allowed the company to launch its entire product line on Amazon (sales from which are included in the GNC.com business unit) in January 2017. Per management, the e-commerce business continues to grow higher than expected.

Moreover, the company is upbeat about the shift of control of the website from a third party to a cloud-based, company-controlled platform. This offers the company more flexibility and control over new features and enhancements, including advanced personalization capability, improved merchandising and opportunity for omnichannel expansion.

The company’s growing international business has also been a major plus. Management expects to continue capitalizing on international revenue growth opportunities through the addition of franchise stores in existing markets, expansion into new high-growth markets and the growth of product distribution in both existing and new markets.

Meanwhile, in the United States, GNC Holdings competes for sales with heavily advertised national brands manufactured by large pharmaceutical and food companies, as well as other retailers. In addition, the company experiences increased price competition from participants entering the market.

Moreover, GNC Holdings’ business is particularly subject to changing consumer trends and preferences. So the company’s continued success depends partly on its ability to anticipate and respond to changes.

Key Picks

Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 2 (Buy).

Amedisys’ long-term expected earnings growth rate is 19.4%. The stock holds a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.

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