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GNC Holdings' Overseas Prospects Robust Amid Market Woes

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On Jun 30, 2016, we issued an updated research report on Pittsburgh, PA-based GNC Holdings, Inc. (GNC - Free Report) , a leading global specialty retailer of products for health and wellness, including vitamins, minerals and herbal supplement, sports nutrition and diet. The company currently carries a Zacks Rank #3 (Hold).

On a brighter note, GNC Holdings’ international business has been a key growth driver in recent years. As of Mar 31, 2016, the company had 2,059 international franchise stores across more than 50 countries.

The company also made substantial progress in its retail segment during first-quarter 2016 and also opened eight new stores. In this quarter, the company opened 8 new company-owned stores. GNC Holdings is a global specialty retailer with a network of more than 9000 locations worldwide, which will help the company eventually overcome the adversities it faced in the beginning of 2016 in the retail segment, in the quarters ahead. The company also holds a strong cash balance position, which is a major positive.

However, GNC Holdings’ business is particularly subject to changing consumer trends and preferences. The company’s failure to respond in a timely or commercially appropriate manner to such changes may adversely affect customer relationship and product sales.

Moreover, the nutritional-supplements industry is characterized by rapid and frequent changes in demand for products and new product introductions. If GNC Holdings fails to predict these demand trends and provide the stores with the latest products, it can harm customer relationship and the company’s market share.

The U.S. nutritional supplements retail industry is large and highly fragmented. In the U.S., GNC Holdings competes for sales with heavily-advertised national brands manufactured by large pharmaceutical and food companies, as well as other retailers. In addition, as certain products become more mainstream, the company is subjected to increased price competition with more participants entering the market.

Key Picks in the Sector

Better-ranked medical stocks are St. Jude Medical Inc. , Boston Scientific Corp. (BSX - Free Report) and ICU Medical, Inc. (ICUI - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).

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