General Nutrition Makes Moves to Gain Market Share From Discount Supplements Sellers

PITTSBURGH—In addition to its August announcement that the company would discount vitamins and other basic products and some sports nutritional supplements in order to better compete with discount chain stores, General Nutrition Cos. (GNCI) has made other moves to bolster its market share and to increase profitability.

The company recently announced at a BancBoston Robertson Stephens conference in New York that 95% of its vendors have agreed to cut prices on name-brand goods an average of 10%. GNCI CEO William Watts says the company will discontinue carrying the affected products from vendors who have not agreed to cut prices. GNCI also announced that it will hold advertising spending at 6% of retail sales; that it won’t increase corporate costs next year above this year’s levels; that last month it fired approximately 8% of the overhead, manufacturing and distribution operations staff; and that it has put an Australian manufacturing business up for sale and has ceased its investment in a joint venture in Japan.

Nine First Call Corp. analysts forecast for GNCI an average profit of $1.39/share for this year and $1.60/share for next year, matching GNCI estimates of $1.40/share and $1.60/share, respectively.