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GNC Holdings (GNC) Michael G. Archbold on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 28, 2016 8:30 am ET

Executives

John F. Mills - Partner, ICR (Integrated Corporate Relations)

Michael G. Archbold - Chief Executive Officer & Director

Tricia K. Tolivar - Chief Financial Officer & Executive Vice President

Analysts

Joe Edelstein - Stephens, Inc.

Curtis S. Nagle - Bank of America Merrill Lynch

Bob Summers - Macquarie Capital (NYSE:USA), Inc.

Philip Terpolilli - Wedbush Securities, Inc.

Christopher Michael Horvers - JPMorgan Securities LLC

Stephen Tanal - Goldman Sachs & Co.

Peter S. Benedict - Robert W. Baird & Co., Inc. (Broker)

Operator

Good day, ladies and gentlemen, and welcome to the GNC Holdings First Quarter 2016 Earnings Conference Call on today, the 28th of April, 2016. Throughout today's presentation all participants will be in a listen-only mode. There will be an opportunity to ask questions at the end of the conference call.

I will now hand you over to Mr. John Mills. Please go ahead.

John F. Mills - Partner, ICR (Integrated Corporate Relations)

Good morning, and welcome to the GNC first quarter 2016 earnings call. This morning, we released our first quarter financial results, which are available on our website. Also on the website is a webcast link that includes a presentation that will be accompanying this morning's call.

With me today is Mike Archbold, CEO; and Tricia Tolivar, Executive Vice President and CFO. Today's call will be limited to approximately 60 minutes. Following our prepared remarks, we will be available to take your questions. After I read the disclaimer, Mike will provide an update on our key initiatives, Tricia will then review financials, after which Mike will wrap up with some closing remarks. Now, for the disclaimer.

This conference call contains forward-looking statements, which include information concerning our future results, trends and other information that is not historical information. All forward-looking statements included on this call are based on information available to us on the date of this call, current expectations and various assumptions. We believe there is a reasonable basis for our expectations and assumptions, but they are inherently uncertain and may not prove correct.

We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this call. For a list of important factors that could cause our actual results to differ materially from the forward-looking statements on this call, please refer to our public filings with the SEC and our earnings release this morning.

I will now turn the call to Mike.

Michael G. Archbold - Chief Executive Officer & Director

Thanks, John, and welcome, everyone, to the first quarter 2016 earnings call. Let me start by saying our results for the quarter did not meet our expectations and we, as your management team, are disappointed with these results. The impact of our initiatives is taking longer than expected to produce significant results, and we're still experiencing surprises. We clearly recognize the severity of the issues, so let me get right into the details of what happened and the immediate steps we're taking to address these challenges.

So, overall, four key factors drover our results; let's talk about them. Significant markdowns, primarily in vitamins to address expiring inventory; overall under-performance in our vitamin business, specifically Vitapaks; marketing effectiveness, although improving, is not delivering our desired results; and weakness in our franchisee results related to low adoption of corporate initiatives. While we're moving quickly to address these challenges, we reduced our guidance for the year.