Health and nutrition retailer GNC filed for Chapter 11 bankruptcy protection, announcing that it will close between 800 and 1,200 locations while it tries to find a buyer.
The firm, in a letter to customers on Wednesday, wrote that “we felt the best opportunity for us to continue to improve our capital structure and address certain operational issues was to restructure through a Chapter 11 reorganization.”
“This gives us the opportunity to improve our balance sheet while continuing to advance our business strategy, right-size our corporate store portfolio, and strengthen our brands to protect the long-term sustainability of our company,” the statement said.
While it remains open for business, the chain will shut down 800 to 1,200 locations, the Pittsburgh-based company wrote.
“By doing so, we will be exiting unfavorable lease terms burdening our business more quickly and shifting resources to our standalone store locations where we are seeing significantly more consumer foot traffic,” said the company. “We will communicate specific updates around potential closures as we progress in the Chapter 11 process. While select corporate stores will eventually close, we encourage you to seek out one of our other store locations in your area. Please note that even closing stores may remain open for a period of time.”
The COVID-19 pandemic, caused by the CCP (Chinese Communist Party) virus, created a problem “where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business.”
“GNC continues to serve consumers through our retail stores in many areas and we are offering safe and convenient curbside pick-up at shopping plaza locations. Stores that are closed as a result of COVID-19 will reopen in accordance with government guidelines as quickly and safely as possible,” it said.
The firm has identified about 250 stores that will immediately close in Canada, the United States, and Puerto Rico. The majority of the locations being closed are in California, Florida, and New York.
The company operates around 5,800 locations overall, CNN reported.
The retailer also noted in a Securities and Exchange filing Wednesday it had paid CEO Ken Martindale a $2.2 million bonus before filing for bankruptcy, saying that the payout was part of a larger “retention bonuses” plan. Martindale will get to keep 75 percent of his bonus if GNC doesn’t emerge from Chapter 11. Several other top GNC managers will receive between $200,000 and $795,000 bonuses, according to the filing.
GNC joins a list of well-known companies to file for bankruptcy during the pandemic, including Neiman Marcus and car rental firm Hertz.