GNC Holdings Inc., parent company of health and wellness retailer GNC, filed for Chapter 11 bankruptcy protection late Tuesday and said it plans to close “at least 800 to 1,200 stores.”
The Pittsburgh-based chain, which had approximately 5,200 retail locations in the U.S. and 7,300 locations globally as of March 31, said the COVID-19 pandemic accelerated the need to file for bankruptcy protection after being under “financial pressure for the past several years.”
“The COVID-19 pandemic created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business,” the retailer said in frequently asked questions about the decision.
In a news release, GNC said it has reached an agreement with its key stakeholders “to pursue a dual-path process that will allow the Company to restructure its balance sheet and accelerate its business strategy through Chapter 11 of the U.S. Bankruptcy Code.”
According to the release, the agreement with lenders and Harbin Pharmaceutical Group Holding Co. Ltd., an affiliate of GNC’s largest shareholder, has a $760 million purchase price, “which would be executed through a court-supervised auction process at which higher and better bids may be presented.”
The company said with support of lenders and stakeholders it “expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process in the fall of this year.”
U.S. and international franchise partners and corporate entities outside North America are not included in the Chapter 11 filing, the company said.
In November 2018, GNC officials had announced that they would close up to 900 stores over the next three years in the U.S. and Canada as leases expire. In July, the retailer said it planned to focus the closings on mall locations.
With the bankruptcy, GNC said it plans to accelerate the closings and 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.”
The coronavirus pandemic forced several companies strained before the crisis to file for bankruptcy to try to survive. J.C. Penney, Neiman Marcus and Tuesday Morning are among the retailers that have filed for bankruptcy since the start of the pandemic.