GNC 2008 Annual Report Download - page 10

Table of Contents
Products
We offer a wide range of high-quality nutritional supplements sold under our GNC proprietary brand names, including Mega Men, Ultra
Mega, Pro Performance, and Preventive Nutrition, and under nationally recognized third-party brand names. We report our sales in four major
nutritional supplement categories: VMHS; sports nutrition; diet; and other wellness. We offer an extensive mix of brands and products, including
approximately 2,600 SKUs across multiple categories. This variety is designed to provide our customers with a vast selection of products to fit
their specific needs. Sales of our proprietary brands at our company-owned stores represented approximately 48% of our net retail product
revenues for 2007, 46% for 2006 and 47% for 2005.
Consumers may purchase a GNC Gold Card in any U.S. GNC store or at www.gnc.com for $15.00. A Gold Card allows a consumer to
save 20% on all store and on-line purchases on the day the card is purchased and during the first seven days of every month for a year. Gold
Card members also receive personalized mailings and e-mails with product news, nutritional information, and exclusive offers.
Products are delivered to our retail stores through our distribution centers located in Leetsdale, Pennsylvania; Anderson, South Carolina;
and Phoenix, Arizona. Our distribution centers support our company-owned stores as well as franchised stores and Rite Aid locations. Our
distribution fleet delivers our finished goods and third-party products through our distribution centers to our company-owned and domestic
franchised stores on a weekly or biweekly basis depending on the sales volume of the store. Each of our distribution centers has a quality
control department that monitors products received from our vendors to ensure quality standards.
Based on data collected from our point-of-sale systems, excluding certain required accounting adjustments of $(0.6) million for the period
from January 1 to March 15, 2007, $5.0 million for the period from March 16 to December 31, 2007, $0.1 million for 2006, $3.0 million for 2005,
and sales from gnc.com of $6.7 million for the period from January 1 to March 15, 2007, $21.6 million for the period from March 16 to
December 31, 2007, and $17.1 million in 2006, below is a comparison of our company-owned domestic store retail product sales by major
product category and the percentages of our company-owned domestic store retail product sales for the periods shown:
Predecessor Successor Combined Predecessor Predecessor
Year ended December 31,
Period January 1 to Period March 16 to
March 15, 2007 December 31, 2007 2007 2006 2005
(dollars in millions)
U.S Retail Product Categories:
VMHS Products $ 96.2 40.4% $ 335.5 41.1% $ 431.7 40.9% $ 415.3 40.0% $ 377.7 40.6%
Sports Nutrition Products 85.6 35.9% 291.1 35.7% 376.6 35.7% 369.7 35.6% 330.3 35.5%
Diet Products 35.7 15.0% 116.8 14.3% 152.4 14.5% 158.7 15.3% 135.2 14.5%
Other Wellness Products 20.8 8.7% 73.0 8.9% 94.0 8.9% 94.0 9.1% 87.8 9.4%
Total U.S. Retail revenues $ 238.3 100.0% $ 816.4 100.0% $ 1,054.7 100.0% $ 1,037.7 100.0% $ 931.0 100.0%
VMHS
We sell vitamins and minerals in single vitamin and multi-vitamin form and in different potency levels. Our vitamin and mineral products
are available in liquid, tablets, soft gelatin, and hard-shell capsules and powder forms. Many of our special vitamin and mineral formulations,
such as Mega Men and Ultra Mega, are available only at GNC locations. In addition to our selection of VMHS products with unique
formulations, we also offer the full range of standard "alphabet" vitamins. We sell herbal supplements in various solid dosage and soft gelatin
capsules, tea, and liquid forms. We have consolidated our traditional herbal offerings under a single umbrella brand, Herbal Plus®. In addition
to the Herbal Plus line, we offer a full line of whole food-based supplements and top selling herb and natural remedy products. Our target
customers for VMHS products are women over the age of 35.
We also offer a variety of specialty products in our GNC and Preventive Nutrition product lines. These products emphasize third-party
research and available literature regarding the positive benefits from certain ingredients. These offerings include products designed to provide
nutritional support to specific areas of the body, such as joints, the heart and blood vessels, and the digestive system.
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