GNC 2009 Annual Report Download - page 24

Table of Contents
effect on our ability to generate revenues. For example, sales of some of our VMHS products, such as St. John's Wort, Sam-e, and Melatonin,
and more recently sales of Vitamin E, were initially strong, but we believe decreased substantially as a result of negative publicity. As a result of
the above factors, our operations may fluctuate significantly from quarter to quarter, which may impair our ability to make payments when due
on our debt. Period-to-period comparisons of our results should not be relied upon as a measure of our future performance. Adverse publicity in
the form of published scientific research or otherwise, whether or not accurate, that associates consumption of our products or any other similar
products with illness or other adverse effects, that questions the benefits of our or similar products, or that claims that such products are
ineffective could have a material adverse effect on our reputation, the demand for our products, and our ability to generate revenues.
Our failure to appropriately respond to changing consumer preferences and demand for new products could significantly harm our
customer relationships and product sales.
Our business is particularly subject to changing consumer trends and preferences, especially with respect to our diet products. For example,
the recent trend in favor of low-carbohydrate diets was not as dependent on diet products as many other dietary programs, which caused and
may continue to cause a significant reduction in sales in our diet category. Our continued success depends in part on our ability to anticipate
and respond to these changes, and we may not be able to respond in a timely or commercially appropriate manner to these changes. If we are
unable to do so, our customer relationships and product sales could be harmed significantly.
Furthermore, the nutritional supplement industry is characterized by rapid and frequent changes in demand for products and new product
introductions. Our failure to accurately predict these trends could negatively impact consumer opinion of our stores as a source for the latest
products. This could harm our customer relationships and cause losses to our market share. The success of our new product offerings depends
upon a number of factors, including our ability to:
• accurately anticipate customer needs;
• innovate and develop new products;
• successfully commercialize new products in a timely manner;
• price our products competitively;
• manufacture and deliver our products in sufficient volumes and in a timely manner; and
• differentiate our product offerings from those of our competitors.
If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our
products could become obsolete, which could have a material adverse effect on our revenues and operating results.
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