GNC 2011 Annual Report Download - page 25

Table of Contents
third-party nutritional supplements. We may not be able to compete effectively and our attempt to do so may require us to reduce our prices, which may result
in lower margins. Failure to effectively compete could adversely affect our market share, revenues and growth prospects.
Unfavorable publicity or consumer perception of our products and any similar products distributed by other companies could cause fluctuations in our
operating results and could have a material adverse effect on our reputation, the demand for our products, and our ability to generate revenues.
We are highly dependent upon consumer perception of the safety and quality of our products, as well as similar products distributed by other
companies. Consumer perception of products can be significantly influenced by scientific research or findings, national media attention and other publicity
about product use. A product may be received favorably, resulting in high sales associated with that product that may not be sustainable as consumer
preferences change. Future scientific research or publicity could be unfavorable to our industry or any of our particular products and may not be consistent
with earlier favorable research or publicity. A future research report or publicity that is perceived by our consumers as less favorable or that questions earlier
research or publicity could have a material adverse effect on our ability to generate revenues. For example, sales of some of our products, such as those
containing ephedra, were initially strong, but decreased as a result of negative publicity and an ultimate ban of such products by the FDA. As such, 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. 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 supplements 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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