Christopher Bayliss
Long/short equity, deep value, value, research analyst

GNC: Overly Discounted GARP Investment

Note: The following article was co-authored with Jack Schrager, an alumnus of the Duke Investment Club.

Introduction

GNC (NYSE:GNC) is a leading supplier of nutrition and supplement products. It profits from delivering its products through company-owned retail stores, franchising and royalty fees, and selling product to its franchises and other 3rd party vendors. The two most recent quarterly results were weak. GNC missed on revenue, comps, and net income both times and twice guided for weaker than expected 2014 due to poor weather, the DMAA ban, aggressive holiday pricing and near-term weakness in the multivitamin market. The approximately 40% fall from 52-week highs is commensurate of GNC becoming a broken growth story. We believe, however, that GNC's growth

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