GNC Holdings, Inc. (NYSE:GNC) Q3 2018 Earnings Conference Call November 9, 2018 4:30 PM ET
Matt Milanovich - Head, IR
Kenneth Martindale - Chairman & CEO
Tricia Tolivar - CFO
Bob Summers - Buckingham Research
Sean Kras - Barclays Capital
Simeon Gutman - Morgan Stanley
Good day, everyone and welcome to the GNC Third Quarter 2018 Earnings Call. Today's conference is being recorded. And at this time, I'd like to turn the call over to Matt Milanovich, Head of Investor Relations. Please go ahead, sir.
Good afternoon, and thank you for joining us on GNC's third quarter 2018 conference call. Today, Ken will give you an overview of where GNC is today and talk about our strategic focus going forward. After that Tricia will take you through our financial results. And finally, we'll open the call for your questions.
I would like to remind everyone that during this conference call, GNC management will make certain forward-looking statements about it's outlook that involve risks and uncertainties. GNC's earnings press release for the third quarter of 2018 which can be found under the News Release link on our Investor Relations page of our website at www.gnc.com includes our forward-looking statement disclaimer. Actual results could differ materially from those projected, and factors that may cause the company's actual results to differ materially from these statements are included in today's presentation and in our SEC filings.
In addition to the GAAP results, GNC will provide certain non-GAAP financial measures. The tables attached to GNC's earning's press release for the third quarter of 2018 that I referred to include reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
With that, I'll turn it over to our Chairman and CEO, Ken Martindale.
Thanks, Matt. Good afternoon, everybody and thank you for joining us late on a Friday afternoon. As you know, we have lot going on here in Pittsburg.
When we set the date and the time for today's call, we intentionally pushed it to the end of the week to ensure that we allowed ample runway to bring our recent transaction to completion. On Wednesday morning we announced that GNC and Harbin Pharmaceutical Group had reached an agreement for funding at the $300 million strategic investment, and finalized the definitive terms of the China joint venture. The amended purchase agreement is structured in three separate tranches of $100 million, $50 million and $150 million to close in November, December and February respectively.
A few minutes ago we further announced that we received the initial $100 million investment from Harbin, and have closed on the initial tranche of the convertible preferred equity. This is the critical first step in strengthening our capital structure and positioning the company for future growth. The joint venture will build upon the strength of the GNC brand to capitalize on the fast-growing demand for nutritional supplements in China, while leveraging Harbin's strong distribution network and regulatory, operational and manufacturing experience. We're confident that this partnership will provide us with the experience and expertise to navigate the competitive Chinese landscape and rapidly expand our brand throughout the market.
I want to spend most of my time with you this afternoon discussing our strategy going forward, but first, let me give you a bit of color on the sales in the third quarter. We got off to a soft start in early July with comps training below our expectations. In response, we took a close look at our business, key competitive activity and the overall retail climate and quickly took action. We immediately dialed up some of our promotional efforts and accelerated an associate commission change that we have been preparing to implement. As a result, sales progressively strengthened throughout the quarter and while we are disappointed with the negative two comp, they did return to a more normalized run rate by quarter end. Margin was also negatively impacted in the quarter by the increased promotional activity.
Let me provide a little more detail on the commission change. In mid-August we shifted some of our sales incentives from being single item focused to being centered more on a transaction building add-on portfolio products that drive higher basket size. These commissioned items are GNC branded foundational products like fish oil, probiotics and multi-vitamins; products that should be included in most customers basic supplement regimen. These are core products that typically carry higher margin and the customers can get only at GNC. It's early in the program implementation but incenting our associates to sell critical foundational products as add-on sales clearly has the power to build basket size and drive gross margin expansion. Because this incentive pay will grow in relation to sales, it also allows us to provide additional compensation to our most effective associates in line with today's aggressive job market. Tricia will have more specifics on the third quarter in a few minutes.
Now that our long-awaited partnership with Harbin has finally been firmly established, we are anxious to continue with the execution of our overall strategy to reposition GNC. I'd like to spend the next few minutes laying out several of the key components that we're focused on as we finish out this year and prepare to head into 2019. Banquet [ph] strengthening our global brand, enhancing the level of customer engagement, accelerating our product and service innovation pipeline, optimizing our store portfolio, and leveraging cost savings and efficiencies. Awareness in Fitch and Affinity for the GNC brand translates across the globe and gives us meaningful opportunities to expand our international market presence, increase our product offerings, grow local assortments and expand wholesale distribution.
To make the most of these opportunities, we partnered with smart strategic country exclusive franchise operators and helped them grow their business and build on their success. In the third quarter, these strategies drove a 6% increase in revenue within our international segment. For example; our new partner in India is growing distribution through additional channel such as pharmacy, fitness centers and e-commerce. They are also expanding their marketing reach within Indian celebrity spokesman, John Abraham, which resulted in year-over-year sales increases of 10% of local currency. We've introduced the new GNC brand at Supplement line Mom Baby Kid develops specifically for our international markets that is now available in 27 countries. And we recently transitioned the 35 stores in The Philippines to a strong existing partner ONI that has already successfully built the GNC brand in 195 stores throughout Singapore, Malaysia and Taiwan.
Let me provide some detail on the size of the opportunity in China. This is a business that we believe can grow to $200 million in revenue over the next three years by leveraging the strengths of both organizations. Our collective teams have been jointly developing the business plan for the joint venture during the past six months, and we are anxious to transition our existing China business to the JV in the first quarter of 2019. When it comes to enhancing customer engagement, the most powerful component of our strategy is providing exceptional, personalized experiences. Today's consumer expects brands that engage with them to understand their needs and preferences. We're digging in on this front and clearly have lots of work to do but we're really making strides. To date, 16 million customers have enrolled in myGNC Rewards including approximately 1 million ProAccess members who continue to visit our stores more often and spend four times as much throughout the year.
We're now capturing 90% of our retail sales in our corporate stores in these two programs which is generating a tremendous amount of consumer data, and we're beginning to leverage that data by providing tailored offers and information based on customer's unique shopping patterns and preferences. Our ProAccess product boxes are delivered to customers front doors twice a year, and are now customized into six distinct segments tailored to their personal lifestyle. Pro customers make up less than 10% of our customer base but generate nearly one quarter of our sales, and these pro customers spend 50% more per transaction than free members. In today's dynamic retail marketplace, one thing is certainly, consumers are changing their shopping habits quickly and we need to change with them.
We're working hard to make it easier for our customers to engage with us whenever, wherever and however they want. GNC delivers an auto-delivering save although currently a small portion of our business, both continue to grow. In a world where quality, authenticity and trust increasingly drive customer decisions about where they want to shop and what they buy, GNC is exceptionally well positioned. Consumers trust our brand and our products and believe that by strengthening the -- and we believe by strengthening our existing products lines and adding new ones we can make our brands even more valuable. In the third quarter, GNC brand sales represented 52% of our domestic system-wide sales which is a 700 point increase from last year, 200 basis point increase from last quarter.
In addition to our unmatched product development capabilities, we're building partnerships with venders who offer us exclusive differentiating products and who highlight GNC in their marketing and outreach to consumers. These exclusive products currently contribute approximately 9% of our domestic sales. As consumer expectation shit and grow our ability to innovate, bring new products to market and serve unmet customer needs is critical to our competitive advantages. In early 2018, we launched Slimvance, a breakthrough all natural weight management brand and refreshed our Amp and Beyond Raw assortment with strong results. Slimvance is already our top selling weight management product and is now on pace to exceed $50 million of sales in it's first year in the market. And Beyond Raw is on pace to become a $100 million in 2018.
In late September we introduced Earth Genius, a new GNC brand with 35 items that address specific consumer needs such as increased energy, stress management and sleep improvement that is really resonating with consumers. Earth Genius addresses the natural supplement market which makes us more than 18% of all supplement sales and is expected to grow to more than $10 billion by 2021. This new product line is creating excitement within an important core GNC segment, health and wellness consumers who shop the main street supplement category and care about natural ingredients.
In the joint health category, where there has been little to no innovation in years, we recently launched TamaFlex, an all-natural botanical blend of supplements that delivers clinically proven results. Since it's launch six weeks ago, our joint category is up over 5% from last year with virtually no cannibalization from our GNC brand TriFlex joint product. For Pro members, we have been including coupons and Pro boxes that have been driving members with higher propensity to purchase, to visit a store and get their free TamaFlex sample.
Another critical element of our strategy is maximizing our brick-and-motor infrastructure as we look to build out an integrated omni-channel experience for our customers. As part of this effort with the assistance of a nationally recognized real estate consulting firm, we recently completed a detailed store-by-store review of our 4,300 domestic locations. This work has resulted in a strategic real estate plan that will optimize our real estate network over the coming three years. With an average remaining lease term of 2.7 years, we have a tremendous amount of flexibility in regards to reshaping our store portfolio.
The analysis identified locations that need to be relocated, refreshed, targeted for lease reductions, potential franchise opportunities, and ultimately between 700 to 900 closures. Over the past two years, we have experienced sales transfer rates in excess of 30% upon store closures. The high fixed costs inherit in our small box retail model make this sales transfer highly accretive to the remaining store base. These closures would generally occur upon lease termination over the next three years as our digital commerce initiatives continue to take hold. There is no doubt that the ultimate GNC consumer brand experience is best delivered by our well trained associates across our corporate and franchise store network. However, while we have tremendous brand recognition, many consumers do not currently visit GNC stores on a regular basis if ever. This presents an opportunity for us to introduce non-users to the brand through other channels.
As you know, we currently GNC branded products at Rite Aid, PetSmart, Sam's Club and Amazon among others. We believe by carefully complimentary retail partnerships on select items and brands, we can expose new customers to innovative high quality products and bring them into the GNC brand. As newly customers engage with the brand, we have an opportunity to drive them back into our retail stores to fully experience everything that the brand has to offer.
Lastly, we recently implemented an enterprise-wide cost reduction and efficiency initiative expected to result in $40 million to $50 million in annual savings once implemented. We estimate that it will take two years to fully realize the annualized run rate savings. The targeted cost reductions are in areas such as product packaging, supply chain, occupancy, salaries and benefits, as well as marketing spend and are intended to have no negative impact on our customer experience. We do plan on reinvesting some of these captured savings into the growth initiatives I walked through earlier.
During my first year at GNC, several things have become exceedingly clear; this is a company with some real competitive advantages and significant potential. We have a strong foundation in numerous platforms that can drive growth but we still have a tremendous amount of work ahead of us to fully achieve a significant potential this company has. GNC is far more than just a specialty retailer, it's a global brand and with our Harbin partnership now firmly in place, we're in a stronger position to continue working towards repositioning the GNC business.
With that, I'll turn it over to Tricia for a closer look at the quarter.
Thanks, Ken and good afternoon, everyone. Even though the quarter started out soft, we delivered $50 million in adjusted EBITDA for the third quarter. After we took action to improve sales in Q3, we have now returned to a more normalized commission strategy and retain the associated commission changes mentioned earlier, resulting in more stable sales in the fourth quarter with slightly better gross margins and modestly higher SG&A costs.
Consolidated revenue was $580.2 million in the third quarter compared with $613 million in the prior year. The decrease is primarily attributable to the sale of LuckyVitamin in September of 2017 which resulted in a $20.8 million reduction in revenue and lower sales associated with the store closures at the end of their lease term, which is a component of our store portfolio optimization strategy. Third quarter same-store sales, including GNC.com were down 2.1%. Excluding the impact of higher loyalty point redemptions in the current year compared to the prior year as our program matures, same-store sales decreased 1.3%. The impact of loyalty point redemption to the comp is negligible in the fourth quarter and beyond.
E-commerce sales were 7.2% of U.S. and Canada revenue in the current quarter compared with 6.2% in the prior year quarter, driven by growth in revenue from both, GNC.com and our Amazon marketplace. Keep in mind, that we've now cycled the first year of our partnership with Amazon and continue to see growth. Revenue from our domestic franchise locations was down $3.6 million due to a decrease in same-store sales and a decrease in the number of franchise stores. Revenue from our International business was up 6.1% driven by an increase in same-store sales of 1.5%. As Ken mentioned, we haven't placed plans to grow our international business by leveraging new channels of distribution like in India, optimize wide space opportunities with strong franchise partners like in The Philippines, and drive the overall business via more innovations like the recently launched Mom, Baby & Kids product line.
Regarding our business in China; these results will continue to be consolidated into GNC until the JV is consummated in February of 2019. During our next update, we'll provide more specifics on the expected JV results and the impact to GNC operating results on a go-forward basis.
Manufacturing and Wholesale revenues excluding inter-segment sales increased $1 million driven by higher contract manufacturing sales. Operating income decreased by $2.3 million, primarily due to lower margin rate from contract manufacturing, partially offset by higher margins from increased intercompany sales. Our focus remains on growing GNC brand mix which will drive higher-margin intercompany sales relative to low-margin third-party contract manufacturing, which is expected to improve total margin rate of this segment overtime. Third quarter gross profit was 31.8% of sales compared with 32.8% in the prior year. The decrease was driven by an increased and promotional spending that we implemented to get sales back on-track. Lower vendor income and impacts from the loyalty program partially offset by higher GNC brand mix.
At 25.2% of sales, third quarter adjusted SG&A was 40 basis points above last year due to incremental associated commissions introduced in August 2018 to be build basket, as well as increased commissions driven by higher GNC brand mix. The enterprise-wide cost reduction and efficiency initiatives that Ken mentioned earlier, is not expected to have a material impact on the fourth quarter. Of the $40 million to $50 million in expected savings, we do anticipate a $15 million to $20 million cost reduction in 2019 and $25 million $30 million in 2020. These cost reductions are incremental to the cost that will be eliminated as we optimize our store footprint. However, some of the enterprise cost reduction and efficiency costs will be reinvested in the business to fund initiatives to execute the GNC strategy.
As mentioned on our last call, we launched a retention program to retain senior executives and other key personnel critical to the execution of the company's strategy. The third quarter impact was $2.1 million, which is treated as an add-back. We also incurred $300,000 related to legal and other startup costs on the China joint venture, and as a result of the store portfolio optimization strategy we announced earlier in the call, we recorded a long-lived asset impairment totaling $14.6 million. Free cash flow is down versus the prior year quarter at $2.4 million driven by the timing of certain activities. We generated $6.5 million in cash from operating activities during the third quarter and we invested $5 million in capital expenditures. We expect free cash flow to range from $90 million to $100 million for the full year of 2018.
The fourth quarter as you know, can be swayed by Black Friday and Cyber Week, but based on current trends we expect cost to be flat and margin rate will be slightly better than Q3. Keep in mind, that Q4's margins usually decline due to deleveraging impact of occupancy and distribution and transportation which are generally fixed on historically lower Q4 sales volumes.
For the 12-month period ended in September 30 2018, our total net debt to adjusted EBITDA, which includes adjustments for our credit agreement is 5.3x. We reiterate our long-term lease adjusted net leverage target of 3x with rent capitalized at 5x. As mentioned in the earnings release today, we have received $100 million of the $300 million previously announced strategic investment in GNC. These funds have been used to paydown our B2 term loan holders which currently barred interested array of LIBOR plus 9.25%.
The remaining $200 million will be received by GNC in two tranches; $50 million to be received by December 20, 2018 and the remaining $150 million will be received by February 13, 2019. Note that the release that we sent just a short time ago indicates the $50 million will be received by December 28, 2019; that is not correct, these funds will be received by December 28, 2018. GNC will use the remaining proceeds to paydown existing debt. As disclosed earlier this week, Harbin has advised GNC that the required foreign exchange registration with SAFE has been completed for the entire $300 million. The execution of the JV for market [ph] complete, however the formation and completion of the China JV is conditioned on the completion of the second subsequent closing expected by February 13, 2019. As such, China's operating results will continue to be consolidated with GNC until that time.
This is a critical first step in strengthening our balance sheet. We intensely focused on all opportunities for long-term growth and success, and will continue to proactively explore opportunities to further enhance our capital structure. We're anxious to provide you more specifics on our long-term strategy, and as a result, we are planning an Investor Day for the first quarter of 2019. We will provide you with further details as they become available.
With that, let's open the call for your questions.
[Operator Instructions] And we will take our first question from Bob Summers with Buckingham.
On the $200 million in revenue that you expect out of China over the next three years, can you give us a feel for what the margin structure of that will look like? I mean, just going to be similar to what we've seen international now?
The structure will be a little bit different than what you're seeing in international now and clearly, it will be part of a separate line included in the financial statements, so they won't be blended in our operations because of the JV but we will share more details on the margin components and other factors when we get together during our Investor Day in the first quarter of 2019.
The impact of the store optimization, could you -- maybe, if we were to instantaneously take those 700 to 900 stores out of the portfolio, what would comps end margins look like?
As Ken mentioned there, we are seeing today a 30% sales transfer rate, so certainly there is a positive impact to sales and because of the nature of our fixed costs in our stores, there is certainly is an improvement to margins as well but we haven't yet shared the expected outcome and impact on the overall portfolio when this does take place.
You talked about things progressing through the quarter and then getting better, can you tell us where the sales run rate was when you exited the quarter? I mean is it in mind with the guidance for the fourth quarter flat or was it better?
It was in line, slightly better than what we've shared about fourth quarter.
Our next question comes from Sean Kras with Barclays.
A question on the cost savings initiative; of the $15 million to $20 million you expect for the next year, I think you said there was a run rate number. How much do you actually tend to realize throughout the course of the year? And then also to -- I guess what from the bigger buckets be?
So on your first question, how much will be realize; I mean certainly, as noted both Ken and I that a portion of those costs will be reinvested in the business and so there will be some residual that would drop to the bottom-line but at this point we haven't answered that exactly as we continue to refine the investments and driving our strategy going forward. And then certainly, there would likely be more color as we approached Investor Day in the first quarter of 2019. And then the bigger bucket, I think Ken mentioned those; areas such as packaging, simplification, certainly looking at occupancy opportunities, supply chain opportunities and then other SG&A including some marketing; there are certainly like an example of a packaging efficiency as where we've got currently a number of items that have both bottled with supplements and a box surrounding them. We certainly believe that there is situations where that is not necessary and we an opportunity impact cost in the favorable way.
Of the 700 to 900 store closures, what percentage of those have flat or negative EBITDA right now?
So less than 10% of our portfolio has flat or negative EBITDA right now. So certainly all of those stores do not fall in that category, what we do see is an opportunity for those stores to transfer sales to nearby GNC locations or through other digital activities that we can drive on gnc.com and other places.
A question just on Harbin as well; how should we think about the ramp of the joint venture once the transaction closes? It might be a question that's perhaps better for the Investor Day, I'm glad you guys are doing that but extent -- you can maybe talk about that a little bit now that will be helpful as to think about how that might evolve?
I don't we've got a firm handle on exactly how quickly it's going to ramp up. The teams have been working together very well over the last six months in a built of pretty solid business plan. Clearly, this business plan further leverages our existing businesses that are there now but there are new businesses that we'll be going into such as pharmacy sales that we don't have anything right now. So we're still working on finalizing that business plan and I think we're going to have to see how quickly we can ramp it up and I think we'll be in a much better position after we get through the first year and we have a little more time to spend with these guys post-signing of the transaction to give you a little better picture on that.
It looks like the e-commerce maybe sales at about 9% or 10% or so year-over-year, and obviously there is a very difficult comparison; you mentioned obviously, annualizing the Amazon relationship but in terms of thinking about the run rate flat business going forward, do you think that I could get back to double-digit growth number or is that just going to be difficult given the size of the base at this point?
Our e-commerce sales actually did grow in the double-digit range in the quarter, and I believe given the growth of e-commerce generally a double-digit go-forward is a reasonable assumption.
What was the actual growth?
And the other thing that I'd tell you Sean, there is a lot of growth out there to be had but we are also trying to be smart. We jumped into Amazon, operating in the prime environment is a little bit different than operating in our own dot com business. And so there are some hidden expenses as you start shipping everything with one item on a very, very short timeframe. So we're trying to balance the profitability and it's a constant balance going forward but there is plenty of growth there but we're trying to make sure that we're really smart and we're doing it in a profitable way. So I think the run rate that you're seeing in the short-term is probably pretty good. And long-term I think there is plenty of growth.
[Operator Instructions] And we'll go to our next question from Simeon Gutman with Morgan Stanley.
Ken, the first one for you, I wanted to ask about the value proposition thinking about you go to market mostly in the stores line pricing, and service and private brands and products; what's sort of going well since you joined and what could be going better?
I think as far as the pricing and the value proposition, we've told you we made a couple of changes throughout the year. I think we're pretty comfortable where we are right now, obviously pricing is always a dynamic situation, it goes hand-in-hand with the promotional environment. I think that we're continuing to see ongoing competitive activity, I think we mentioned in the last call that we saw some additional SKUs kind of early summer starting to hit some massive competition that we have and some of the specialty guys like Whole Foods [ph], clearly -- they've ramped up prime, and some of the offers that they've got in areas that we directly compete.
So, there is a lot of competition and a lot of moving parts out there. You'd always love to see less of that but I don't think operating and retail, we're ever going to see that. So we just got to continue to stay sharp and we've got to continue to develop I think more and more unique exclusive products, whether it's products that we develop ourselves or whether it's products that we develop in conjunction with some of our key suppliers that do differentiate us from the market. So I think that's where a big part of our focus is from a value proposition perspective.
And then regarding the transfer rates, you mentioned 30%; what timeframe is that the last several quarters, is it a year, is it two years? Just any more details around -- I guess the freshness of that data.
We listed the stores that we closed over the prior two years and the transfer rates are fairly consistent in those products and for those sets of stores.
And then again on the 700 to 900, are these keyed [ph] up, and you're going to close them? I mean, what if the landlords come back and cut the rent such that it financially makes sense to you. Do you keep them open or you're saying look, we want to reduce our store footprint by one-third, it makes sense for us and that's what's going to happen overtime?
The vast majority of the 700 to 900 are identified and will be closed under certainly our opportunities with numbers much larger than this where we have -- we will work with our landlords, see if there are rent reductions but if we don't get them we'll close the stores or we'll look to have short-term lease renewals but if we don't get them we'll close the stores. So we're comfortable with the amount of stores that we're looking at in the range of 700 and 900, and they will all close within the next three years.
I think the only thing that I would add is, it's interesting, the real estate market is pretty dynamic out there right now and we've been working diligently over the past year to drive rent concessions and we've been pretty successful at it. But I think as things continue to move, if we find the right rep concessions in certain situations and it really makes a difference in the store, that's how we continue to operate. So to some degree there are some of these stores that are moving target and we'll see what happens as we continue to negotiate with our landlords going forward.
We will take our next question from Damien [ph] with Gabelli & Company.
The store closings; are these mostly mall-based locations or is it mixed?
The store closings are across all geographic regions and across all of our formats, so there is not a significant concentration in one area and certainly not in mall.
Just to give you a sense on that; probably in excess of 40% of those stores are over 15 years old, and so to some degree we're taking a look at this thing opportunistically and saying, look, it doesn't make a lot of sense if we got a store in old location and we haven't put any capital into it for a long time, we just don't want to put any capital into those stores because we don't see a lot of upside. So there is a pretty big percentage of these stores that are just really, really old and tired and they've worn out their useful life and so it's time to move forward and really make sure that we're optimizing the store base that we have in place.
Can you give me a sense of how many total stores are actually coming up for lease over the same time period? I'm just trying to get a sense of what does 700 mean in terms of the overall basket?
We review 800 and 900 store leases annually.
And then Tricia you said -- how many stores you said -- I think you said 10% of your store base has negative comps; I think I misheard that?
So 10% of the store base has negative EBITDA, negative EBIT.
The new way of compensating sales people, I mean are we going sort of back to what GNC was doing couple of years ago where they were sort of incentivized to build the basket and then kind of drove some of the business away, that way?
No, I think it's fundamentally different than it was a few years ago. The way that the compensation structure has always been set up, or at least historically has been sent up was to fund commissions based on whoever brought the most money to the table, and so what it did often times was created some inconsistent behavior in our teams out in stores because they might be selling product day one month, when you came back in and you wanted to buy your protein the next month they were selling product B and it was a little confusing to our customers. So what we've done in this case, we are now incenting them to sell add-on products that really most all of our customers should be taking. These are very standard products that belong in a lot of our customers regimen, so they are selling the right products to the customers based on what else they are buying in that particular basket.
So this is really complementary, it should be a very positive experience and so far has been for our customers, and our associates like it. First thing we do when we hire them is we train them on foundational products and then historically we have them selling other products that weren't the foundation products. So now we're actually incenting them on the core training that we've given them when they walked in the door. So it makes a lot of sense to our associates right now.
Lastly, where is your own brand -- the private label brand as a percentage of your own sales -- your own stores? It used to be around 50 -- I don't know where it is now.
We just said that we had 52% of our own brand in the quarter, and we had 9% on top of that in exclusive brand. So exclusive products and brands that we have in our stores is about 61% last month but 52% on GNC.
And we thank everyone for your questions. And at this time I'd like to turn it back over to Mr. Ken Martindale for closing or additional remarks.
Great. Well, I thank everybody for hanging in with us today. I know this was kind of a tough time but under unique circumstances, we did want to make sure that we had all the opportunity that we could to get the transaction done and we're really excited that we're able to do that. And we promise we won't have another Friday afternoon at 16:30 call. So I appreciate everybody hanging in with us. Have a great weekend, we'll talk to you in another quarter.
And this concludes today's conference. Thank you for your participation. You may now disconnect.