Medical Journal’s Effort to Put GNC Out of Business

It’s not every day that a New York Stock Exchange-listed company has its very reason for being questioned in the New York Times (NYT), but that’s what happened today to GNC Holdings (GNC), the supplements and vitamins retailer.

In The Times weekly Science section, the paper reported on an editorial in the journal Annals of Internal Medicine, which was headlined rather unambiguously, “Enough Is Enough: Stop Wasting Money on Vitamin and Mineral Supplements.”

The Times summed up the article thusly:

“The message is simple,” the editorial continued. “Most supplements do not prevent chronic disease or death, their use is not justified, and they should be avoided.”

“We have so much information from so many studies,” Dr. Cynthia Mulrow, senior deputy editor of Annals of Internal Medicine and an author of the editorial, said in an interview. “We don’t need a lot more evidence to put this to bed.”

In recent years, the biggest threat to GNC seemed to be that Amazon (AMZN) would steal its customers by selling vitamins and supplements more cheaply over the Internet, and indeed GNC has been identified as a retailer that’s very vulnerable to online competition.

But GNC’s sales and profits have so far defied those worries.

GNC Revenue (Quarterly) Chart

GNC Revenue (Quarterly) data by YCharts

How about a prestigious medical journal telling your customers to essentially stop doing business in your stores? GNC, based in Pittsburgh and with about 8,400 retail locations and a $5.5 billion market cap, seemed to shrug off the report. Its shares were down ever so slightly in a sideways market.

GNC Chart

GNC data by YCharts

One can surmise why investors didn’t panic. First, the overlap between GNC customers and readers of the New York Times (never mind the Annals of Internal Medicine) may be, well, small. And though other news organizations ran accounts of the study, too, for every competently reported and evenhanded article or television news segment on health, these days there would seem to be several shrieking reports magnifying either a danger or a potential cure available to consumers.

The Internet, airwaves and news racks are stuffed with junk science and medical news. There’s certainly the opportunity for people to tune it all out, or to listen only to reports that appeal to an existing bias. (Sort of like political coverage, eh?)

Perhaps in the days ahead, the Annals of Internal Medicine editorial will snowball and lead to a complete turnaround in thinking about all the silver bullets that stock the shelves at GNC. I’m guessing not, however. And if you’re an owner of GNC shares, seeing the company waltz through this kind of bad publicity should be fabulously encouraging.

Oh, on GNC’s web site today, under the heading “Latest News,” was a headline: “Acid-Suppressing Drugs Linked to Vitamin B12 Deficiency.” The link leads you to a New York Times article of the same headline. The hoped for message: all you acid suppressant junkies better come in and buy some B-12. GNC’s website lists B-12 available in about 15 different packages. Better stock the shelves.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Company News  retail stocks   healthcare   

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