NEW YORK (TheStreet) -- Shares of GNC Holdings Inc. (GNC) have dropped -10.42% to $39.10 in after-market trade as the specialty retailer of health and wellness products reported its financial results for the 2014 first quarter.
The company reported consolidated revenue of $677.3 million, an increase of 1.9% over consolidated revenue of $664.7 million for the first quarter of 2013.
Revenue increased in the company's retail segment by 3.1%. Revenue decreased in the company's franchise and manufacturing segments, by -1.4% and -2.2% respectively.
Same store sales dropped -0.7% in domestic company-owned stores (including GNC.com sales) in the quarter.
As previously disclosed, results were negatively impacted by severe weather patterns in January and February. The company generated positive same store sales (including GNC.com sales) in March.
In domestic franchise locations, same store sales decreased -3.2% in the quarter.
GNC reported net income of $69.9 million, compared to $72.6 million for the first quarter of 2013. Diluted earnings per share were 75 cents for the first quarter of 2014, a 2.7% increase over diluted earnings per share of 73 cents for the first quarter of 2013.
TheStreet Ratings team rates GNC HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GNC HOLDINGS INC (GNC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Specialty Retail industry and the overall market, GNC HOLDINGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- GNC HOLDINGS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GNC HOLDINGS INC increased its bottom line by earning $2.72 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($3.23 versus $2.72).
- The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 0.5% when compared to the same quarter one year prior, going from $47.44 million to $47.66 million.
- 39.27% is the gross profit margin for GNC HOLDINGS INC which we consider to be strong. Regardless of GNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GNC's net profit margin of 7.76% compares favorably to the industry average.
- You can view the full analysis from the report here: GNC Ratings Report