Goldman Sachs Global Retailing Conference September 5, 2012
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Discussion Topics GNC’s Major Assets Provide for a &
Competitive Advantage
for Success & Growth −
brand in health & wellness
− −
demographic & loyal customer base Brand
through product development and
innovation −
Retail
driven by consistently strong execution
−
Expanding
footprint
Growing the Driving Long-Term Total Shareholder Return 2
Why GNC – our major assets Strong Global Brand Awareness Leading, highly regarded brand in Health & Wellness
Brand
57% proprietary product sales Aided Awareness 82%
GNC
87%
Wal-Mart
80%
Target V. Shoppe
Customers shop GNC for premium brands, quality,
49%
trust and integrity Dominance in fastest growing categories More than 80% of our business in key segments, including Vitamins and Sports Exceeding market growth rates >25% market share in Sports, and growing Multi-channel reach – PetSmart, Sam’s Club, Rite Aid Global presence – highly recognized in 50+ countries
3
Why GNC – our major assets Unique Customer Base Unique Customer − Younger − Higher income &
education − Fitness focused − Digital age
Regimented, consistent shopper with fitness as key element of lifestyle Growing spend and “Customer for Life” opportunity
More products, trading up Propensity for frequent visits and cross shopping Nearly 50% Sports customers buy Vitamins ~25% Vitamin customers buy Sports products Loyal – Gold Card program
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Why GNC – our major assets Leading Product Development and Innovation Capabilities CPG-like business capabilities
Proprietary flagship brands in each category
Vertically integrated
Innovate
Strong infrastructure developed
Anticipate customer needs
over many years
Accelerated pipeline
We build powerful sub-brands that drive the business!! Pro Performance
$275mil franchise
Vitapak
Diet
YTD 2012 40+%
YTD 2012 75+% (Total Lean)
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Why GNC – our major assets Retail Excellence The premier in-store
experience in our space
Unique product assortment Knowledgeable, trained associates Targeted and effective promotions In-store programs drive add-on sales
Multi-faceted real estate
portfolio, with substantial future growth Attractive store
economics
Diversification against macro and consumer trends
Highly successful in all types of locations
20% return, < 3-year payback
34% 62%
Malls
Strip Centers
Downtown
2011 stores exceeding target sales 4-wall EBITDA 20%+ Only 25 negative EBITDA stores Huge productivity upside
e-commerce matches
store experience
GNC.com – consistent profitable growth @ 20%+
Site enhancements – consultative, content, community LuckyVitamin.com – top and bottom line growth opportunity
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Growing the customer base
GNC.com
7
Growing the customer base
Active Members
Unique Visitors
(in mil)
Email Addresses
(per month, in mil)
(in mil)
5.8
3.1
10.4
2.3 4.9
2010
6.1
Today
2010
Today
2010
Today
GNC.com
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Driving Results – Domestic Retail 2-year
Same Store Sales (YTD Q2 ’12)
23%
Company Owned
30%
22%
Franchise - Domestic
3-year
25%
24%
Franchise - Int'l *
36%
* International Comps are franchise reported, in local currency
254
Company Owned
New Stores (cumulative: 2010-2012F)
Franchise - Domestic
36
303
Franchise - Int'l
Revenue
e-commerce Revenue
LuckyVitamin.com (Proforma)
$150+
2012E 2011 2010
$ in mil
$128 $59
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Driving Results (cont.) Segment Revenue Growth (YTD 2012)
21%
Retail
Franchise Manu. / Wholesale (Petsmart & Sam's Club)
28%
14%
19.3%
2012 Outlook (implied)
Adjusted EBITDA Margin
16.7%
2011
14.5%
2010
Share Repurchase
Shareholder Distributions
$360
2012E
2011
$ in mil
Dividend $46
$62
10
Long-term Growth – Domestic Retail Stores
e-commerce
600 – 700 stores of growth
Our e-commerce spectrum
Value & Breadth
States with highest potential net market gain and states with less than 50 total existing GNC stores
Premium & Specialized
The Opportunity (LTM Segment Revenue $1.7bil)
Long-term organic growth driven by:
Industry Growth
Brand differentiation via product innovation
Marketing to an expanded, loyal customer base
Excellence in customer service
Growing share in a $2bil market
GNC.com: premium assortment, content and community
LuckyVitamin.com (and other banners): price competitive space
4,500+ store potential - 150 / new year
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Long-term Growth – International GNC International – 2012 1,600+ stores 50+ countries 1,000+ products
Existing Geographies Targeted New Geographies
The Opportunity (LTM Revenue $149mil) Existing Geographies
Franchise stores - double existing footprint
Expand & diversify distribution channels
e-commerce
Customized / localized GNC product assortment
Most countries carry less than half the SKU’s offered domestically
New Markets
Exploring distribution, franchise and company-owned strategies
Major Markets (nutritional market size) Europe: $22bil
Russia: $3bil
China:
Brazil: $3bil
$16bil
S. Africa: $1bil
Limited premium players in most markets
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Long-term Growth – Channel diversification The Opportunity (LTM Segment Revenue $232mil) Channel
Category
Opportunity
Examples
Channel Market Size
Mass Channel
Vitamins
$2.5B+
− GNC Brands − Distinct offering
Sports / Diet
$2B+
− Unique Brands − GNC credibility in space
Pets (specialty)
Sources: Nutrition Business Journal, Packaged Facts
Supplements
$650M+
− Brand extension − “Own the category”
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Shareholder Return Focused Revenue Growth
Retail
Operating Profit & Margin Growth
$ Growth, Leverage Capital Structure & Operating Leverage
Earnings & Free Cash Flow EPS
Share Price Growth Value Proposition for Investor
Manufacturing / Wholesale
Franchise
Earnings & P/E Driven
Free Cash Flow
Dividend
Share Repurchase
Total Yield on Shares
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GNC – 2012 & Beyond Our customers are loyal to our
and the
products in the market We offer a
and
product
assortment We are a leader in store
and providing product
information We are
the customer base
We deliver We are gaining We have
performance , profitably , capital efficient growth opportunities,
domestically and internationally We seek to maximize 15
