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SC vitamin plants supplemented GNC's retail business

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GNC, the retail industry’s latest coronavirus casualty, is best known as a mall and strip center merchant, with storefronts stretching from South Carolina to South Korea.

But that's just one side of the now-bankrupt vitamin and supplements seller. For decades, the pioneering company also was a pillar of the Palmetto State's industrial belt.

The 85-year-old retail chain began manufacturing, packaging and distributing its line of wellness products in Greenville starting as far back as the 1970s or '80s. An expansion into nearby Anderson followed by the late 1990s. 

"They’ve been here a long time," said Burriss Nelson, Anderson County's economic development director. 

In a serendipitous turn of events, the two Upstate plants and their roughly 1,000 workers are mostly shielded from GNC's financial woes, thanks to a timely deal that came together last year. In March 2019, International Vitamin Corp. bought a majority ownership stake in the Greenville-based production arm, which operates as Nutra Manufacturing and occupies more than 950,000 square feet of space.

Steve Rosenman, senior vice president for corporate marketing for International Vitamin, said the Irvine, Calif.-based company took steps last week to reassure employees, customers and suppliers that it's not part of the GNC bankruptcy. Other than that, it's been business as usual, he said Thursday. 

"We produce a lot of products there, not only for GNC but for other customers," Rosenman said. "We see no change in our headcount. We're still producing the same products."

In fact, he added, the pandemic has boosted demand for supplements as more consumers take up new health regimens. Sales over the past six months are running about four times ahead of their typical annual growth rate of 4 percent to 6 percent, he estimated.

"I would say ... we expect the future to be very good," Rosenman said.

The outlook for GNC, a product of the Great Depression, is less rosy.

A young David Shakarian hatched the business in 1935 by stocking yogurt, brewers yeast and other items at his Lackzoom health food store in downtown Pittsburgh.

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The company later changed its name to General Nutrition Centers and then GNC as it expanded across the country. Its first Charleston-area store opened in 1973 in Northwoods Mall. 

"We try to go into every major shopping center in the U.S.," the founder told the New York Times in 1981.

By last year, GNC was trying to restructure its $903 million in debt, but the COVID-19 crisis torpedoed those efforts as the company was forced to temporarily close more than 1,800 retail locations, mostly in the U.S.

"This, coupled with a significant decline in brick-and-mortar foot traffic as a result of shelter-in-place orders and a shift in consumer demand, cut off a significant source of the company’s revenue," GNC finance executive Tricia Tolivar said in a court statement last week.

GNC hopes to cut $300 million off its debt during the bankruptcy process, and it's courting buyers in anticipation of an auction of the business later this year. It set the minimum bid at $760 million.

Meanwhile, the company is slimming down, saying it will permanently shutter 800 to 1,200 of its 7,300 worldwide stores.

Six of the roughly 40 GNC outlets in South Carolina are among the initial round of 726 closings. They include stores in the Market at Oakland in Mount Pleasant, Paradise Shoppes in Summerville and Walterboro Plaza in Colleton County. The others are in Beaufort, Myrtle Beach and Parris Island. Liquidation sales started Friday and are expected to wrap up by September.

GNC said the bankruptcy reorganization will speed up a plan it announced in 2019 to jettison money-losing and underperforming retail stores.

"This acceleration will allow GNC to invest in the appropriate areas to evolve for the future, better positioning the company to meet current and future consumer demand around the world," it said.

More closings are likely. GNC has hired a real estate firm to help it negotiate better lease terms, such as lower rent payments, with many of its landlords in North America, "with the goal of improving the financial performance" of the locations it will keep open.

The success of those discussions "will drive the determination of whether or not to close additional stores," the company said.

Contact John McDermott at 843-937-5572 or follow him on Twitter at @byjohnmcdermott

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