Ex-Vitamin Shoppe president replaces Fortunato at GNC
August 5, 2014 10:03 PM
GNC President, CEO and Chairman Joe Fortunato.
By Steve Twedt Pittsburgh Post-Gazette
After years of stability in the executive suite, GNC Holdings has sent longtime leader Joe Fortunato packing and installed an outsider — senior retail industry executive Michael Archbold, 53 — as CEO, effective immediately. Lead independent director Michael Hines has been elected nonexecutive chairman of the GNC board.
Mr. Archbold comes to GNC from women’s apparel retailer Talbots, but before that he held executive positions, including president and chief operating officer, for GNC competitor Vitamin Shoppe.
Tuesday’s surprise announcement comes only weeks after GNC’s longtime CFO Michael Nuzzo left the company to become chief administrative officer and executive vice president at 4Moms, a Strip District company that develops and manufactures high-tech baby gear.
The move signals major changes for the Downtown company, as Mr. Fortunato, 61, has been closely linked to GNC’s identity for the past decade.
GNC stock took a hit shortly after the Tuesday morning announcement but quickly recovered and finished the day at $33.52, up 39 cents. That was still far from the $61-a-share mark it hit late last year.
In an official statement Tuesday, Mr. Hines hinted that the company’s recent financial downturn prompted the change.
“The board is committed to delivering improved financial results and creating value for GNC shareholders, and we are pleased that Mike has agreed to join GNC,” Mr. Hines said. “He is a world-class executive with highly relevant retail experience and financial expertise, proven leadership skills and a track record of developing strong corporate cultures and delivering superior financial performance.”
Last week, GNC’s second-quarter report of 77 cents in earnings per share missed analysts’ estimates by 2 cents and net income was off by 8 percent. That followed a disappointing first quarter, in which GNC’s profit dropped from $72.6 million in 2013 to $69.9 million this year.
As he did following GNC’s first quarter, Mr. Fortunato cited a variety of factors for the flattened results in a July 29 conference call to discuss the second-quarter results with analysts, including a softened supplements market and an unusually harsh winter.
He also laid out plans to get the company back on the right footing by going back to basics with more simplified pricing and “differentiating” the GNC brand from its competitors. One analyst afterward described the call as “encouraging.”
Just a few weeks ago, there were no outward signs that Mr. Fortunato’s position might be in jeopardy. The yearly stockholder’s meeting in May at the Omni William Penn, Downtown, proceeded smoothly with no questions raised about the falling stock price. And, in a follow-up interview with the Post-Gazette, Mr. Fortunato expressed optimism that GNC could rebound in 2015.
Given his track record, that optimism seemed well placed.
In the eight years from the time Mr. Fortunato became president and CEO in 2005, GNC’s earnings before interest, depreciation and amortization jumped from $113 million to $526 million. In 2011, he guided GNC to the year’s most successful initial public offering, beating such well-known names as LinkedIn and Groupon.
Certainly he knew the company as well as anybody. The Mount Washington native has held executive positions with GNC for nearly 25 years, first as director of financial operations from 1990 to 1997, then senior vice president of financial operations from 1997 to 1998.
He later became executive vice president of retail operations and in 2001 was named executive vice president and chief operating officer.
He had served as either CEO or president since November 2005, and was named board chairman as well in 2012.
For fiscal 2013, his total compensation was $2.86 million.
Sitting at a conference table off his office at the company’s Sixth Avenue headquarters, Downtown, in early June, Mr. Fortunato speculated about giving up the GNC presidency in one to two years, but said he expected to be at the helm for another three to five years.
“I’m here as long as I love what I’m doing,” he said at the time. “I still see so much opportunity for the company.”
Steve Twedt: firstname.lastname@example.org or 412-263-1963.
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