(CNN) — GNC has filed for bankruptcy, warning it will close up to a quarter of its stores and search for a buyer.
The 85-year-old vitamin and dietary supplement company has been saddled with nearly $1 billion of debt and has faced declining sales at its brick-and-mortar locations since before the pandemic. However, GNC said that stay-at-home orders during the Covid-19 pandemic prevented the company from accomplishing its refinancing plans because of the abrupt “dramatic negative impact” on its business.
GNC will continue operating, but it will become a smaller company. It plans to close up to 20% of its 5,800 retail stores, which amounts to as many as 1,200 locations across the United States. GNC also sells its products in an additional 1,200 Rite Aid stores.
It obtained $130 million in fresh financing from its largest vendor, vitamin supplier IVC, to help it restructure. GNC aims to emerge from bankruptcy in the fall.
GNC explained that bankruptcy will give the company an “opportunity to improve our balance sheet while continuing to advance our business strategy, right-size our corporate store portfolio, and strengthen our brands to protect the long-term sustainability of our company.”
Around 30% of its stores in the United States and Canada were forced to temporarily close because of the pandemic. In its first-quarter earnings report released in May, losses accelerated to $200 million — far more than the $15 million it lost during the same time period in 2019 — because of the store closures.
“The Chapter 11 process will allow us to accelerate these strategies and invest in the appropriate areas to evolve in the future, while improving our capital structure and balance sheet,” GNC said in a letter to shoppers.
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