GNC Holdings, Inc. (NYSE:GNC), the vitamin and nutritional supplements retailer, capitalized on a resurgent stock market and a growing appetite for healthy products to go public with the sale of its shares on Friday, April 1st. The shares were priced between $15 and $17 and ended the day at $16.75. Most of the company's shares are still held by the Ontario Teachers' Pension Plan Board along with Ares Management.

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Third Try
Apollo Global Management
(NYSE:APO), which previously owned GNC, had in recent years unsuccessfully attempted to take the company public twice, but cancelled due to weak investor demand before selling it to Ares Management. Last year an acquisition by Bright Food of China failed to materialize. The IPO saw 22.5 million shares sold, with 87.4 million being retained, mostly by the Ontario pension fund.

GNC's initial market cap began at roughly $1.65 billion, while its main public company competitor Vitamin Shoppe Inc. (NYSE:VSI) has a $1 billion market cap. GNC had $1.8 billion in sales in 2010 with $96.6 million in earnings. GNC has grown same store sales in company owned stores by 5.6% in the last year and has increased operating income percentage of sales in its last three years. The company carries $1.05 billion in long-term debt.

Vitamin Competition
The vitamin and nutritional supplement field is highly competitive with large concentrated retailers such as GNC and Vitamin Shoppe, as well as private and local chains. There are large general retailers such as supermarket chains Kroger (NYSE:KR) and Safeway (NYSE:SWY), along with drugstore chains such as Walgreen (NYSE:WAG) and CVS Caremark (NYSE:CVS). Online retailers represent a downward pressure on item pricing.

Possible Headwinds
GNC, which derives 40% of its company-owned retail sales from vitamins and 43% from sports nutrition products, has challenges to its growth. Its brands are vulnerable to generic brands and the growing push of online vitamin and supplement retailers. Also, GNC's 2,000 mini-stores within Rite Aide Drugstores (NYSE:RAD) are on potentially shaky ground given the precarious future of Rite Aide. Should the economic recovery continue weakly, there may be a dampened demand for the industry's products.

Plans for Growth
GNC has bullish plans for expansion. Despite having around 5,000 full-size retail worldwide outlets, the company says the US market can support a sizable increase in both company owned and franchised stores. It continues to expand its own branded product line, which has contributed to sales increases, and will likely do more deals such as the ones it has done with Pepsico (NYSE:PEP) for Gatorade G Series Pro, and Pet Smart (Nasdaq:PETM) for its upcoming GNC-branded nutritional pet supplements.

GNC Post-IPO Prospects
GNC's high debt load is a potentially negative factor. GNC has done well in a difficult marketplace, though, as the company grew through a difficult recession when even food companies had a hard time. Food is essential, supplements aren't. There's now a permanent place in the mainstream retail landscape for a one-time marginal industry, and GNC is the leader. (For additional stock analysis, see Can Anyone Compete With Google?)

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