S&P upgrades GNC

Standard & Poor's said it raised its corporate credit rating on General Nutrition Centers Inc. to B from B- and its $110 million 10¾% senior subordinated notes due 2015 to CCC+ with a recovery rating of 6 from CCC because of improved credit metrics and favorable operating performance.

The outlook is stable.

The agency said GNC's operating performance improved in 2008 and thus far in 2009 because of good comparable-store sales growth and better margins, and S&P attributed the turnaround largely to a new national pricing model and marketing efforts.

The ratings on GNC reflect a capital structure that is highly leveraged after its 2007 leveraged buyout, resulting in weak cash flow protection measures, and participation in the highly competitive and fragmented nutritional supplement retail industry, the agency said.

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