Source: GNC.

GNC (GNC), the global retailer of nutritional products, released its quarterly report last week, and the results missed analysts' expectations. The report got worse as it went on and GNC's shares have reacted by declining sharply. Let's take a thorough look at the results and determine if this is our opportunity to buy GNC or if we should steer clear of the stock for now.

The report
GNC released its fourth-quarter report after the market closed on Feb. 13. Here's an overview:

MetricReportedExpected
Earnings per share $0.50 $0.64
Revenue $613.70 million $631.51 million

GNC's earnings per share increased 6.4% and revenue rose 8.6%, as same-store sales grew 5% at domestic company-owned stores. Revenue grew in all three of the company's segments, but sales were much weaker than originally anticipated; here's a detailed look:

Segment2013 Revenue2012 RevenueGrowth
Retail $443.54 million $411.54 million 7.8%
Franchise $103.15 million $94.30 million 9.4%
Manufacturing/Wholesale $67.06 million $59.18 million 13.3%

GNC CEO Joe Fortunato stated that the company faced a "challenging retail environment," and this is clearly seen in the results. He then noted that more than $350 million was returned to shareholders during the quarter, but little could deter investors' attention from the earnings miss. 

Fueling the negativity
Following the fourth-quarter miss, GNC provided a dismal outlook for fiscal 2014. The company described the retail environment in January and February as "very challenging" and it does not think the next 10 months can make up for the bad start to the year. Here is what the company now expects 2014 will hold:

  • Earnings per share of $3.18-$3.24, an increase of 11.6%-13.7% compared to 2013's adjusted earnings per share of $2.85
  • High single-digit revenue growth
  • Domestic company-owned same-store sales growth in the mid single digits 
The consensus analyst estimate had called for earnings per share of $3.46 on revenue growth of 9%-10%, so GNC missed this mark by a mile. The market reacted to the earnings and guidance misses by sending GNC's shares plummeting more than 15% after-hours. Although I believe this sell-off is a bit overdone, I still would not consider GNC for an investment. With the company noting challenges in January and February, the first-quarter report will likely be very weak, which could cause continued weakness in the stock. Investors should follow this very well-known piece of advice: Don't try to catch a falling knife.

Source: Weight Watchers.

Not alone in the struggle
Weight Watchers International (WW -4.44%), the weight-management service provider, did not find success in the most recent quarter, either. This company helps people lead healthier lives with its meetings, magazine, and virtual services on its website or mobile app. It also provides nutritional products and cookbooks that make following its diet plans easier.

Weight Watchers' fourth-quarter report was released within seconds of GNC's report, and the results were mixed compared to expectations; here's a breakdown:

MetricReportedExpected
Earnings per share $0.54 $0.61
Revenue $366.10 million $357.98 million

Weight Watchers' earnings per share decreased 47.2% and revenue declined 11%, as all of the company's segments were very weak; revenues from meetings declined 15% in North America and 11.4% internationally, and revenue from its website declined 5.3%. The common factor in each segment's slowdown was that user counts dropped, which is arguably the worst possible scenario for a service provider in this industry. Weight Watchers' shares fell more than 15% after the earnings release and they have fallen more than 60% in the last two years. I believe Weight Watchers could continue moving lower, so I would caution investors to avoid it.

The Foolish bottom line
The only thing more disappointing than GNC's earnings and revenue in the fourth quarter was its outlook on fiscal 2014. The stock has taken a beating following the release, and GNC's shares may remain weak for the rest of the year. I would wait until GNC's next quarterly report before considering it for an investment, to see if the company is able to turn things around. After a miss like the one we just saw, you can never be too careful, especially when it comes to your hard-earned money.