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No. 1 Vitamin Firm Dismisses Its President

The president of General Nutrition, the nation’s largest retailer of vitamins and diet supplements and other specialty foods, has been dismissed by the Pittsburgh-based company after he had disagreements with members of the company founder’s family.

Gary A. Daum, 46, was abruptly fired Monday, the same day a federal court judge in Boston approved a $3.5-million settlement of an antitrust suit brought against General Nutrition by a small competitor, Nature Food Centres.

Jerry Horn, former president of Thousand Trails, a Seattle-based retailer of resort properties, was named to succeed Daum and began work at General Nutrition offices Tuesday. Neither Horn nor Daum could be reached for comment.

However, Daum was quoted shortly after his dismissal as saying that it stemmed from “personal business differences” with the family of David B. Shakarian, who died last year. He said those differences had “regressed to the point where I was terminated.”

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On the other matter, the company expressed satisfaction with the settlement, which ended a 3-year-old antitrust case and a separate lawsuit arising from General Nutrition’s purchase of 33 Nature Food Centres outlets.

The 1982 antitrust suit sought $42 million in damages. The suit claimed that General Nutrition had engaged in unfair competition and illegal advertising and promotion and that General Nutrition had attempted to monopolize the health-food market by erecting stores near Nature Food outlets and selectively cutting prices.

In the other suit, Nature Food Centres--a closely held, Boston-based retailer that operates in the East and Midwest--disputed a 1975 contract under which General Nutrition acquired the smaller retailer’s outlets and contended that it was owed an additional $1.3 million.

While the settlement amount represents about 31% of General Nutrition’s $11 million in fiscal 1984 net earnings, the company’s general counsel, Robert Dunn, called the agreement “a very good one.

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“Litigation is expensive,” Dunn said. “We’d already spent $2 million on the case. We anticipated anywhere from a 12- to 16-week trial that would have cost us another $2.5 million even if we had won.”

He added, however, that the settlement will have “some impact on first-quarter earnings.”

Although General Nutrition’s revenue increased by $15.4 million to $390 million for the fiscal year ended Feb. 2, it reported that net earnings declined 56% to $11 million from $24.9 million the previous year.

First-quarter 1985 earnings, which Dunn said will reflect the settlement costs, are expected to be reported later this month.


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