Fitness 2004: SNEWS® reviews the year

From recalls to lawsuits, from retail changes to manufacturer acquisitions, 2004 has been quite a breathless year. The recalls hit some particularly hard (Nautilus, Fitness Quest and Horizon), and the legal wrangling provided continuing tennis-match, head-swiveling entertainment, if you will, while attorneys just smiled to the tune of ka-ching, ka-ching (Think Nautilus vs. Icon scramble).

When it came to retailers, it was another who’s-on-first sorta year with everybody seemingly knocking on the doors of Florida, Arizona, Colorado and Utah; some retailers are still wearing silly grins, and some will try simply to forget 2004 ever existed. Manufacturers won’t be forgotten as consolidation continued to be the biggest topic, with acquisitions happening from Day 1, as Precor and its Finish parent Amer Group swooped down on two companies in January alone. Yes, it’s already been a year!

Ah, yes, 2004…. In the annual SNEWS® Year in Review, we won’t try to recap every last barbell that went bump in the night, every company’s last little twitch, or even begin to talk about all the new product — or product that claimed to be new — since that could fill a tome or two. But what we’ll do is a quick waltz through the year’s 12 months to summarize what happened, with the who’s, where’s, when’s, broken down by various categories that we, yes, make up as news dictates. No, you won’t read every detail, but you will likely be surprised and say perhaps more than once, “That was just last year?!?”

Retail scene: Pace of change escalating
We could perhaps write a novella on this area. But we won’t. You’ll see more in our second-annual FitBiz by GearTrends®, mailing March 1. First of course was the sporting goods deal where Dick’s bought Galyan’s and has been trying to build a stronger force in fitness, including adding so-called trainers on its floor. By spring, however, Busy Body got really busy, acquiring All About Fitness, Exercise Equipment of Nevada and then following that up in August with Advanced Exercise Equipment. But was it done? Nope. In the fall, Busy Body owner Hancock Park bought Omni Fitness in the East from Life Fitness-parent Brunswick. It was estimated to hit 60 total Busy Body stores in the Western Region by December, with Omni being operated separately. The Fitness Experience, after growing admirably then merging just over two years ago with Exercare, began to see the walls close in, sold its St. Louis stores to True Fitness and has been fighting off constant rumors of a sale, acquisition or even bankruptcy. In December it was down to about 35 stores from a high of nearly 60. That story isn’t over yet, and we think it’s sad and unfortunate considering the people involved who really did care so much.

Another retail death was that of Indiana’s Factory Fitness, which liquidated and said adios. Arizona turned into a banquet of buzzards circling as Donnie Salum’s Fitness Gallery began to weaken; he finally filed Ch. 11 protection in October, and then followed that with Ch. 7 liquidation two weeks later. Another tragic end. Brother Billie’s stores in Colorado and Kansas are flourishing. Joining the fray down in the Southwest were several long-time players, but keeping track of who’s where could leave you shuddering. All we know is there are fitness specialty stores on three of four corners of one intersection and another a half-mile or so away. Go figure. Florida saw Jeff Sellars open Home Fitness Equipment near Tampa, Eric DeForest open Benchmark Fitness, Gyms to Go open its 15th store, and Ilan Katz do a now-you-see-him, now-you-don’t trick, opening a specialty store in February in Miami then closing it three months later to return to Fitness Headquarters in Texas.

Acquisitions and relationships
Precor (Amer Group) started the year with a bang by announcing its acquisition of FPI and its best-known Icarian brand, and then topped that 10 days later by acquiring club entertainment specialist ClubCom. Cybex struck up a partnership with the Trazer electronic game in what seemed like an off-beat addition to its normally pretty conservative self, but we like it. Star Trac acquired its German distributor MPK Fitness, and then nabbed Flex Fitness in the fall. Did we miss anybody? More to come this year, we promise.

Recalling recalls
Not that they’re the fondest memories for our industry, but it was shocking to see the number of products recalled this year. Nautilus led off the year with 420,000 Power Pro Bowflex units, Sportcraft took back 320 treadmills (nothing in the grand scheme, really), Horizon got hit with a $500,000 CPSC fine for allegedly not reporting treadmill dangers in time, Icon’s Jumpking recalled 1.2 million dumbbells carrying the Reebok or Nordic Track brand, Nautilus saw another recall involving 782,000 Power Pro and Ultimate machines, and Ab Lounge by Fitness Quest recalled every unit since the product began selling in October 2003. That adds up to millions and millions of products. And a black mark on the fitness industry in the consumer’s eye.

New guys
New Balance-branded fitness equipment by Fitness Quest debuted mid-year. Kevin Lamar, after “departing” Nautilus, wasted no time starting his own company — Lamar Health, Fitness & Sports — and taking the opportunity to work with the less traditional such as IBDs and Crocs footwear. Only alive now since August, Lamar will light more fires in 2005, we betcha. Others barely over a year old but catching some attention included Lifespan by PCE Fitness and Fitnex by Fitness Master, while elliptical specialist Octane — still almost wet behind the ears — has grown a strong enough reputation that we wouldn’t be surprised if it were snapped up by somebody wanting the elliptical category. Trixter’s X-Bikes also continued to make a big statement in the indoor cycling world. Even with the consolidation, there’s always someone else new around the next bend.

Not-so-new-but-changing guys
TKO, which tries to stay below-the-radar, has more on its horizon after quietly listing itself on the Pink Sheets last spring. That’s a precursor to going fully public. New categories are the rumor. Don’t blink. Bodyguard had a major change in the summer and spent the fall promising new categories, new look and a new image this year. SportsArt Fitness continues to shake things up with partnerships, funny marketing initiatives (built like a brick, well, you know…), and products that have more than a few looking twice. Pacemaster and Spirit also hire new presidents and promise to become more, bigger, better.

Big guys
The Nautilus Group revamped its entire management team, with no one other than new Senior Vice President Pat Warner really left from the days when it acquired Schwinn and started on the track to become more than Bowflex. The changes have caused a stir, with some sniping at what seems like management disconnected with the retailer foundation, while analysts seems to be starting to smile again. That’s Hammann’s job: Turnaround. Icon’s founders Scott Watterson and Gary Stevenson left in July for a three-year mission in Asia with the Mormon church, allowing rumors to fly about what’s next for the company and if it is really for sale. Cybex CEO John Aglialoro proclaimed “the wolf was no longer at the door” in terms of Cybex and its stability. Life Fitness continued to back-pedal on its much bally-hoed lower-cost Sport and Essential equipment lines; not much to be seen of them anymore. Star Trac CEO Steve Nero takes the little big guy/company and marches it right in beside the front-row, turning heads at the new equipment and new look that is making the company glitter.

Other non-manufacturer big guys: Life Time Fitness goes public and is on the growth warpath. Bally Total Fitness spends the year squirming under an uncomfortable spotlight, putting off announcements, and fending off stockholders’ complaints and an SEC investigation. Maybe Life Time is positioned to become the “new Bally?” Forzani of Canada says it has big plans to head into fitness specialty retail with a pilot concept for 2005 that will mesh retail, training and education. Sears regroups and decides to stick with Icon as its fitness equipment supplier, stopping a pilot program also to sell Horizon equipment.

Onward, forward, what’s next, or bye-bye
Spirit Fitness founders Rodger and Shirley Hurt sell a majority interest in their company to Taiwan company Dyaco and step back from day-to-day. Kris Reibel steps away from Factory Fitness, which he co-founded, just before it liquidates and takes over at Bladez as director of fitness products. Mike Cochrane “retires” from Bodyguard to “chill;” David Taylor takes over as North American sales director a year after he landed there from Muscle Dynamics. Jim McPartland departs from Star Trac intent on his own venture that is to be club-like, likely involve hospitals and help those who need to lose weight. Steve Nero takes on the top role.

David Salisbury leaves Hoist as marketing director and moves over to Fish & Richardson law firm. Bill Thierfelder resigns from his presidency post at York Barbell to become the president of a small Catholic liberal arts college — and is blissful about what it will mean to his life, his faith and his family; Dennis Hyuck takes over at York. Tom Cove accepts the role of incoming president of the SGMA upon John Riddle’s retirement, all slated for Feb. 1. Kevin Lamar leaves Nautilus, Brian Cook retires, and Gregg Hammann takes over all the major roles there. Pacemaster’s new president is from outside the industry, Gordon Boggis.

Red Oxx says adios to fitness accessories, blaming foreign outsourcing that makes it impossible to compete. Theradyne appears at the Health & Fitness Business show, but only to liquidate the last of its treadmills and get out of the business.

Internationally, it’s a big chess game, with Nautilus, Kettler, Life Fitness and Icon (Aicon), firing, hiring or replacing right and left.

Sad news
Steve Block, Spri co-founder and president, passes away suddenly on Dec. 30 from a brain aneurysm. Power Bar founder Brian Maxwell dies from a totally unexpected heart attack at age 51.

Happy news
Jhan Dolphin and his wife have a fourth child. Jay Hurt at Spirit Fitness and his wife have a baby boy. PR person and fitness writer Julie King has twins. PCE’s Bobby Krause and his wife are joyful in the birth of their first.

Legal maneuverings
The Nautilus vs. Icon infringement suit has multiplied. We think there are three now since the first filing in December 2002. Although Icon seemed to be winning the first rounds, Nautilus seems to have more notches on its side now. Of course as we all know, with legal costs in the million or more per quarter, the only real winners here are the attorneys. Cybex vs. Kirila case: After two years, the courts affirm a ruling of about $2.5 million against Cybex that stemmed from the purchase by Cybex from Gene Kirila of Pyramid Fitness in 1993. Appeals? Of course. In an odd turn that illicits “oh, that’s bad,” from legal sources, Flex Fitness’ personal injury lawsuit and ruling is still caught in the courts with Flex founder Mark Nalley, now out of that business, joining with the plaintiff and another defendant against the insurance company.

We are fat. Period.
America and the world unite as everyone begins to panic as obesity continues to grow globally. OK, Americans may be the fattest (what a prize to win), but Europeans and even Asians aren’t far behind. Can the fitness industry begin to attract those in need of simple and safe movement? What have you done lately? The SGMA says it is going to embrace the fitness area more strongly, adding a D.C. advocacy and education event March 1-2, 2005, to help bring the industry in front of legislators more strongly and position it as one solution to the obesity problem.

Marketing 101
SportsArt puts a spin on the typical beautiful-body ads, trade or consumer, to inject some fun with brickhouses, snarly dogs named Spike, and guys with big butts named Bob. What a breath of fresh air: How many beautiful bodies leaning on machines with towels around their necks can we look at??? Nautilus says it’s going to advertise to the consumer and direct respondents to retailers. Horizon continues its involvement with game shows on TV: Com’ on down!!