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Fitness: Did you hear?…

Busy Body/Gyms to Go to open Tampa store, Bally raising $175 million to refinance, G.I. Joes to feature Nautilus fitness equipment, IHRSA research gauges industry health, plus much more...

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>> Florida-based Busy Body/Gyms to Go is opening its 15th store this month — in Tampa. The new store will be more than 5,000 square feet with 1,500 square feet of warehouse space, which will serve as satellite distribution center for Tallahassee and Jacksonville. “We are excited about this store as it will give us more coverage on the west coast of Florida,” President Carlos Vazquez told SNEWS®. He said the company intends to open two or three more stores over the next year, including more in Georgia. The company is also considering other Southeastern states such as South Carolina — despite hurricanes in that neck of the wood. Speaking of hurricanes, Vazquez said of his 14 stores pre-Jeanne’s strike on Sept. 25-26, four were shut down for six days and two were shut down for eight days due to lack of power or water damage. The chain lost a bucket-load of revenue. “Thank goodness we have the Atlanta market,” he said. “We just gotta keep plugging along.” He’s also helping out two employees who lost their homes.

>> Bally Total Fitness (NYSE: BFT) has announced that it plans to raise $175 million with a five-year loan facility to refinance existing debt, including its current $100 million securitization facility. J.P. Morgan Securities Inc. will be the lead arranger on the loan. This announcement comes on the heels of criticism from Emanuel Pearlman of Liberation Investments, one of Bally’s biggest investors with 7 percent ownership of the company. Pearlman has been pressuring Bally to refinance its debt, consider selling some assets, and provide clear financial information to stockholders. This loan facility seems to be a first step to follow Pearlman’s advice. The loan facility will provide Bally with $75 million in additional liquidity, which the company said will be used for general corporate purposes. In other Bally news, the company also announced that its revolving credit lenders granted an extension for the delivery of second-quarter financial results. After the initial extension in August, Bally was supposed to deliver the results by Sept. 30. It will now have until Nov. 1 to post the information.

>> The industry has babies: Bobby Krause, of Lifespan Fitness by PCE, and his wife are the new parents of Aden Faber Krause, who was born on Sept. 16 at 10:36 a.m. Aden Faber weighed 7 pounds, 13 ounces, and was 19 inches. Krause said the little one came about two weeks early — “which my wife was very happy about since they had told us he could have reached up to 10 pounds.” He added that mom and baby are doing very well: “Actually mom is already out walking.” No word on how Bobby is doing since he hasn’t wiped that proud-daddy smirk off his face for two weeks now. Also, Jhan Dolphin and wife Hilary have added to their clan. Chase Mitchell was born Aug. 27 at 1:02 a.m., and weighed 6 pounds, 5 ounces, and is 18.5 inches. He joins older brothers Jeff and Parker and sister Sara.

>> SGMA International is presenting a three-part series (via phone/web conferencing) called “Doing Business in China” to provide information and resources to the sporting good industry on how to succeed in the Chinese marketplace. “Whether your company is currently doing business in China or you are looking at new opportunities in China, this program will bring you the latest news and information from that country,” said SGMA President John Riddle. “By participating in this ‘webinar,’ you will learn from experts in the field on how to develop a comprehensive and well-planned strategy for doing business in China.” The webinars will be moderated by Mark Granger (Morrison Mahoney, LLP) and Kevin Mayer (Steptoe & Johnson, LLP), both members of SGMA’s Legal Task Force. It will take place on three days — Oct. 5, Oct. 19 and Nov. 2 — from 12-2 p.m. each day. Each day has a different agenda with three to four different speakers. They include topics such as “Getting Started with New Methods;” “It’s Your Product, Protect Your Rights in China;” “Avoid a Cultural Faux Pas: Know the Chinese Customs and Business Practices;” “Further U.S./Chinese Business Relations in the Sporting Goods Industry;” and “Product Liability Concerns in China.” A brochure in PDF format is available by clicking here. The audio portion of the program will be presented as a toll-free dial in teleconference with visual materials available on the web. To register, go to or call SGMA’s Anna Weinman, 202-775-1762. The fee is $295 for SGMA members and $395 for non-members.

>> The inventor of the Universal Gym Machine, Harold Zinkin Sr. died Sept. 22 after hitting his head in a fall at his home. He was 82. A regular at Southern California’s famed Muscle Beach in 1930s — part of a core group that started the then-ridiculed physical fitness movement — Zinkin won the first Mr. California bodybuilding title in 1941. He moved to Fresno, Calif., in 1953 and later started a chain of fitness centers. In 1961, he patented the Universal Gym Machine, which was designed to make multiple exercises possible on a single piece of equipment.

>> Lifestyle Family Fitness Inc., based in St. Petersburg, Fla., with 20 locations in the state, will continue to make available its shower and bathroom facilities to those left without power by Hurricane Jeanne. Those wanting to use the club must only show proof. The clubs have arranged for this through September.

>> An administrative law judge has ordered the marketers of the “Ab Force” belt to stop making claims that the Ab Force causes or promotes weight, inches, or fat loss; causes or promotes well-defined abdominal muscles; or is an effective alternative to regular exercise. In an initial decision, Chief Administrative Law Judge Stephen McGuire upheld a Federal Trade Commission complaint charging Telebrands Corp., TV Savings LLC and their owner, Ajit Khubani, with unfair or deceptive acts or practices and false advertising. The Fairfield, N.J.-based, operation marketed and sold the Ab Force ab belt — an electronic muscle stimulation (EMS) device that causes the muscles to contract involuntarily. Filed in 2003, the FTC complaint alleged that the respondents’ infomercials falsely claimed that users could achieve weight loss, fat loss and inch loss, get well-developed abs, and that use of the belt is an effective equivalent to regular exercise. Click here to read the entire FTC release.

>> Los Angeles-based The Sports Club Company Inc. has engaged Barnett & Partners, LLC, a New York-based investment banking firm, to evaluate strategic alternatives including the sale of one or more of the company’s operating assets. Sports Club has received a number of non-binding indications of interest relating to certain of its assets. Because two proposals were received from its affiliates, the board of directors has approved the formation of a Special Committee of independent directors to consider these and other proposals. Rex Licklider, CEO of Sports Club said, “The company’s business is performing well this year in a highly competitive environment. The interest in the company and its assets received to date reflects both the value of The Sports Club/LA brand and the enormous commitment of our many employees to developing and operating the finest luxury fitness complexes in the world. The creation of the Special Committee at this time underscores the board of directors’ commitment to implementing a process that is fair to all prospective participants while at the same time insuring that maximum value is realized from any sale of assets.” The Special Committee, comprised of independent board members George Vasilakos and Andrew Turner, has engaged independent legal counsel, and may engage an investment bank, to advise it in connection with this process. Licklider will participate in the analysis and negotiation of proposals but will not be a member of the special committee. Sports Club operates and owns sports and fitness complexes nationwide under the brand name, The Sports Club/LA.

>> In 1952, G.I. Joes made its mark selling 2,000 surplus sleeping bags. Now, it is partnering with The Nautilus Group to develop a fitness equipment department at each of its 22 locations. Nautilus will begin installing five SKUs of strength and cardio equipment — Schwinn and Bowflex-branded stationary bikes, treadmills and home gyms — Oct. 15, with a completion date of Nov. 1. Nautilus said the agreement with G.I. Joes, also based in the Pacific Northwest as it is, is another step in its business strategy to diversify its marketing and distribution into retail stores. “G.I. Joes is an excellent regional retailer with a strong following of customers who enjoy physical activity,” Tim Hawkins, chief customer officer of Nautilus, said in a statement. With approximately $200 million in annual sales, G.I. Joes’ goal is to provide its customers the best selection of sports, outdoor and automotive gear at the best possible prices. “We’re excited to have the No. 1 brands in fitness equipment alongside the many other great brands customers find at G.I. Joes,” said Norman Daniels, president of Wilsonville, Ore.-based, G.I. Joes. “We’re also thrilled to see two strong companies with headquarters in the Northwest working closely together for the benefit of our customers.”

>> GERMANY — In a recent investor presentation, adidas-Salomon (OTC: ADDDF.PK) confirmed it expects 20 percent higher earnings this year and sales to be up about 5 percent excluding currency effects. The Germany-based sporting goods company aimed for an operating margin of 10 percent by 2006, up from 7.6 percent in the first half of the year, adding that there is further potential to increase the operating margin. The company had raised its outlook in August from a projection of 15 percent higher profit and 3 percent to 5 percent sales growth after a recovery in its key North American business fuelled better-than-expected second-quarter results. Net profit rose 36 percent in the second quarter to 44 million Euros ($53.40 million). Sales rose to 1.47 billion Euros from 1.39 billion Euros a year ago. Analysts are still keeping adidas-Salomon on their “outperform” list.

>> In a follow up to our previous report on Finish Line (NasdaqNM: FINL), its recent conference call confirmed that second-quarter net income rose to $20.8 million, or 85 cents per share, from $17.5 million, or 73 cents, a year ago. However, that was 2 cents lower than analysts’ expectation of 87 cents a share, driving the retailer’s stock down 2.5 percent to $29.69 in after-hours trading on electronic brokerage INET from a Nasdaq close of $30.44.

>> GERMANY — Always on the lookout for design innovation, the 2005 ispo winter trade show based in Munich, Germany, will be showcasing the winners of the new Volvo SportsDesign Awards for sport products designed specifically for women in six categories, including women’s fitness equipment. Volvo is looking for submissions in the following categories: women’s ski equipment (skis, shoes, binding, poles); women’s board equipment (snowboards, snow boots, snowbindings, skateboards, surfboards, kiteboards); women’s fitness equipment (stationary workout bikes, treadmills, weights); women’s outdoor equipment (shoes, climbing equipment); women’s footwear equipment (running shoes, soccer shoes, sports shoes); and women’s accessories and components (helmets, glasses, watches, backpacks, gloves). Products will be judged based on quality, function and benefits for women, innovation and concept, material used as well as colors and patterns. Submission deadline is Dec. 20, 2004. The nominated products will be exhibited during 2005 ispo winter, Feb 6-9, 2005, and at ispo china, March 14-17, 2005, trade shows. Winners will also be published in the 2005 Volvo SportsDesign Yearbook. For more information, visit or contact Daniel Kugler, Pascher + Heinz SportsMarketing,, (+49 89) 9441960.

>> GSI Commerce has been named to the Technology Fast 50 Program for the Delaware Valley, a ranking of the 50 fastest growing technology companies in the region judged by Deloitte & Touche. Rankings are based on the percentage growth in fiscal year revenues from 1999 to 2003. GSI’s annual net revenues have risen from $5.5 million in 1999 to $242 million in 2003. To qualify, companies must have had operating revenues of at least $50,000 in 1999 and $1 million in 2003, and be a technology company. Winners of the 19 regional Technology Fast 50 programs are entered in the Deloitte Technology Fast 500 program.

>> IHRSA queried 13 leading U.S. health and sports clubs, representing 180 facilities, to gauge the financial health of the industry, finding that companies grew their total revenue an average of 8.3 percent to about $12.7 million in revenue for the quarter compared to last year. The companies also increased their same-store revenue for clubs that have been in operation for at least two years by an average of 3.4 percent to $10.6 million. “Given the overall economy’s slow return to growth, these results represent a positive indicator for the industry’s performance in the first half of 2004,” John McCarthy, IHRSA’s executive director, said in a statement. “Particularly encouraging was the fact that the reporting companies grew non-dues revenues at their mature clubs by a little more than 8 percent over 2003 levels, suggesting that members were willing to pay for profitable fee-for-service programs like personal training.” The survey found that the average earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) improved by 10.7 percent to $3.5 million. As a percentage of total revenue, EBITDAR remained steady at approximately 27 percent of revenue for both the second quarter of 2003 and 2004. Other stats were: total membership/dues revenue, $8.8 million; total non-dues revenues, $3.7 million; total membership accounts, 33,678; and same-store total membership accounts, 28,317. The survey was conducted by Industry Insights Inc. for IHRSA for the quarter ended June 30, 2004.

>> Specialty retail works hard to differentiate itself from the competition with superior customer service, and a recent study by NFI Research reported that 85 percent of senior executives and managers say that their customers’ expectations are higher compared to two years ago. Thirteen percent said they stayed the same, while only one percent said they are lower. Although customer expectations are higher versus two years ago, 94 percent of senior executives and managers responded that in general, their group or department meets customer expectations well today, while the other 6 percent said they don’t meet their customer expectations very well. One respondent said, “Each time a customer receives service that makes a positive impression, it becomes harder to impress that customer the next time. This is true for the same company as well as any other company the customer deals with. Nevertheless, we will continue striving to exceed our customers expectations.” While another more upbeat respondent added, “Higher expectations provide excellent motivation for new ideas, approaches and performance!” NFI Research is a U.S.-based research firm that identifies and analyzes trends and attitudes in business and organizational management.

>> The newly launched Association of Hydraulic and Fitness Clubs is holding a national conference in Houston Oct. 22-24. Dubbed the Harmony Fitness Workshop, the event is targeted for 30-minute circuit training health clubs and will focus on the specific challenges and concerns in running franchised or independent circuit training gyms, like Curves or ExpressFit. Symanthia Harper, the founder of both the association and the workshop, said, “We found that we got a lot of calls from club owners that have basically the same challenges… so we got the idea that it’s high time for a national conference to address these timely issues and to have an idea exchange.” For more info, call 800-258-4059 or visit:

>> We just heard about a disgruntled health club member who thought he’d do something in light of all the national worries about obesity? He joined a health club last year, spent about $400: “Haven’t lost a pound. Apparently you have to go there.”