Fitness financials: Bally enters confidentiality agreement with Pardus, plus Crocs, Finish Line, Wal-Mart
Fitness financials: Bally enters confidentiality agreement with Pardus. Crocs shares rise on analyst upgrade. Finish Line cuts forecast. Wal-Mart reports August same-store sales.
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Bally enters confidentiality agreement with Pardus
Hedge fund Pardus Capital Management said that it has entered a confidentiality agreement with Bally Total Fitness Holding (NYSE: BFT), allowing Bally’s largest shareholder to receive confidential information about the company.
Pardus said in a filing with the Securities and Exchange Commission that Bally will give Pardus “certain nonpublic information about the company for the purpose of evaluating and negotiating a possible strategic transaction with the company.”
Under the terms of the agreement, Pardus — which holds a 14.8 percent stake in Bally –can nominate individuals for election to Bally’s board of directors; bring business before a stockholders meeting; and conduct a proxy solicitation in support of director nominees, according to the filing.
In exchange, Pardus agreed to not buy or sell Bally securities for a period ending three business days after a deadline that will be no later than Oct. 16.
Earlier this month, Bally announced the resignation of Chairman and CEO Paul Toback and said that it was taking itself off the block after failing to attract a suitable buyer.
Shares of Bally closed on Aug. 25 at $2.58, up $0.20 from the previous day.
In other company news previous to this announcement: James McAnally, M.D., resigned from the board of directors, which he has served on since 1996. The company said he was instrumental in helping Bally branch out into new areas and stay current with medical trends. No reason was given for his resignation.
Crocs shares rise on analyst upgrade
Shares of Crocs (Nasdaq: CROX) were on the rise Aug. 28, elevated by a thumbs-up from Wedbush Morgan Securities predicting strong growth for the company. Shares of Crocs rose $0.55, or 2.1 percent, to $27.21 on the Nasdaq.
Wedbush Morgan said it raised its rating on Crocs to “Buy” from “Hold,” citing “exceptional” channel checks in the second and third quarters, rapid growth of its international business, and an expanded product line including licenses that can drive further growth.
“During the second quarter, the company increased its international sales by over 10 times — from $2.6 million to $27.6 million — and increased its international door count from 1,500 to 4,000,” analyst Jeff Mintz wrote in a client note. “These increases suggest that Crocs is not just a U.S. phenomenon, but appeals to an international consumer as well.”
The company has also signed licenses with Walt Disney Co. and various colleges that would allow it to sell Crocs footwear based on various Disney characters, or bearing the name of the college or university.
Finish Line cuts forecast
Finish Line (Nasdaq: FINL) cut its earnings and sales guidance for the fiscal second quarter due to lower sales, especially in women’s shoes. The company expects same-store sales to decline 6 percent to 8 percent. Finish Line said same-store sales of women’s running shoes and softgoods — which include sports clothing, caps and backpacks — fell in the double digits.
Finish Line now expects per-share earnings for the quarter ending Aug. 26 in a range of $0.19 to $0.21, versus previous guidance of $0.25 to $0.28 per share. The company expects second-quarter sales of $335 million to $339 million compared with previous guidance to a range of $352 million to $362 million.
Because of uncertainty in the business environment, the company said it will no longer provide sales or earnings guidance.
Wal-Mart reports August same-store sales
Wal-Mart Stores (NYSE: WMT) estimates August same-store rose approximately 2.7 percent, near the top of the company’s 1 percent to 3 percent guidance range. These comparative same-store sales numbers represent a 1 percent decrease in the two-year trend, indicating that Wal-Mart is seeing some of the softness in retail overall, said Banc of America Securities analyst David Strasser in a research report on Aug. 27. The analyst believes investors were expecting the numbers to be worse and is “encouraged by the visibility into the business and Wal-Mart’s ability to come in at the high end of the range.”
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