Fitness financials: Bally names new CFO and treasurer, plus Forzani, Amer, Sears/Kmart, GSI, Finish Line

Bally names new CFO and treasurer
Starting March 28, Bally Total Fitness Holding Corp. (NYSE: BFT) will have a new chief financial officer, replacing Bill Fanelli who has served as acting CFO since April 2004. Carl Landeck, known as a financial turnaround expert, will take over the CFO role and Fanelli will transition to the newly created position of senior vice president of planning and development and oversee strategic business planning, information technology, real estate, construction and franchising.

Landeck is a CPA who has served as the CFO of both publicly traded and privately held companies over the past 10 years and in various senior financial roles spanning nearly two decades. He most recently served as chief financial and administrative officer at Levitz Home Furnishings and, Bally said, was instrumental in developing and ensuring the financial integrity of the business, establishing an effective control environment and building the organizational infrastructure necessary to support the revitalization of the company’s operations. He has also held positions with Cablevision Electronics Investments, a wholly owned subsidiary of Cablevision Systems Corporation and Herman’s Sporting Goods.

“The hiring of a new CFO is an important step in restoring investor confidence in Bally’s financial statements,” said Paul Toback, chairman and CEO of Bally, in a statement. “I have every confidence that Carl will be an excellent addition to the executive team, as he brings a wealth of management and financial turnaround experience and possesses the leadership skills necessary to help us chart our future on a sound financial basis.”

Then a day later, Bally announced that Katherine L. Abbott was joining the company as vice president and treasurer, effective immediately. In her new position, Abbott will report to Landeck and have direct responsibility for Bally’s treasury operations and oversee the company’s investor relations. Prior to joining Bally, Abbott was a vice president at J.P. Morgan Securities, and has also worked for Budget Group Inc., Credit Agricole Indosuez and the Container Corp. of America.

Forzani earnings hit by accounting changes
Forzani Group Ltd. (FGL.TO) — parent of Sport Chek, Coast Mountain Sports and National Sports in Canada — said its fourth-quarter and full-year 2005 earnings were actually weaker than previously reported due to a change in accounting for certain lease costs.

Net earnings for the fourth quarter were CDN $13.0 million (USD $10.7 million), a 19.2 percent decrease from fiscal 2004, CDN $12.7 million (USD $10.4 million) or a decrease of 21.1 percent, after the impact of the change in accounting for certain lease costs. Diluted earnings per share for the fourth quarter were CDN $0.40 after the accounting adjustments, compared to CDN $0.50 per share for the same period last year. Revenue decreased 2.3 percent to CDN $274.3 million (USD $225.5 million). Corporate comparable store sales decreased 7.7 percent and, in the franchise division, comparable store sales increased 7.1 percent.

Net earnings for the year were CDN $22.9 million (USD $19.0 million), down 18.5 percent from reported net earnings of CDN $28.1 million (USD $23.1 million) in fiscal 2004, CDN $21.5 million (USD $17.7 million) or a decrease of 23.5 percent, after the impact of the change in accounting for certain lease costs. Earnings per share were CDN $0.70 after the accounting adjustments, versus $0.87 per share in the previous year. Gross margin for the year decreased 50 basis points from fiscal 2004 to 33.9 percent.

During fiscal 2005, Forzani opened 20 new corporate stores, seven of which were opened during the fourth quarter. Also, during fiscal 2005, the franchise division opened four new franchise stores. It now has over 5.5 million square feet of retail selling space and 446 locations.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of March 24.)

Amer’s name change complete
Following approval at Amer Group Plc’s annual general meeting on March 16, the proposed change to the company’s trade name has been registered in the Trade Register. The new name is Amer Sports Oyj in Finnish and Amer Sports Corp. in English, effective immediately. The trading symbol — AMEAS — of the company’s shares will remain unchanged. For more, go to www.amersports.com.

Sears and Kmart shareholders approve $12.3 billion merger
On March 24, Kmart Corp. and Sears Roebuck & Co. shareholders approved Kmart’s buyout of the Sears chain, creating the third-largest U.S. retailer. Kmart shareholders quickly approved the transaction, valued at $12.3 billion, which would create Sears Holding Corp. Later in the day, the Sears shareholder meeting was identified as contentious but the same percentage — 69 percent — voted in favor of the deal.  

Trading under the ticker symbol “SHLD” on the Nasdaq, Sears Holding will convert at least 400 Kmart locations to Sears outlets, operating under the name Sears Essentials. The move will expand the company’s presence in “off-mall” formats amid years of declining shopping-center traffic, as shoppers seem to favor stand-alone stores such as Wal-Mart, Home Depot and Target.

It’s been reported that the companies hope the new entity, with $55 billion in annual sales and 3,800 stores, will be able to better compete with Wal-Mart. The deal also allows for cross-selling of the companies’ proprietary brands. Edward Lampert, Kmart’s chairman who engineered the deal, will be chairman of Sears Holding, while Sears CEO Alan Lacy will be CEO and vice chairman.

Sears shares fell $6.64, or nearly 12 percent, to $50.16 in afternoon trading on the New York Stock Exchange. Kmart shares rose $4.02, or 3.2 percent, to $128.85 on the Nasdaq Stock Market. Analysts said that the deal’s approval means there is no more upside for shares of Sears. Investors who didn’t trade in their Sears stock for a half-share of Kmart’s would receive only a flat consideration for each of their shares, according to analysts. Sears Holding’s shares should trade closer to $160 a share, analysts estimate.

News organizations said the Sears gathering was more contentious, as retirees and former employees gathered to voice their concerns over pensions and the buyout of one of retailing’s most enduring names.

GSI Commerce stands by guidance
GSI Commerce (Nasdaq: GSIC) said it sticks by its fiscal 2005 first-quarter and annual financial guidance that was previously announced on Feb. 16. “We are very pleased with the performance of our business so far this year,” said Michael Rubin, chairman and CEO of GSI Commerce, in a statement. GSI Commerce will announce its fiscal 2005 first-quarter financial results on April 27.

Finish Line 4Q up 30 percent
Finish Line (NasdaqNM: FINL) reported that fourth-quarter earnings increased more than 30 percent year-over-year, due to strong same-store sales growth. Fourth-quarter net income rose to $28.2 million, or 57 cents per share, from last year’s $21.1 million, or 43 cents per share. Sales increased 18 percent to $361.4 million from $305.3 million last year, and sales at stores open at least one year, or same-store sales, grew 8 percent. For the full year, the company earned $61.3 million, or $1.24 per share, from $47.3 million, or 98 cents per share, in fiscal 2004 on a restated basis. Included in year-ago profit is a 1-cent gain on the tornado insurance settlement. Sales increased 18 percent to $1.17 billion from $985.9 million last year, and same-store sales grew 9 percent.

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