Fitness financials: Big 5 Nasdaq listing still hanging on, plus Bally, Saucony, Sears, Sara Lee, Puma, Wal-Mart

Fitness financials: Big 5 Nasdaq listing still hanging on, plus Bally, Saucony, Sears, Sara Lee, Puma, Wal-Mart

Big 5 Nasdaq listing still hanging on
Nasdaq gave Big 5 Sporting Goods (Nasdaq: BGFVE) another reprieve and has agreed to continue listing its stock since the company filed its 2004 annual report. The company could still face delisting, though, if it doesn’t file its first- and second-quarter reports by Sept. 30 — Nasdaq’s pushed-back deadline and final extension.

Big 5 said it expects to submit the quarterly reports “as soon as possible” but added that “there can be no assurance the company will be able to file these quarterly reports by the Sept. 30 deadline.” The company, which had delayed filing its annual report to restate its 2002 and 2003 results, submitted the results to the SEC on Sept. 6.

Nasdaq originally granted Big 5 a filing extension to Aug. 31, but the company missed the deadline. Big 5 said it requested an additional extension. However, Big 5 submitted the report before receiving a response from Nasdaq management, which today denied the company’s request. Nasdaq agreed to let the stock continue listing because the forms were filed before the denial was announced.

The company said it restated its prior financial reports to correct an accounting error the company found during its normal year-end process.

Bally names indenture trustee
Bally Total Fitness Holding (NYSE: BFT) entered into a supplemental indenture with U.S. Bank National Association as trustee, governing Bally’s 10 1/2 percent Senior Notes and 9 7/8 percent Senior Subordinated Notes. The supplemental indentures were entered into in connection with the successful completion of Bally’s solicitation of consent from bondholders for the waiver of default on financial reporting covenents on certain debt. Also, the supplemental indentures amended the indentures to waive future compliance by Bally with Section 7.4 of each indenture, which require Bally to file with the SEC, and furnish to the holders of notes and the trustee, reports required to be filed pursuant to the Securities Exchange Act of 1934, as amended, until Nov. 30, 2005.

To read more about Bally’s ongoing financial issues and delays, read several past SNEWS® stories, including Aug. 26, 2005, ” Bally’s board of directors continues to dwindle,” and Aug. 19, 2005, “Bally gets needed covenant and cross-default extensions.”

ISS supports Saucony sale
Institutional Shareholder Services, an independent proxy advisory firm, is giving the thumbs-up to Saucony (Nasdaq: SCNYA and SCNYB) shareholders to vote for Saucony’s proposed acquisition by Stride Rite (NYSE: SRR). In its report, ISS said it believes that the merger agreement warrants shareholder support. It also noted that the company’s decision to sell was reached following a lengthy sale process, in which a total of 46 parties were contacted.

Saucony and Stride Rite entered into a definitive agreement in June under which Stride Rite agreed to pay $23 in cash for each outstanding share of Saucony Class A and Class B common stock, or approximately $172 million in aggregate value. Saucony’s board of directors also unanimously recommends that stockholders vote for the proposed acquisition. Saucony also owns Hind, which is part of the deal. The vote is planned for Sept. 16.

Sears Q2 sales down, names new CEO
Sears Holdings Corp. (NasdaqNM: SHLD) is replacing CEO Alan Lacy as it reported lower second-quarter sales, and its stock dropped 5 percent. Aylwin Lewhas been been named CEO, starting Sept. 30, while Lacy will stay on as vice chairman and focus on merger integration and strategy. Chairman Edward Lampert, the hedge fund manager whose ESL Investments owns 39 percent of the company, will oversee marketing and merchandising.

According to reports, Lacy had faced Wall Street criticism for failing to revive Sears’ sales despite years of turnaround efforts. Sales slumped again in the latest quarter, dropping 7.4 percent at Sears’ stores open for at least a year. Kmart’s comparable-store sales were down just 0.3 percent, and its apparel sales rose. Analysts said the management moves had been expected for some time because Lacy’s expertise is in finance, while Lewis has a stronger retailing background.

Lacy ran Sears’ credit card operations and served as chief financial officer before taking over as CEO in 2000. Lewis was an executive at restaurant group YUM Brands before he became Kmart’s CEO last year.

In a letter to shareholders, Lampert said the moves reflect “the board’s and my desire to make the company more responsive to our customers and to involve me more directly in the renewal of the company.” He said he intends to serve without compensation, either in cash or stock options.

Sears Holdings said second-quarter net income rose to $161 million from $154 million a year earlier. Earnings per share, however, slid to $0.98 from $1.72 because of a large increase in shares outstanding associated with the merger, which was completed in March. On a basis that assumes Sears and Kmart had been combined last year instead, earnings rose to $161 million, or 98 cents a share, from $110 million, or 67 cents a share. In the latest quarter, capital spending was $114 million, far below the combined $287 million that Sears and Kmart spent in the same period a year ago.

Sears Holdings said it was sticking to its strategy of converting hundreds of Kmart stores to a new format called Sears Essentials, which pairs Kmart’s discounted merchandise with Sears’s top-selling exclusive brands like Kenmore appliances and Craftsman tools.

Shares of Sears Holdings fell $6.99 to $127.86 on the Nasdaq near midday on Sept. 8.

Sara Lee buyback program on schedule
Sara Lee, parent of Champion and licensor of the name for the new Champion Fitness equipment brand by Lamar Health Fitness & Sport, has repurchased 29 million shares since the start of its fiscal year on July 3, it told analysts at a Prudential “Back-to-School” Consumer Conference.

The company’s repurchases were made through a combination of open market transactions and an accelerated share repurchase program executed through Citigroup for a total cost of $562 million. It said the accelerated share repurchase program should be completed within three to six months.

The repurchases are part of its previously announced $2 billion, multi-year share repurchase program. The company plans to shed businesses in a bid to focus more on its core operations. Sara Lee added that it’s in talks with several parties over the sale of its European apparel business.

Herz siblings increase stake in Puma
Siblings Gunter and Daniela Herz have reportedly increased their stake in Puma (PUM.DE) to a blocking minority of 25 percent, according to UK’s Financial Times. The purchase, which brought their shares in the company up from 17 percent, raised speculation that Puma is susceptible to a takeover from the Herz siblings or even from Nike.

Wal-Mart maintains September forecast
Wal-Mart Stores (NYSE:WMT) said demand increased for hurricane-related merchandise including water, canned meat and sleeping bags, and it maintained its September sales forecast. It still expects a 2 percent to 4 percent increase in September sales at its U.S. stores open for at least a year, and demand for groceries was stronger than general merchandise sales.

Wal-Mart repeated that its forecast was subject to any impact from the hurricane and rising oil prices. The retailer said it had reopened all but 15 of the 126 stores and corporate facilities that were closed due to the hurricane. Nine locations were severely damaged. One of its Louisiana stores was reduced to nothing but half of a wall and safe.

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