Fitness financials: Big 5 posts lower Q1 income, plus Sara Lee/Champion, adidas, Under Armour, Nautilus, Health Fitness Corp.

For May 9-15

Big 5 posts lower Q1 income
First-quarter net income for Big 5 Sporting Goods (Nasdaq: BGFV) was down 7.8 percent — $5.9 million, or $0.26 per share, in 2006 vs. $6.4 million, or $0.28 per share, in 2005 — hit by various one-time charges.

Results for the quarter included about $1.8 million in distribution center transition costs, $700,000 in auditing and consulting costs and $1.7 million in distribution center costs capitalized into inventory, it said. Year-ago results include a $500,000 charge related to a flood at one of the company’s stores.

Net sales increased 9 percent to $207.2 million from $190.1 million a year earlier. Same-store sales rose 5.3 percent. Results were still better than analyst predictions of $0.18 a share earnings on revenue of $202.6 million.

“Each of our major merchandise categories of footwear, hardgoods and apparel posted gains, with exceptional strength in winter products driven by favorable winter weather comparisons, particularly over the last several weeks of the quarter,” Steven Miller, CEO and president, said in a statement.

Big 5 also said its board authorized a buyback of up to $15 million shares. The company said the shares would be repurchased from time to time, on the open market or in privately negotiated transactions. The board also authorized an increase in cash dividend to an annual rate of $0.36 per share from $0.28. The board declared a quarterly cash dividend of $0.09 per share to be paid on June 15 to stockholders of record as of June 1.

It opened two new stores during the first quarter, bringing its store count to 326. It anticipates opening a total of three new stores during the second quarter, and opening a total of about 20 new stores during 2006.

Champion parent takes 78 percent income hit
Sara Lee (NYSE: SLE) reported a 78 percent drop in third-quarter income — much lower than analyst expectations — suffering from charges for disposing of businesses and a 1.3 percent drop in sales. It includes among its numerous brands Champion, which has a licensing agreement with Lamar Fitness for fitness equipment.

Net income for the quarter was down to $42 million, or $0.06 per share, from $189 million, or $0.24 a share, during the same period a year ago. Revenue fell to $3.79 billion from $3.84 billion.

Sara Lee said it was hurt by higher prices for such commodities as wheat and coffee. Its total commodity costs increased by $147 million in the quarter, only partially offset by $98 million of higher pricing.

The company said results include $0.16 per share in charges from the recognition of goodwill impairments, severance and other costs related to the company’s revamping of its business portfolio, offset in part by gains on the sale of its European branded apparel and rice businesses. Excluding those items, earnings were $0.22 per share, or $0.03 less than the consensus estimate of analysts.

The company said it expects fourth-quarter earnings of $0.27 to $0.32 per share, excluding one-time charges, and full-year earnings of between $0.98 and $1.03 per share. The full-year guidance includes the $0.16 charges from the third quarter.

adidas reports Q1 results with Reebok included
Net income climbed 37 percent for adidas (ADSG.DE) in the first quarter, benefiting from sales of golf gear and soccer-related products ahead of the World Cup.

Including Reebok results, net income rose to Euro 144 million (USD $183 million) and sales leapt 47 percent to Euro 2.46 billion (USD $3.13 billion). Operating profit of Euro 248 million (USD $316 million) topped forecasts, as did revenue. Sales for the company’s Asian business rose 28 percent at constant rates.

The quarter included Euro 454 million (USD $578 million) in revenue from Reebok. Excluding this figure, sales rose 19 percent, led by growth in its TaylorMade-adidas golf business due to the first-time inclusion of the Greg Norman apparel business. On a comparable basis, sales improved 12 percent for the adidas brand, while sales for the Reebok brand tumbled 16 percent.

Though operating margins fell 2.1 percentage points on the first-time inclusion of less-profitable Reebok and marketing expenditures for the World Cup, the sales growth boosted its profit, the company said. Reebok orders were down 14 percent this quarter, but the company noted it’s better than the 22 percent order decline from the last quarter.

“We have made important progress in successfully integrating Reebok within the adidas group and we are well positioned for the World Cup, which is only one month away,” said CEO Herbert Hainer.

The company raised its sales forecast for soccer-related products to Euro 1.2 billion (USD $1.5 billion) from Euro 1 billion (USD $1.3 billion).

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of May 9.)

Under Armour files public offering
As part of an agreement with its main venture backer and other shareholders, Under Armour (Nasdaq: UARM) has registered a public offering with the SEC in which private owners will sell 6.8 million shares.

The company said the filing is part of an agreement with Rosewood Capital, its main venture backer, and other shareholders. Under Armour will get none of the secondary’s proceeds, which would total about $255 million at the current price. Also, certain selling shareholders have granted the underwriters an option to purchase up to an additional 1,022,275 shares to cover over-allotments, if any.

Rosewood Capital, a San Francisco-based venture capital company with about $600 million in assets, received $12 million in Under Armour’s November IPO.

Nautilus declares quarterly dividend
The board of directors of Nautilus Inc. (NYSE: NLS) declared a regular quarterly dividend of $0.10 per common share, payable June 9, 2006, to stockholders of record as of May 20, 2006.

Health Fitness posts Q1 financial results
Health Fitness Corp. (HFIT.OB), a provider of fitness and health management services to corporations, hospitals and communities, posted a 10.3 percent decrease in net earnings, while revenue was up 8.2 percent. Net earnings were $563,263, compared to $627,934 for the same quarter last year. Revenue was $14.6 million for the first quarter, up from 2005’s $13.5 million. Diluted earnings per share decreased to $0.01 per share from $0.04 per share in the same period last year. Gross profit was $3.6 million for the quarter, an increase of 4.7 percent, compared to $3.4 million for the first quarter last year. Gross profit as a percent of revenue was 24.7 percent for the quarter compared with 25.6 percent for the same period last year. A non-cash benefit of $434,521 was recorded during the first quarter due to a change in the fair value of warrants we issued in 2005 to new investors.

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