Fitness financials: Brunswick loss widens in Q4; fitness sales drop 15 percent, plus Under Armour

Brunswick loss widens in Q4; fitness sales drop 15 percent

Brunswick Corp. (NYSE: BC) said its quarterly loss almost doubled as it sold fewer products — partially reflected by a 15-percent drop in domestic sales for its fitness segment.

For the three months ended Dec. 31, the company lost $124 million, or $1.40 per share. That compares with a loss of a year earlier of $66.3 million, or $0.75 per share. Revenue sank 22 percent to $657.3 million, down from $837.7 million during the same period last year.

For the full year, Brunswick’s annual revenue fell 41 percent to $2.78 billion from $4.71 billion in 2008. The company’s loss narrowed to $586.2 million, or $6.63 per share, versus its 2008 loss of $788.1 million, or $8.93 per share.

Brunswick’s report didn’t exclude two one-time items from its quarterly profit: a charge of $0.78 per share and a gain of $1.20 per share.

Fourth-quarter fitness segment sales, which include Life Fitness and Hammer Strength, totaled $146.4 million, down 15 percent from $171.8 million in the year-ago quarter. International sales — which represented 52 percent of total segment sales in the quarter — declined by 10 percent.

For the quarter, the fitness segment reported operating earnings of $20.5 million, including $0.5 million of restructuring charges. This compares with operating earnings of $25.6 million, including restructuring charges of $1.2 million, in the fourth quarter of 2008.

Brunswick said commercial equipment sales, which account for the largest percentage of the fitness segment’s sales, declined in the quarter as gym and fitness club operators remained cautious about ordering equipment. Sales of consumer exercise equipment were also down during the quarter.

Lower operating earnings in the fourth quarter of 2009, when compared with 2008, reflect the unfavorable effect of lower sales and a reversal of variable compensation and defined contribution retirement accruals that benefited the fourth quarter of 2008, partially offset by actions taken by Life Fitness to reduce expenses, including improvements in material costs.

Looking ahead, Dustan McCoy, Brunswick’s chairman and CEO, told investors in a Jan. 28 conference call that he believes sales improvement will occur in the fitness and bowling and billiards segments as financing slowly becomes available.

“Our current expectations reflect that these segments will experience modest growth in both revenue and operating earnings while continuing to generate strong cash flows,” he said. “We expect to report improving margins and the majority of our margin growth will come from significantly higher revenues and production rates, which may combine with our lower cost structure will produce strong operating leverage.”

Q4 profit for Under Armour up 83 percent

Under Armour (NYSE: UA) said its profit jumped 83 percent in the fourth quarter on higher apparel and online sales.

For the quarter ended Dec. 31, it earned $15.2 million, or $0.30 per share, compared to $8.3 million, or $0.17 per share, a year earlier.

Quarterly revenue rose 24 percent to $222.2 million. The company said apparel sales rose 26 percent and online sales grew about 53 percent.

It added that its operating costs would exceed revenue growth in 2010 as it invests in marketing, online sales, product innovation and its supply chain.

For the full year, the company’s profit rose 22 percent to $46.8 million, or $0.92 per share, compared to $38.2 million, or $0.76 per share, in 2008. Yearly revenue rose 18 percent to $856.4 million from $725.2 million.

Looking ahead, the company projected 2010 revenue and per-share profit will rise 10 percent to 12 percent over 2009 results. Assuming that level of growth and 2009 earnings per share of $0.92, 2010 profit may be in a range of $1.01 to $1.03 per share. Revenue in 2010 could rise to a range of $945 million to $960 million, it said.

–Compiled by Wendy Geister

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