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Fitness financials: Cybex's sales, profit down in Q2, plus Accell Group, GSI Commerce, Brunswick

Cybex's sales and profits were down in Q2, Accell Group's profit increased 20 percent, GSI Commerce posted a wider net loss in Q2, and Brunswick elected a new board member.

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Cybex’s sales, profit down in Q2

Despite a reported pick-up in sales orders in mid-June, Cybex International (Nasdaq: CYBI) posted a drop both in its net sales and in its net income for the second quarter.

“At this moment serious issues of credit, debt levels, consumer spending attitudes and commodity prices are affecting the global economy, the U.S. economy, our fitness industry, and certainly Cybex,” CEO John Aglialoro told analysts and media on a quarterly call July 22. But he was optimistic, adding that orders are picking up and should continue to pick up into July.

“The culture change, I believe, is authentic,” he said. “People are exercising more, health clubs are opening more and more because of the benefits of exercise.”

Net sales for the second quarter of 2008 were $33.1 million compared to $34.7 million for the corresponding 2007 period, dropping 4.6 percent. For cardiovascular equipment, sales were $17 million, dropping 8 percent over a year ago. Strength showed sales of $12 million, for a drop of 4 percent. In the question period, COO Art Hicks told an analyst that the Arc Trainer’s drop of about 17 percent in sales was the biggest hit on the cardiovascular category since it is a high-margin item. He added that treadmills were up slightly and that, in the strength segment, the VR1 line was up but most of the rest was down.

Gross margins also took a hit, dropping 2.9 points with much of that coming from either freight cost hikes or increases in materials such as steel.

Net income was about $100,000, or $0.01 per diluted share, versus $1.1 million, or $0.06 per diluted share, in the corresponding 2007 period.

For the six months ended June 28, 2008, net sales increased to $72.9 million compared to $69.4 million for 2007. Net income for the last six months was $1.4 million, or $0.08 per diluted share, down from 2007’s $2.2 million, or $0.12 per diluted share.

Aglialoro noted that with the uptick starting in June, Q3 seemed to have a positive outlook.

“Overall the feeling is better, the general concern that I have is one of confidence for the economy, for our industry,” he told analysts on the call. “If this upturn continues throughout the industry, we’ll be in good shape.

“Although the U.S. and world economic conditions continue to be a concern,” he also said in a statement, “the fitness industry appears to be performing relatively well and the sales order rate at Cybex began to improve at the end of Q2.”

Accell Group profit increases 20 percent

Accell Group N.V. said it realized continued growth of sales and profit in the first half of 2008. Turnover in the relatively small-scale fitness segment — made up of Bremshey and Tunturi and 6 percent of the group sales — did not keep up with expectations in the past half year, it added.

The company said, due to good sales of bicycles in the higher segment of the market and the acquisition of Ghost Mountainbikes, sales for the six-month period increased by 11 percent, to EUR 306 million (USD $486 million). Organic growth was 6 percent, down from the 10 percent in 2007.

As a result of an improved product mix, it said net profit from ordinary operations increased by 20 percent to EUR 19.3 million (USD $30.6 million) versus EUR 16.1 million (USD $25.5 million) the year before.

Sales in Accell’s fitness segment, made up of Bremshey and Tunturi, dropped in the past six months to EUR 17.7 million (USD $28.1 million) from EUR 18.9 million (USD $30.0 million) in 2007.

Accell said half of the drop might be attributed to a weaker U.S. dollar and British pound. The operating result remained at the same level as in the first half of 2007, due to slightly better margins. After the strong growth in 2006 and consolidation in 2007, Accell said the organization is further adjusted.

In order to realize more efficiency benefits, Accell said, procurement will be moved further to Asia. For the full year 2008, a sales increase is expected, it added.

(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 July 23.)

GSI Commerce posts wider net loss in Q2

GSI Commerce (Nasdaq: GSIC) said second-quarter net revenues increased 47 percent, but posted a wider net loss.

Net revenues were $193.2 million versus $131.3 million in the same period last year. Non-GAAP net revenues increased 85 percent to $102.9 million from $55.8 million.

Loss from operations was $17.2 million compared to $9.0 million and included $2.2 million in amortization expense related to e-Dialog and Zendor, which was not included in the company’s guidance for the quarter. Non-GAAP income from operations was $6.7 million compared to $0.7 million.

Net loss was $19.0 million, or $0.40 per share, compared to $5.0 million, or $0.11 per share, last year.

For the third quarter, GSI said net revenues are expected to be approximately $188.0 million to $193.0 million. Loss from operations is expected to be in a range of $18.5 million to $19.5 million. For the full year, it anticipates net revenues to be approximately $1.0 billion with a loss from operations to be in a range of $6.5 million to $9.5 million.

Brunswick elects new board member

Brunswick Corp. (NYSE: BC) has elected Anne E. Belec, director of global marketing for Ford Motor Company, to its board of directors, effective immediately, and appointed to the human resources and compensation committee. The election of Belec brings the number of board members to 11.

Belec assumed her current position at Ford in March 2008. Most recently, she had been president and chief executive officer of Volvo Cars of North America, overseeing Volvo operations in the United States, Canada and Mexico. Belec also served as vice president of sales operations for the Volvo Car Corp. in Sweden.

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