Fitness financials: Gaiam doubles Q1 net income, plus Health Fitness, Nautilus, adidas, NRF reports weak April retail sales, The Sports Club, Wal-Mart, Costco

Gaiam doubles Q1 net income
For the first quarter, Gaiam (Nasdaq: GAIA) doubled its net income to $1.8 million, or $0.07 per share, from $900,000, or $0.04 per share, in the first quarter of 2006. Depreciation and amortization for the quarter was $2.3 million.

Revenue for the quarter increased 13.0 percent to $58.5 million from $51.8 million recorded in the same period last year. Gross margin for the first quarter remained strong at 64.1 percent of revenue, consistent with the comparable period last year. The company said this solid margin reflects the company’s continued emphasis on media and proprietary products.

During the first quarter of 2007, Gaiam generated record cash of $8.3 million from its operations compared to a use of $1.0 million cash in the same period last year. Gaiam’s cash position at March 31, 2007, remained strong at $83 million, even after the repurchase of 2.5 million shares of common stock and two content licensing agreements funded during the first quarter. As of the end of the quarter, Gaiam had approximately 24.7 million common shares outstanding. Gaiam continues to have no debt.

According to Nielsen’s VideoScan, Gaiam’s market share in the fitness/wellness DVD category increased to 48 percent at the end of March, up from 42 percent in the same quarter last year and 45 percent at the end of last quarter.

During the first quarter of 2007, Gaiam entered into exclusive content licensing deals with TAG Entertainment and The Brainy Baby Company. The agreement with TAG provides for exclusive distribution rights of existing TAG titles as well as a first look opportunity to license video rights to new family films produced by TAG. The agreement with Brainy Baby covers approximately 40 existing titles under the “Brainy Baby,” “First Impressions” and “Bilingual Baby” brands, as well as production rights to future Brainy Baby titles.

Gaiam also announced the hiring of Bill Sondheim as president of Gaiam’s Distribution and Direct Response Marketing businesses. Sondheim has a long track record in the home entertainment industry, including executive vice president with Sony BMG Music Entertainment and president of PolyGram Video.

Health Fitness net earnings drop for Q1
First-quarter revenue for Health Fitness Corp. (OTC.BB: HFIT), a provider of employee health improvement services to corporations, hospitals and communities, increased 13.9 percent. Revenue was $16.6 million, up from $14.6 million for the same period last year.

Gross profit during the quarter increased 33.4 percent to $4.8 million, from $3.6 million for the same period last year. Operating income increased 132.5 percent to $0.89 million, from $0.38 million for the same period last year.

Net earnings decreased to $510,000, from $560,000 in the prior year period. Net earnings per diluted share increased to $0.03, from net earnings per diluted share of $0.01 for the same period last year. Net earnings per diluted share for the first quarter of 2006 excluded a $430,000 non-cash gain related to a change in fair value of warrants.

Additionally, fitness management segment revenue grew 4.1 percent to $10.7 million, from $10.3 million for the same period last year. The company attributed growth to new contracts, the expansion of existing contracts, and growth of program revenue at existing sites, including personal training, weight management services and massage therapy.

Nautilus declares quarterly dividend
Nautilus Inc. (NYSE: NLS) announced that its board of directors declared a regular quarterly dividend of $0.10 per common share, payable June 8, 2007, to stockholders of record as of May 20, 2007.

adidas Q1 profit slips 11 percent
First-quarter net profit for adidas (ADSG.DE) fell 11 percent in the first quarter as marketing costs related to the Reebok brand and the comparison with last year’s run-up to the World Cup cut into profits.

Net profit was EUR 128 million euros (USD $174.3 million) in the January-March period, compared with EUR 144 million a year earlier

Earlier this year, the company had warned that first-quarter results would fall between 10 percent and 20 percent. The company confirmed its full-year financial targets of 15 percent growth in net profit through the end of the year.

Sales rose 3 percent to EUR 2.54 billion (USD $3.46 billion) in the three-month period, compared with EUR 2.46 billion a year earlier. Reebok reported sales of EUR 524 million (USD $713.4 million) in the quarter, up 15 percent from EUR 454 million a year earlier.

Reebok’s first-quarter order backlog rose 3 percent, the first positive quarter-end results since it was acquired by adidas. The order backlog for the adidas brand increased 7 percent and was helped by the strong product pipeline in the second half of the year, the company said.

Sales also rose worldwide, despite the strength of the rising euro, with Asia and Latin America seeing gains of 13 percent and 36 percent, respectively, while sales in Europe rose 8 percent. North America, however, saw a decrease of 8 percent to EUR 698 million (USD $950.3 million) from EUR 759 million.

Also, adidas said it still expects currency-adjusted sales to increase in a mid single-digit percentage range. Reebok revenue is expected to rise at a low-single-digit rate, while the adidas brand should post sales growth in a mid-single-digit range in 2007.

(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 8.)

April retail sales take a hit, NRF reports
The National Retail Federation (NRF) said April retail sales were impacted by rising gas prices, unseasonably cool weather, and an early Easter. Retail industry sales for April, which exclude automobiles, gas stations and restaurants, rose 2.6 percent unadjusted over last year and decreased 0.5 percent seasonally adjusted from March, NRF reported.

April retail sales released by the U.S. Commerce Department show that total retail sales decreased 0.2 percent seasonally adjusted from last month and increased 3.1 percent unadjusted year-over-year. It does not include non-general merchandise categories, such as autos, gasoline stations and restaurants, in its figures.

Industry sales varied across the board. For stores selling electronics and appliances, sales rose 0.7 percent seasonally adjusted over March and 3.6 percent unadjusted over last year. But stores selling building materials, garden equipment and garden supplies saw sales drop 2.3 percent from April and 3.8 percent over last year.

Health and personal care stores saw moderate gains of 0.9 percent month-to-month, plus a strong 8.7-percent increase unadjusted year-over-year. Clothing and clothing accessories stores’ sales, affected mostly by Easter falling in the earlier part of the month this year, fell 2.0 percent seasonally adjusted but increased 2.3 percent unadjusted from last year.

The Sports Club reports Q1 net loss
The Sports Club Company (Pink Sheets: SCYL), operator of sports and fitness complexes under the brand name The Sports Club/LA, posted a narrower net loss for first quarter.

After preferred stock dividends of $297,000 and $549,000 for the first quarter ended March 31, 2007 and 2006, respectively, the net loss for the 2007 first quarter was $1.92 million, or $0.10 per basic and diluted share, compared to 2006’s net loss of $3.22 million, or $0.17 per basic and diluted share. The weighted average number of basic and diluted shares outstanding for the 2007 first quarter was 19,977,000 shares compared to 19,406,000 shares for the first quarter last year.

Revenues for the quarter rose 3.2 percent to $15.02 million compared to $14.56 million for the same period last year.

Wal-Mart posts rare decline in April same-store sales
For the month of April, Wal-Mart Stores (NYSE: WMT) recorded a rare decline — the weakest performance since the world’s largest retailer started publishing monthly sales in 1980, according to a company spokesman. Wal-Mart reported a 3.5 percent decline in same-store sales. Analysts had expected a 1.1 percent decrease.

Wal-Mart warned last month it expected same-store sales in April to be anywhere from unchanged to down 2 percent, but business was much weaker because of disappointing sales of apparel and home goods at its Wal-Mart discount chain. Same-store sales at the discount stores were down 4.6 percent, while same-store sales at the Sam’s Club warehouse club division rose 2.5 percent.

The last time Wal-Mart reported a drop in same-store sales was last November, when the retailer posted a 0.1 percent decrease.

Total sales for the four-week period were $26.568 billion, up 3.7 percent from last year’s $25.625 billion.

It expects May same-store sales to rise 1 percent to 2 percent.

Costco same-store sales rise in April
Costco Wholesale (Nasdaq: COST) reported a 7-percent increase in same-store sales in April due to the shift in Easter holiday timing, which added an extra sales day to the latest period. Costco said the calendar shift boosted same-store sales by about 2 percent.

Same-store sales in the United States grew 6 percent, while international same-store sales gained 10 percent for the month. Total sales for the four-week period ended May 6 increased 12 percent to $4.94 billion from $4.43 billion.

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