Fitness financials: Icon's refinancing, not selling; plus Sears, Wal-Mart and a look at the state of U.S. retail

Icon says it’s not for sale, but the company is refinancing
Rumors swirling again (at least quarterly, it seems) about Icon Health & Fitness being on the market. With the news in January that its co-founders and top executives, CEO Scott Watterson and COO Gary Stevenson, would both resign in July to head out on a three-year mission as “mission presidents” somewhere out of the country for their church, Church of Jesus Christ of Latter Day Saints, no wonder the buzz about a sale started spreading. Turns out Icon is refinancing, sources tell us. No other word from Icon yet about what all that means. While Watterson and Stevenson are gone, they will still be involved in select strategic decisions, SNEWS® was told. In their absence, Scott’s brother David Watterson will take over as CEO.

Sears unit closes $2.0 billion bank facility
Sears, Roebuck and Co. (NYSE:S) on May 17 said its finance subsidiary, Sears Roebuck Acceptance Corp., completed a $2.0 billion syndicated bank facility. The three-year, unsecured revolving line of credit replaces a 364-day facility that was scheduled to expire later this month. The new facility will be used to support SRAC’s commercial paper program, and for general corporate purposes. The facility was co-arranged by Citigroup Global Markets Inc. and Barclays Capital, the Investment Banking Division of Barclays Bank PLC, which also acted as joint book runners, and was broadly syndicated among 33 participants. SRAC, a wholly owned finance subsidiary of Sears, Roebuck and Co., raises funds through the issuance of unsecured commercial paper and long-term debt, which includes medium-term notes and discrete underwritten debt.

Wal-Mart reports 14.2-percent jump in net sales
Wal-Mart (NYSE: WMT) reported record first-quarter earnings and sales for the quarter ended April 30, 2004. Net sales were $64.8 billion, an increase of 14.2 percent over the first quarter of fiscal 2004. Income from continuing operations for the quarter was $2.2 billion, an increase of 18.4 percent from $1.8 billion in the first quarter of fiscal 2004. Earnings per share from continuing operations were $0.50, up from $0.41 per share in the same prior year quarter.

Despite upbeat consumer, reports say economic outlook remains mixed
While the University of Michigan’s early May survey of consumer confidence showed American consumers remain upbeat (a score of 94.2 remains unchanged from late April), there are indications that increasing concerns over high gasoline prices and continued Iraq turmoil could bring positive economic energy to a screeching halt.

The year certainly started off on a rosy note, with the first-quarter sales reported by the National Retail Federation — www.nrf.com — up 9.8 percent in the GAFS category which includes general merchandise stores, clothing and clothing accessory stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores. Home merchandise sales remained strong through April, but clothing sales dropped 2 percent, dragging April sales for the GAFS category down .5 percent from March numbers. But economists are worried that as gasoline prices continue to climb, consumer spending will decline.

Regionally, the West experienced the largest dip in April GAFS numbers, down .7 percent followed by the South at .5 percent, the Northeast at .5 percent, and the Midwest at .4 percent.

Economists report that they did expect the dip in April retail sales simply because March experienced unusual growth due to unseasonably warm weather pushing up gardening-related sales, and an increase in construction activity which boosted building supply sales. Year-over-year, sales numbers are still up overall by 7.6 percent.

To get a sense for where the market is heading, the SNEWS® team has assembled a few reports for your reading pleasure:

Consumer Confidence: The Conference Board publishes a monthly report based on a mail-in survey sent to approximately 5,000 households. Results of the survey are a gauge of the consumer spending mood and are very closely watched by economists. Results of the survey are converted to an index, and the number reported is in comparison to the 1985 average of 100: April – 92.9; March – 88.5; February – 88.5; January – 97.7

Retail Sales: The Census Bureau tracks consumer spending trends by watching sales of motor vehicles, clothing, building materials, electronics, restaurants, grocery stores and more. The numbers reported indicate the percentage change from only the previous month: April – 0.5 percent; March – 2 percent; February – 1 percent; January – 0.5 percent.

Consumer Inflation: The Consumer Price Index is reported by the Bureau of Labor Statistics and is used to measure inflation. A set grouping of consumables, including food, beverages, medical care, fuel, and clothing are watched. The value indicates the year-over-year change in core pricing: April – 1.8 percent; March – 1.6 percent; February – 1.2 percent; January – 1.1 percent.

Gross Domestic Product (GDP): Reported by the Bureau of Economic Analysis, the GDP is an indicator of economic health. Growth over the long term is sustainable at 3.5 percent according to economists. If the GDP shows a decline over a period of quarters, the economy is considered to be recessionary. The GDP is reported quarterly and is comprised of the value of all goods and services produced in the United States. The numbers are expressed as a percentage change from the previous quarter: Q4 2003 – 4.1 percent; Q3 2003 – 8.2 percent; Q2 2003 – 3.3 percent; Q1 2003 – 1.4 percent.

For more information about the companies in this financial report, as well as to view stock prices updated every 15 minutes, visit the SNEWS® Stock Market Updates. Click on:www.outsidebusinessjournal.com/cgi-bin/snews/stock_report.html.