Precor bright spot in Amer Sports’ Q2 report
Despite a 7 percent increase in second-quarter net sales for its Precor segment, Amer Sports’ net sales decreased 4 percent to EUR 310.3 million (USD $425.0 million) compared to EUR 321.8 million (USD $443.0 million) in 2006. In local currency terms, net sales were on par with the previous year.
Amer Sports’ second-quarter EBIT loss widened from last year — EUR -12.8 million (USD -$17.5 million) versus EUR -9.0 million (USD -$12.3 million) in 2006. Net financial expenses totaled EUR -1.1 million (USD -$1.5 million) compared to EUR -6.4 million (USD -$8.8 million), and earnings before taxes were EUR -13.9 million (USD -$19.0 million) versus EUR -15.4 million (USD -$21.2 million).
Its net sales in January-June 2007 decreased 6 percent to EUR 692.1 million (USD $948.1 million) from EUR 739.2 million (USD $1.017 billion) in 2006. Net sales in local currency terms declined 2 percent.
For the six-month period, net sales by business segment were: Wilson 45 percent, Salomon 27 percent, Precor 19 percent, Suunto 6 percent, and Atomic 3 percent. Salomon’s sales declined 8 percent, Wilson’s 7 percent, and Atomic’s 41 percent. Precor’s sales were on par with the previous year and Suunto’s net sales rose 9 percent. In local currency terms, Salomon’s sales were down 6 percent and Atomic’s 40 percent. Wilson’s sales were on par with the previous year, while Suunto’s sales increased 12 percent and Precor’s 8 percent.
The group’s EBIT was EUR -20.6 million (USD -$28.2 million). In 2006, the EBIT was EUR -7.4 million (USD -$10.1 million).
Earnings before taxes were EUR -28.4 million (USD -$38.9 million) compared to EUR -18.7 million (USD -$25.7 million) in 2006. Earnings per share stood at EUR -0.30 (USD -$0.41), while 2006 it was EUR -0.19 (USD -$0.26). Net financial expenses totaled EUR -7.8 million (USD -$10.6 million) compared to EUR -11.3 million (USD -$15.5 million) last year, reduced by interest rate swaps executed in May, which resulted in a gain of EUR 6.4 million (USD $8.8 million).
Net sales for the Precor business segment stayed relatively status quo compared to last year: EUR 59.7 million (USD $81.7 million) versus 2006’s EUR 59.3 million (USD $81.6 million). For the six-month period, sales nudged up slightly: EUR 133.5 million (USD $182.8 million) compared to EUR 132.2 million (USD $182.0 million) in 2006.
The company said Precor’s net sales continued to develop favorably, increasing 8 percent in local currencies. The Americas accounted for 78 percent, EMEA for 15 percent, and Asia for 7 percent of net sales. Sales in local currencies were up 20 percent in Asia, 8 percent in EMEA and 7 percent in the Americas.
Despite its costs being more front-loaded than previously, Precor’s EBIT increased 9 percent in local currency terms, totaling EUR 16.1 million (USD $22.0 million). Precor’s full-year outlook is good, the company said in a statement, and earnings are expected to improve.
Precor’s sales continued to grow, and it has agreed to deliver cardio equipment to the 24 Hour Fitness chain. Precor also signed an agreement with SATS, Europe’s biggest fitness club chain. Amer Sports said fitness club sales were further boosted by the new launch of the Adaptive Motion Trainer (AMT) at the IHRSA 2007 show and Precor’s ClubCom entertainment and media services.
For 2007, Amer Sports said EBIT for the company as a whole is not expected to reach last year’s level. A mild winter reduced pre-orders for winter sports more than expected and increased uncertainty about re-orders in the latter part of the year. The result for winter sports equipment will be in the red, while other business areas are expected to develop positively in the latter part of the year.
(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 Aug. 9.)
Bally files amendment to bankruptcy plan
Bally Total Fitness (Pink Sheets: BFTH) said it has filed a motion with the U.S. Bankruptcy Court, Southern District of New York, seeking approval to amend its reorganization plan, under which Harbinger Capital Partners would invest about $233.6 million in exchange for 100 percent of common equity of the reorganized Bally.
In its motion, Bally is seeking court approval to pursue the amended plan without further vote solicitation and to treat previously received votes to accept the existing plan as votes to accept the amended plan implementing the Harbinger-funded restructuring. Bally has also filed a motion seeking court approval to enter into an investment agreement providing for Harbinger’s commitment to make its $233.6 million equity investment, and a restructuring support agreement reflecting the parties’ commitment to implement the Harbinger-funded restructuring through the amended plan.
Under the amended plan, the company can still consummate the restructuring set forth in the existing plan if the Harbinger-funded restructuring cannot be consummated. As previously announced, the plan would be funded by $90 million in capital to be provided through the issuance of new senior subordinated notes in a rights offering backstopped by funds managed by Tennenbaum Capital Partners, Goldman Sachs & Co. and Anschutz Investment Company
Gaiam Q2 revenue increases 21.3 percent
For the second quarter, Gaiam (Nasdaq: GAIA) generated revenue of $52.4 million, an increase of 21.3 percent over the $43.2 million recorded in the same period last year. The internal growth rate was 18 percent on top of the 25 percent increase achieved in the second quarter of last year.
Gross margin increased 190 basis points to 64.2 percent of revenue in the second quarter of 2007, from 62.3 percent in the same period last year, which in turn represented a 1,370 basis point increase from 48.6 percent in the second quarter of 2005. The increase over 2006 was primarily due to higher margin international sales, the company said.
Operating expenses as a percentage of revenue decreased to 67.9 percent in the second quarter of 2007, from 68.5 percent in the comparable period last year even after increased expenses related to Gaiam’s expanding online community.
Gaiam reported a net loss for the second quarter of $0.3 million, or $0.01 per share, as compared to a net loss of $1.2 million, or $0.05 per share, for the second quarter of 2006. Depreciation and amortization for the quarter was $3.1 million.
According to Nielsen’s VideoScan, Gaiam’s market share in the fitness/wellness DVD category increased to 48 percent at the end of June, up from 44 percent in the same six months last year.
Gaiam generated $8.1 million in cash from operations during the quarter bringing year to date cash generated from operations to $16.4 million compared to a cash use of $3 million in the same six months of last year. Excluding the repurchase of 2.5 million shares of Gaiam stock for $32.9 million in February, Gaiam increased its cash position from the beginning of the year by $17 million.
Subsequent to the second quarter, Gaiam acquired Zaadz, LIME Media and majority ownership of Conscious Enlightenment to strengthen the company’s community division and create a unified source for LOHAS (lifestyles of health and sustainability). The total consideration paid for the companies was approximately $10 million.
Gaiam’s board of directors also authorized a share repurchase program of up to 5 million shares of Gaiam’s Class A common stock as well as the filing of a shelf registration statement for the same amount of shares.
Everlast’s Q2 revenues up 24 percent, reaches lawsuit settlement with Hidary
Second-quarter net revenues for Everlast Worldwide (Nasdaq: EVST) increased 24 percent to $12.2 million, compared to $9.8 million in the same period in 2006.
The company said growth in net revenue resulted from a 28 percent increase in sporting goods sales to a record $8.7 million — a result of expanded distribution and continued strong sell-through.
Net licensing revenues increased 15 percent to approximately $3.5 million versus $3.0 million in the second quarter of 2006. The growth was driven by organic increases in licensing income by our worldwide licensees, particularly in South Korea, Chile and in select categories in the United States, the company said.
In the second quarter of 2007, the company’s gross margin was 54.1 percent, compared with 45.7 percent in the second quarter a year ago. The improvement was generated by a 14.2 percent improvement in sporting goods gross margins.
Second-quarter operating income grew 36 percent to $2.1 million, or 17.5 percent of net revenues, versus the year-ago level of $1.6 million, or 15.9 percent of net revenues.
Adjusted earnings per diluted share for the second quarter of 2007, adding back approximately $0.63 of non-recurring merger related transaction costs and $0.05 of non-cash expense associated with stock-based compensation, was $0.21 per diluted share, a 62 percent increase over adjusted earnings of $0.13 per diluted share in 2006.
The second quarter 2006 amount adds back approximately $0.03 of non-cash expense associated with stock-based compensation, the company said. Reported basic and diluted loss per share for the second quarter of 2007 was $0.46 compared with earnings per diluted share of $0.10 in second quarter of 2006.
In other company news: Everlast has settled a lawsuit with Hidary Group Acquisitions and Hidary Group Acquisitions, which had sought to block Everlast’s merger with Brands Holdings Limited.
The settlement agreement calls for dismissal, with prejudice, of Hidary’s lawsuit, while Everlast will limit discovery it takes from Hidary in connection with certain stockholder litigation.
According to a filing with the SEC, Hidary may seek to make another bid to acquire the company.
Iconix net income rises in Q2
Iconix Brand Group (Nasdaq: ICON), parent of Danskin Fitness, said second-quarter net income rose 77 percent on higher licensing and commission revenue.
Quarterly profit rose to $14.8 million, or $0.24 per share, from $8.3 million, or $0.19 per share in the year-ago period. Revenue more than doubled to $39.1 million from $18.4 million last year.
The company said results were helped by integrating in two recent acquisitions, Danskin and Roca Wear.
Iconix also said the number of its outstanding shares rose to 61.4 million from 44.7 million.
Additionally, Iconix reaffirmed its 2007 guidance as it reported its second-quarter revenue more than doubled. The company expects earnings between $0.96 and $1 per share on revenue between $150 million and $160 million.
adidas’ Q2 net income rises
Second-quarter net income rose at adidas (Xetra: ADSG.DE) as the integration of its Reebok division helped cut costs and increase margins despite nearly flat sales growth.
adidas said sales fell in North America but grew in all other markets in the first half, adding the European soccer championship and Olympic Games in 2008 would boost revenue and earnings.
adidas said second-quarter net income rose 27 percent to EUR 104 million (USD $144 million). In euro terms, sales fell 1 percent to EUR 2.4 billion (USD $3.2 billion).
The company credited its higher margins — gross margin increased 2.8 percentage points to 47.4 percent — to cost cuts and synergies from integrating Reebok, which it bought in 2005.
On a currency-adjusted basis, sales rose 3 percent, despite comparisons with the prior year when sales were high because of the soccer World Cup in Germany.
The company said the order backlog for the adidas brand rose 6 percent on a euro currency basis. At Reebok, the order backlog expressed in euros fell 3 percent year-on-year at the end of June. On a currency-neutral basis, Reebok’s order backlog was flat.
adidas reiterated that it expects currency-neutral sales to grow by a mid-single-digit percentage in 2007 and the rise in net income to approach about 15 percent.
(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 Aug. 8.)
Nautilus declares quarterly dividend, files delayed 2Q report
The board of directors for Nautilus (NYSE: NLS) declared a regular quarterly dividend of $0.10 per common share, payable Sept. 10, 2007, to stockholders of record as of Aug. 20, 2007.
In addition, Nautilus has filed its delayed second-quarter report with the Securities and Exchange Commission and reiterated it had net income of $1.11 million, or 4 cents a share for the three months ended June 30. Its net income for the second quarter of 2006 was $1.67 million, or 5 cents a share, the company said in the filing. Nautilus said it had delayed the filing because it was completing a valuation analysis of intellectual property relating to the April settlement of lawsuits with competitor Icon Health & Fitness.
Hibbett lowers Q2 guidance
Hibbett Sports (Nasdaq: HIBB) cut its second-quarter guidance, citing slower sales at its urban stores and overall softness in consumer spending.
For the quarter ended Aug. 4, the company now expects to report earnings per share of $0.14 to $0.17, down from previous guidance of $0.20 to $0.24 per share. The company reported profit of $0.12 per share during the year-ago period.
On a quarterly basis, Hibbett expects to report a same-store sales increase of 2.6 percent. However, on a same-store, comparable week basis, sales are expected to fall 5.6 percent, Hibbett said.
Hibbett said it expects to provide fresh guidance for the third quarter and the rest of the year when it reports earnings Aug. 23.
Sears narrows Q2 guidance, launches $1.5 billion share buyback
Sears Holdings (Nasdaq: SHLD), which owns Sears and Kmart stores, narrowed its second-quarter earnings guidance and announced its second major share buyback program in a month.
The company said it expects profits of $170 million to $185 million, or $1.13 to $1.23 per share, as it struggles with higher markdowns and sluggish sales. Last month, Sears said it anticipated earnings between $160 million and $200 million.
Sears said Kmart’s domestic same-store sales fell 3.8 percent during the second quarter, while sales at Sears stores slid 4.3 percent.
Meanwhile, Sears said its board had approved a $1.5 billion share repurchase program. A $1 billion buyback announced July 10 is nearly complete. The company has repurchased $3 billion worth of its shares since the third quarter of 2005.
Sears Holdings is scheduled to release financial results by the end of the month.
Health Fitness’ Q2 earnings decrease
Health Fitness Corp. (OTC Bulletin Board: HFIT), a provider of employee health management programs, said its second-quarter revenue increased 9.0 percent to $17.0 million, from $15.6 million for the same period last year.
Gross profit during the quarter increased 14.3 percent to $4.8 million, from $4.2 million for the same period last year. Operating income decreased to $0.38 million, from $0.69 million for the same period last year.
Net earnings decreased to $0.17 million, from $0.73 million in the prior year period. Net earnings per diluted share decreased to $0.01, from net earnings per diluted share of $0.02 for the same period last year. Net earnings per diluted share for the second quarter of 2006 excluded a $0.41 million non-cash gain related to a change in fair value of warrants.
The company’s fitness management segment revenue declined 0.7 percent to $10.5 million, from $10.6 million for the same period last year.
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