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Fitness financials: Shareholder begins talks with Nautilus about turnaround plans, plus Bally, Life Time Fitness, Hibbett Sports, Dick's Sporting Goods, adidas, Foot Locker

Fitness financials: Shareholder begins talks with Nautilus about turnaround plans. Bally says court OKs Ch. 11 amendment motion. Life Time Fitness prices common stock offering. Hibbett Sports Q2 profit rises. Dick's Sporting Goods' Q2 profit rises on higher sales. adidas reaffirms commitment to Reebok. Foot Locker shows Q2 loss.

Shareholder begins talks with Nautilus about turnaround plans

Nautilus’ (NYSE: NLS) largest shareholder, Sherborne Investors LP, has started talks with the company about its turnaround plans, according to a SEC filing. It owns 6.6 million shares, representing a 21 percent stake in Nautilus.

Sherborne said it met with Nautilus Chairman and Interim CEO Robert Falcone, Director Ronald Badie and other members of management to discuss the status of Nautilus’ operational turnaround plans. Sherborne said they also discussed Nautilus’ search for a permanent CEO and the possibility of adding representatives to the company’s board.

Sherborne said it expects to have further discussions with representatives of the company about these issues in the near future.

The investor said it bought the Nautilus stake because it felt the shares were undervalued. In the future, Sherborne said it may also begin talks with other Nautilus shareholders or request a special meeting of the company to seek board representation, among other options.

Bally says court OKs Ch. 11 amendment motion

Bally Total Fitness (Pink Sheets: BFTH) said a U.S. bankruptcy court granted its motion to amend its Chapter 11 plan, in favor of a restructuring plan proposed by Harbinger Capital Partners, without resoliciting creditor approval.

The court also approved its debtor-in-possession financing and exit credit facilities, the fitness club operator said a statement.

The confirmation hearing on the amended plan is scheduled for Sept. 17, 2007. If confirmed the company expects to implement the amended plan and emerge from Chapter 11 by the end of September 2007.

Life Time Fitness prices common stock offering

Life Time Fitness (NYSE: LTM) said the pricing of its public offering of 1,500,000 shares of its common stock at a public offering price of $55.40 per share. The estimated net proceeds of the offering will be approximately $82.8 million.

Net proceeds from the offering will be used to partially pay down debt under the company’s credit facility.

The company plans to offer the shares, plus up to an additional 225,000 shares to cover over-allotments to be exercised within 30 days.

Life Time Fitness said it believes the offering will meet the demand for its stock as a result of its inclusion in the S&P MidCap 400 index.

In addition, Life Time Fitness has granted Credit Suisse Securities USA, the sole underwriter, an option to purchase up to an additional 175,000 shares to cover over-allotments, if any.

Hibbett Sports Q2 profit rises

Second-quarter profit for Hibbett Sports (Nasdaq: HIBB) climbed 16 percent, but missed analyst estimates by a penny on softer-than-expected sales. The company said its sales were soft during the quarter, leading to “lower-than-expected results.”

For the quarter ended Aug. 4, net income rose to $4.7 million, or $0.15 per share, from $4 million, or $0.12 per share in the prior-year quarter. Analysts expected earnings per share of $0.16.

Revenue rose 10 percent to $114.4 million from $104.4 million in the second quarter of 2007. Analysts predicted revenue of $117.2 million. Same-store sales rose 2.6 percent.

For fiscal 2008, the company said it expects earnings per share between $1.07 and $1.20.

For the third quarter, the company said it expects earnings between $0.20 per share and $0.25 per share.

Dick’s Sporting Goods’ Q2 profit rises on higher sales

Dick’s Sporting Goods (NYSE: DKS) said its fiscal 2007 second-quarter profit rose 87 percent on higher sales from both existing and new stores with the inclusion of Golf Galaxy.

For the three months ended Aug. 4, the company earned $47.9 million, or $0.83 per share, compared with a profit of $25.7 million, or $0.47 per share, during the same period a year prior.

The number of shares outstanding rose some 5.2 percent from approximately 54.9 million to about 57.8 million.

Revenue climbed 38 percent to $1.01 billion from $734 million. Same-store sales rose 7.2 percent during the quarter.

During the quarter, the company opened six Dick’s Sporting Goods stores and two Golf Galaxy stores. The quarter ended Aug. 4 and the company’s fiscal year ends Feb. 3.

Additionally, the company said it is raising its full-year outlook and setting third-quarter guidance.

The company now expects full-year profit to range from $2.47 to $2.50 per share, up from prior guidance between $2.37 and $2.40 per share. In fiscal 2006, the company earned $2.03 per share.

The company said it plans to open 45 new Dick’s Sporting Goods stores during the year and that same-store sales are expected to rise 2 percent. The company’s fiscal year ends Feb. 3.

During the third quarter, the company said it expects profit between $0.09 and $0.12 per share, compared with a profit of 14 cents a year prior. The company cited a shift in the retail calendar and the buyout of Golf Galaxy as factors in the expected decline. The company said it expects a same-store sales decrease between 1 percent and 3 percent during the third quarter.

adidas reaffirms commitment to Reebok

adidas said it remains committed to investing more in the company’s lagging Reebok subsidiary and expanding North American sales despite a slumping U.S. retail market.

CEO and Chairman Herbert Hainer said the Germany-based sporting goods maker expected $4 billion in companywide sales this year in North America, where slow sales of Reebok shoes and apparel have recently hurt adidas’ results.

A top priority for adidas is revamping Reebok “with significantly better product, brand communication and distribution that wasn’t the case for the last five years,” Hainer said.

Reebok is trying to increase its appeal among runners and women, a demographic that helped Reebok gain traction in pitching aerobics shoes in the 1980s.

Reebok’s profit growth fell short of adidas’ expectations last year, and sales of Reebok products were down 6 percent in the first six months of this year. While adidas has enjoyed generally strong growth globally, North American sales were down 10 percent in the first half of the year.

adidas’ financial expectations remain unchanged for the year, with a projected 15 percent increase in its full-year profit.

Foot Locker shows Q2 loss

Foot Locker (NYSE: FL) posted a loss in the second quarter on a drop in revenue and higher markdowns on slower-selling footwear.

For the quarter, Foot Locker reported a loss of $18 million, or $0.12 per share, compared with a profit of $14 million, or $0.09 per share, in the prior year quarter.

Sales slipped nearly 2 percent to $1.28 billion from $1.30 billion in the second quarter of 2006. Same-store sales fell 7.3 percent.

The company said in addition to the lower sales, it also made the decision to significantly mark down its slow-selling merchandise, which contributed to the loss. Foot Locker was expecting to report a loss of $0.17 to $0.22 per share for the quarter, mainly because of the markdowns.

At the end of July, Foot Locker hired Lehman Brothers to help evaluate strategic options, including a sale of the company. It also announced the closing of up to 250 underperforming U.S. stores during the year.

Additionally, CEO Matthew Serra said Foot Locker would not provide any guidance for the rest of the 2007 fiscal year “given the uncertainty of several factors that may affect our financial results,” including costs associated with closing the stores and the challenging athletic retail environment in the United Sates.

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