Fitness financials: Stride Rite to purchase Saucony, plus Big 5, Everlast, Finish Line, Costco, Wal-Mart

Stride Rite to purchase Saucony
Hind’s parent Saucony (NasdaqNM: SCNYA and SCNYB) has been picked up by Stride Rite Corp. for $170 million — about $23 a share.

Taking into account cash reserves at Saucony, Stride Rite said the deal would cost it about $140 million. Stride Rite is funding the acquisition entirely in cash, although the company will incur some long-term debt, it reported. Stride Rite also said it expects the transaction to add to earnings and cash flow in 2006, excluding one-time costs.

The two companies have little overlap has Saucony targets serious runners and also includes Spot-bilt workplace shoes and Hind athletic apparel, while Stride Rite sells shoes under the Keds, Sperry Top-Sider, Tommy Hilfiger and Grasshoppers names.

“This transaction combines two leading footwear companies with strong balance sheets and cash flows, similar corporate cultures, and shared roots in the greater Boston area dating back to the early 1900s,” said David M. Chamberlain, Stride Rite’s chairman and CEO, in a statement. Stride Rite’s Lexington headquarters is just 21 miles from Saucony’s offices in Peabody.

After news of the acquisition, Saucony’s shares rose $3.30, or 17 percent, to close at $22.65 on the Nasdaq, where the stock has traded in a 52-week range of $18.53 to $29. Shares of Stride Rite rose $1.46, or 12 percent, to close at $13.50 on the New York Stock Exchange, where the stock has ranged from $9.60 to $13.98 the past year.

The cash deal comes 10 months after Saucony hired an investment bank to help it consider strategic options including a possible sale. It also offered incentives to executive team members to, one, stay on until a sales and, two, to stay on after a sale. The company’s sales rose 22 percent last year to $166 million, compared with $558 million for Stride Rite. Saucony’s net income rose 23 percent last year to $10.4 million.

The companies expect the transaction to close in the summer, subject to shareholder and regulatory approval.

Big 5 receives another warning of Nasdaq delisting
Big 5 Sporting Goods Corp. (Nasdaq:BGFVE) received another notice from Nasdaq that it fails to comply with its listing standards. Big 5 has been delayed in filing to the SEC its 10-Q quarterly report for the quarter ended April 3, 2005, as well as its annual 2004 10-K report. Nasdaq is saying the delay is another reason to de-list the company despite Big 5’s request for a deadline extension. Big 5 has requested that Nasdaq grant it an extension of time to finish such review and audit and to make the filings. The company’s common stock will remain listed on the Nasdaq National Market under the symbol BGFVE. In the event that Nasdaq determines not to grant the company’s request for continued listing, it may be delisted from the Nasdaq National Market.

Everlast CEO tells shareholders at meeting 2004 “most eventful”
George Q Horowitz, chairman and CEO of Everlast Worldwide (Nasdaq: EVST), told attendees of the company’s annual meeting that, “Fiscal 2004 was perhaps one of the most eventful years in Everlast’s 95 year history. In addition to positioning our company for improved operating performance, many of the initiatives we put in place propelled the Everlast brand name to greater heights of consumer awareness and will facilitate the execution of our various corporate growth strategies.”

Horowitz added that Everlast benefited greatly from its involvement with Hollywood in the reality show “The Contender” and the movie “Million Dollar Baby.” “The enhanced stature of our brand facilitated our international expansion and attracted the attention of numerous licensees throughout the year. During the past year, we expanded on virtually every continent, including Europe, Asia as well as the Americas. In addition, our family of products grew to include numerous consumer items such as nutritionals as well as apparel, footwear and exercise equipment.”

At the meeting, shareholders elected nine members to the board of directors. Shareholders also voted to amend the company’s 2000 Stock Option Plan and to approve the adoption of the 2005 Non-Employee Directors Stock Option Plan.

Horowitz ended the meeting by saying, “While we will continue to draw upon our illustrious heritage as boxing’s preeminent brand, we are much more than a ‘boxing brand,’ we are a lifestyle brand and one with universal appeal and we intend to capitalize on that positioning as we grow the company.”

Finish Line’s same-store sales up 2 percent
Finish Line (Nasdaq: FINL) reported net sales of $291.2 million for the first quarter of 2005 compared to $258 million the year before. Comparable store net sales for the quarter increased 2 percent on top of a 14 percent increase reported last year. The company expects that diluted earnings for the first quarter to be at the mid to high end of the guidance range of $0.24 to $0.26 per share. Last year, it was $0.21 diluted earnings per share. It did not repurchase any Class A Common Shares during Q1 under the current share repurchase authorization, which expires December 31, 2007.

Costco reports May sales
Costco (Nasdaq: COST) reported net sales of $4.11 billion for the month of May, an increase of 8 percent from $3.80 billion last year. U.S. same-store sales were 3 percent, and 5 percent when combined with international sales.

May same-store sales drop for Wal-Mart
May sales for Wal-Mart Stores (NYSE: WMT) were up 9.3 percent to $23.421 billion from last year, with the Wal-Mart division also up 9.1 percent to $15.697 billion. Same-store sales for the entire company was 2.5 percent compared to 6 percent last year, and the Wal-Mart division was also down — 2.7 percent compared to 4.8 percent in 2004. Its estimating comparable sales in the United States for June to be in the 2 percent to 4 percent range.

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