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Fitness financials: Town Sports drops IPO price, plus Bally, Cybex, Everlast, Costco, Finish Line, Wal-Mart

Fitness financials: Town Sports drops IPO price, starts trading. Bally board to allow rights plan to expire, ramps up franchising. Cybex underwriters buy more shares. Everlast holds annual shareholder meeting. Costco reports Q3, May sales. Finish Line May sales down. Wal-Mart reports May sales.

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Town Sports drops IPO price, starts trading
After cutting the price of its initial public offering, Town Sports International Holdings (Nasdaq: CLUB) was a slow mover on the Nasdaq Stock Exchange on June 2.

Town Sports, the third-largest U.S. fitness club operator, cut its planned IPO to 8.95 million shares at an estimated price of $14 each after previously filing for 10 million shares at $16 to $18 each. On June 1, it priced the IPO at $13 a share.

MarketWatch, which monitors stock exchanges, reported that with the stock market coming out of a big sell-off in May, IPOs have been chopping their prices.

The company is selling about 7.65 million shares, raising about $99.5 million to repay debt. Other shareholders are selling the other 1.3 million. Additionally, underwriters have been granted an option to purchase a maximum of 1.14 million additional shares from other selling stockholders to cover over-allotments, if any.

Town Sports’ shares were traded as low as $12.74 and as high as $13.50 on Friday, to close on the Nasdaq at $13.25. It operates 145 fitness clubs.

Credit Suisse and Deutsche Bank Securities were the lead underwriters for the offering.

Bally board to allow rights plan to expire, ramps up franchising
Bally Total Fitness’ (NYSE: BFT) board of directors has decided not to submit the company’s stockholder rights plan, which would discourage unfair takeovers, to a stockholder vote and will let it expire in July.

The company’s stockholders rights plan, also known as a poison pill, was set to expire July 15, unless the board decided to put it up for a stockholder vote. The board in October said it implemented the plan to protect shareholders while it awaited the company’s issuance of restated financial statements. The board wanted the plan to prevent outsiders from attempting to buy the company for a too-low price.

The company added that it is on track to file its 2005 annual 10-K financial report and its quarterly report for the first quarter of 2006 by the July 10 deadline set by company debt holders.

In separate news, Bally also reported the grant of stock options to new employees Gayle Franger, vice president of brand development, and Robert Moschorak, assistant vice president of franchising. Franger and Moschorak each received 6,000 stock options.

And, on other fronts, Bally said it has renewed its focus on franchising and launched a new franchising program at the International Franchise Expo June 2-4, 2006, in Washington D.C. It said it is also advertising in key franchise trade publications to announce the program and attract franchisees. Meanwhile, plans for two new U.S. franchises — one in Baton Rouge, La., and the second in Jacksonville, Fla. — are already underway.

The plans for franchise expansion were set in motion last fall, when Robert Moschorak joined the company as managing director of franchise operations. The new structure will include individual franchise agreements, area development agreements and master franchise agreements to be used strategically going forward.

Cybex underwriters buy more shares
The underwriters of Cybex International’s (AMEX: CYB) offering of common stock have exercised their over-allotment option to purchase an additional 407,900 shares at the offering price of $5.50 per share. Of the shares, 203,950 shares are being issued and sold by Cybex and 203,950 shares are being sold by a selling stockholder, UM Holdings Ltd. Cybex said it will not receive any proceeds from the sale of the over-allotment shares by the selling stockholder.

Everlast holds annual shareholder meeting
During its annual meeting, Everlast Worldwide’s CEO told shareholders that the company is much more than a boxing brand but also a lifestyle brand with universal appeal and it intends to capitalize on that positioning as it grows.

During 2005, the company also signed a record 30 licensees.

“Last year was an important year in the history of our company. It was the year Everlast transformed its business model by licensing our men’s and women’s apparel lines and focusing on boxing equipment, our foundation, and worldwide brand licensing,” said Seth Horowitz, chairman, president and CEO of Everlast (Nasdaq: EVST).

“We see continued growth for our boxing equipment business as a result of our worldwide marketing activities and the increasing popularity of boxing as a sport and as a fitness activity. And, as the undisputed leader in market share of boxing equipment, we will receive the most benefit,” Horowitz said. “Moreover, the universal appeal of the iconic Everlast brand has allowed us to strategically move into new product categories around the world as a result of our highly focused and successful licensing strategy.

At the meeting, shareholders elected eight members to the board of directors, who will serve until the next Annual Meeting. Shareholders also voted to amend the bylaws of the company to classify the composition of the board. The selection of Berenson LLP as Everlast’s independent auditors was also ratified by the shareholders.

Costco reports Q3, May sales
Third-quarter earnings for Costco (Nasdaq: COST) rose 12 percent year-over-year — $235.6 million, or $0.49 a share, versus year-ago earnings of $209.8 million, or $0.43 a share. Net sales rose 11 percent in the quarter to $13 billion from $11.75 billion a year earlier. Including membership fees, total revenue increased to $13.27 billion in the quarter from $12 billion. Same-store sales increased 7 percent in the period.

For the month of May, Costco, reported net sales of $4.71 billion. Same-store sales for the month were up 10 percent. International comparable sales rose 17 percent while domestic comparable sales increased 9 percent for the month.

Finish Line May sales down
Finish Line’s (Nasdaq: FINL) same-store sales fell 7.2 percent in the first quarter, in line with its revised guidance. Total sales for the 13 weeks ended May 27, were virtually flat at $289 million, compared with $291.3 million in the year-earlier period. Last month, Finish Line lowered its estimates for sales, earnings and same-store sales in the first quarter, citing higher costs and weak sales in women’s performance running and kid’s footwear. Finish Line, which operates more than 700 stores under the Finish Line, Man Alive and Paiva brands, plans to report first-quarter earnings on June 21.

Wal-Mart reports May sales
Wal-Mart Stores (NYSE: WMT) reported a 12.2 percent increase in May sales from the previous year. Net sales for the month were $26.285 billion versus $23.421 billion. Same-store sales were down — 2.3 percent in 2006 versus 2.7 percent in 2005.

Just for the U.S. Wal-Mart stores sales were up 7.7 percent — $16.901 billion compared to $15.697 billion in 2005. Same-store sales for the month were down to 2.0 percent from 2.8 percent last year.

The company estimates comparable sales in the United States for the June five-week period to be in the 1 percent to 3 percent range.

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