Fitness financials: Town Sports Q4 profit surges more than five times, plus Accell Group, Iconix, adidas, Big 5, Stride Rite, Foot Locker, Finish Line, Health Fitness, Brunswick, Wal-Mart, Costco

Town Sports Q4 profit surges more than five times
Town Sports International (Nasdaq: CLUB) reported its fourth-quarter profit rose more than fivefold, reportedly driven by growing membership revenue and ancillary club revenue.

Net income climbed to $6.6 million, or $0.25 per share, from $1.2 million, or $0.07 per share, a year ago. Quarterly revenue grew 12 percent to $110.2 million from $98.5 million, while comparable club revenue — or revenue from clubs open at least one year — increased 7.9 percent.

The company said revenue growth was driven by membership revenue, which expanded 12 percent, and ancillary club revenue, which increased 21 percent.

Fiscal 2006 net income more than doubled to $4.6 percent, or $0.20 per share, from $1.8 million, or $0.10 per share, in the prior year. Revenue rose 12 percent to $433.1 million from $388.6 million in fiscal year 2005.

Town Sports boosted its fiscal 2007 earnings guidance, increasing its earnings per share estimates to between $0.79 and $0.83 per share when adjusted for early debt extinguishment costs on a post-tax basis. In January, the company had forecast a profit of $0.73 to $0.76 per share. The company attributed the move to the successful refinancing of the 9 5/8 percent senior notes issued by TSI LLC.

The company expects annual revenue in the range of $475 million to $480 million, up 10 percent to 11 percent over 2006 revenue of $433.1 million. It also said it expects to open about 15 new clubs in 2007.

Town Sports owns health clubs operating under the brand names New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs.

Accell posts 16 percent increase in FY ’06 sales
Accell Group said favorable performance from its fitness products was a major contributor to the 16 percent increase in sales for the fiscal year. Sales were EUR 431.7 million (USD $567.0 million) compared to EUR 372.1 million the year before. Organic sales growth came in at 9 percent.

Net profit rose by 18 percent to EUR 18.4 million (USD $24.1 million), which the company said translated into an increase in earnings per share of 15 percent to EUR 2.00 (USD $2.62) versus EUR 1.75 in 2005.

“Our results increased again in 2006. The earnings per share increased by 15 percent and were therefore on the upper end of the forecast we issued in November,” René Takens, chairman of the executive board of Accell Group, said in a statement. In the final months of 2006, we realized good turnover in all our product groups. Electric bicycles and fitness products performed particularly well.”

Net sales for the fitness division, which includes Bremshey, Tunturi and BS&T, grew almost completely organically to EUR 45.6 million (USD $59.9 million) from EUR 32.2 million in 2005. Accell said the rise in turnover in the fitness segment was in large part due to the launch of new and innovative products and addition of new clients.

Accell said 2006 was characterized primarily by the streamlining and strengthening of the organization of the fitness division. The division’s management was centralized in the main office of Accell Fitness in Almere, the Netherlands, and the production of Tunturi fitness equipment in Finland has been relocated to Estonia. Additionally, Accell Group acquired Webena Sport, which sells fitness equipment in the Benelux, and its Pliant brand in November 2006.

(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 Mar. 6.)

New Danskin parent reports Q4 net income rise
Iconix Brand Group (Nasdaq: ICON), the new parent of Danskin, said fourth-quarter net income grew 18 percent on higher licensing revenue.

Quarterly income totaled $8.9 million, or $0.18 per share, from $7.5 million, or $0.19 per share in the year-ago period. Revenue more than doubled to $26.9 million, from $12.4 million in the prior-year quarter.

The company noted that in fourth quarter 2005 it recognized non-cash tax benefits, whereas in the comparable 2006 quarter it was fully taxed at a rate of about 34.5 percent.

For the year, earnings more than doubled to $32.5 million, or $0.72 per share, from $15.9 million, or $0.46 per share in 2005. Revenue jumped to $80.7 million, from $30.2 million in 2005.

Iconix raised its guidance and now expects 2007 earnings between $0.96 and $1, from previous guidance of between $0.87 and $0.92. Iconix expects revenue between $150 million and $180 million.

Q4 profit up 26 percent for adidas
adidas (ADSG.DE) posted a profit for the fourth quarter in contrast to a loss a year ago, saying its earnings rose 26 percent for the full year on record sales driven by recently acquired Reebok.

In the three months ending Dec. 31, adidas earned EUR 13 million (USD $17.03 million) versus a loss of 4 million euros in the same quarter a year earlier. Sales in the quarter rose 48 percent to EUR 2.25 billion (USD $2.95 billion).

For the 2006 full year, adidas said it earned EUR 496 million (USD $649.76 million), up from 390 million euros the previous year. Annual revenue rose 52 percent to EUR 10.1 billion (USD $13.23 billion) — exceeding the EUR 10 billion mark for the first time in the company’s history, adidas said.

Excluding Reebok, fourth-quarter sales were up only 4.8 percent to EUR 1.594 billion (USD $2.09 billion). Over the full year, sales without Reebok were up 13.7 percent to EUR 7.548 billion (USD $9.89 billion).

adidas Group saw sales grow robustly in all regions, driven by the first-time inclusion of Reebok as well as strong revenue increases at both adidas and TaylorMade-adidas Golf. Group sales were up 31 percent in Europe, 35 percent in Asia and 56 percent in Latin America while they more than doubled in North America.

The company also reaffirmed it expects profit growth “approaching 15 percent” this year — reiterating its statement from the third quarter, which had lowered the target from 20 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 Mar. 7.)

Big 5’s Q4 earnings up 25 percent
Fourth-quarter sales rose on demand for sporting apparel and costs fell allowing Big 5 Sporting Goods’ (Nasdaq: BGFV) earnings to rise 25 percent.

Net income rose to $9.6 million, or $0.42 per share, from $7.7 million, or $0.34 per share, in the year-earlier period. Sales rose 7 percent to $234.5 million from $218.9 million a year ago.

Same-store sales increased 4.2 percent, representing the company’s 44th consecutive quarter of positive same-store sales comparisons.

For the year, net income rose 12 percent to $30.8 million, or $1.35 per share. Sales rose 8 percent to $876.8 million from net sales of $814.0 million for fiscal 2005. Same-store sales were up 4 percent in the fiscal 2006 full year versus the prior year.

The company opened nine new stores during the fourth quarter of fiscal 2006, bringing its store count at the end of fiscal 2006 to 343 stores.

Stride Rite CEO to retire in 2007
Stride Rite (NYSE: SRR), parent of Saucony and Hind, said its chairman and CEO, David Chamberlain, plans to retire in 2007. Chamberlain, 63, said he will continue to serve as chairman and CEO until a replacement has taken office and will remain on the board after his retirement. He has served in those positions since November 1999. The company said it is already searching for a replacement, and is considering both internal and external candidates.

Foot Locker projects lower Q1 earnings
Foot Locker (NYSE: FL) is forecasting that its first-quarter and full-year earnings to fall short of analyst expectations. It’s projecting quarterly earnings of $0.34 to $0.37 per share — analysts are expecting $0.37 per share.

For the full year, the company expects earnings of $1.55 to $1.65 per share, while analysts are looking for earnings of $1.74 per share. The company also said it expects to spend $170 million on capital expenditures for the year.

Finish Line Q4 same-store sales fall
Finish Line’s (Nasdaq: FINL) fourth-quarter same-store sales fell 5.4 percent — down 5.8 percent at its Finish Line stores, while its Man Alive same-store sales rose 4.4 percent.

Total sales for the quarter rose 1.4 percent to $404.8 million from $399.2 million during the same period a year prior. Including an extra week of sales during the most recent quarter, the company saw a 7.5 percent jump to $429 million.

Finish Line said it expects fourth-quarter profit between $0.40 and $0.44 per share, including charges of $0.09 or $0.10 per share on 17 to 19 underperforming stores.

For the full year, the company saw same-store sales rise 5.7 percent. Total sales for the year, including an extra week, rose 2.5 percent to $1.34 billion from $1.31 billion. Without the extra week, sales rose less than 1 percent.

Finish Line said it expects to report full fourth-quarter results March 29.

Health Fitness reports fourth-quarter results
Fourth-quarter revenue for Health Fitness Corp. (HFIT.OB), a provider of employee health improvement and fitness services to corporations, hospitals and communities, grew 19.3 percent.

Revenue was $17.1 million compared to $14.3 million for the same period last year. Gross profit during the quarter increased 33.9 percent to $4.6 million, from $3.4 million for the same period last year. Operating income decreased 7.0 percent to $0.61 million, from $0.65 million for the same period last year, primarily due to operational investments and non-cash, stock-based compensation expense.

Quarterly net earnings increased to $0.46 million, from a net loss applicable to common shareholders of $0.43 million for the same period last year. Net earnings per diluted share increased to $0.02, from a net loss per diluted share of $0.03 for the same period last year.

For the fourth quarter, fitness management revenue grew 1.4 percent to $10.7 million, from $10.5 million for the same period last year. Compared to revenue of $10.7 million for the third quarter of 2006, fitness management revenue remained flat, it said.

For the year, revenue increased 15.7 percent to $63.6 million, from $54.9 million for the prior year. Gross profit increased 27.6 percent to $17.6 million, from $13.8 million for the prior year. Operating income increased 4.6 percent to $3.7 million, from $3.5 million for the prior year.

Net earnings, which includes a $0.8 million non-cash gain related to a change in fair value of warrants, increased 143.1 percent to $2.9 million, from $1.2 million for the prior year. Net earnings per diluted share was $0.11 on 19.7 million weighted average common shares outstanding, compared to $0.08 for the prior year on 16.9 million weighted average common shares outstanding.

For the year, fitness management revenue grew 4.0 percent to $42.2 million, from $40.6 million. The company said the growth it experienced in its fitness management business area is primarily attributed to new contracts and lower contract attrition compared to 2005.

Brunswick CFO addresses investors at analyst conference
Brunswick Corp. (NYSE: BC) backed its full-year earnings from continuing operations guidance at the Raymond James Institutional Investors Conference in Orlando, Fla. The company still sees its 2007 earnings from continuing operations between $1.65 and $2 per share. Last year’s earnings came in at $2.28 per share.

Brunswick Senior Vice President and CFO Peter G. Leemputte reviewed with analysts and investors the company’s strategy, outlook, and several new products and other dealer efforts recently launched by Brunswick.

Among the new products cited was Life Fitness’ new ability to seamlessly integrate its fitness equipment and Apple Computer’s popular iPod. Leemputte said this connectivity makes it possible for iPod users to plug in and charge their iPods, watch video on the equipment’s large LCD screen and to control the playing of their iPod music libraries from the fitness equipment console.

Wal-Mart’s February same-store sales up 0.9 percent
Wal-Mart Stores (NYSE: WMT) released net sales for the month of February, reporting an 8.1 percent increase over last year — $26.794 billion vs. $24.778 billion last year. Comparable store sales were up 0.9 percent compared to 3.7 percent in the same period last year.

Separately, Wal-Mart increased its annual dividend 31 percent to $0.88 a share. It will be paid in four quarterly installments of $0.22 a share. The next one will be paid on April 2 to shareholders of record on March 16.

Costco’s 2Q profit drops 16 percent
Costco’s (Nasdaq: COST) second-quarter profit dropped 16 percent. Net income for the quarter ended Feb. 18 fell to $249.5 million, or $0.54 per share, from $296.2 million, or $0.62 per share a year ago.

Costco said it raised the amount it typically subtracts from quarterly sales by $224.4 million to cover returns, and took a charge of $48.1 million in the quarter. Results also included a $46.4 million charge related to the company’s effort to fix stock options accounting practices. The charges were tempered by a $10.1 million tax refund on phone cards. Excluding these items, Costco said profit totaled 66 cents per share.

Revenue increased 7.5 percent to $15.11 billion from $14.06 billion a year earlier, with merchandise sales and membership fees both gaining. Same-store sales rose 5 percent for the quarter.

The company said February same-store sales rose 4 percent, short of the average analyst estimate of 5.1 percent growth.

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