Fitness financials: Town Sports swings to a loss in Q3, plus Sports Club, Iconix, Under Armour, GSI, Champion, Brunswick

Town Sports swings to a loss in Q3

Town Sports International (Nasdaq: CLUB) swung to a loss in the third quarter hampered by a lower membership count.

Net loss for the quarter ended Sept. 30 was $1.5 million, or $0.07 per diluted share, compared to net income of $3.8 million, or $0.14 per diluted share, for 2008.

Revenue decreased 6 percent to $120.4 million versus $128.1 million last year. Comparable club revenue decreased 7 percent compared to the same period in 2008.

Total member count was down 4.8 percent compared to 2008. Membership attrition averaged 4.2 percent per month compared to 3.6 percent in the third quarter of 2008 and 3.7 percent in the second quarter of 2009.

Total operating expenses increased 2.1 percent. Operating margin was 1.2 percent compared to 9.0 percent last year.

Revenue for the fourth quarter is expected to be between $112.5 million and $114.5 million versus $122.9 million in 2008. It expects a net loss of between $1.8 million and $2.3 million, and loss per share to be in the range of $0.08 per share to $0.10 per share.

Sports Club posts Q3 loss

The Sports Club Company (Pink Sheets: SCYL) said revenue for the third quarter fell 13.9 percent as membership, products and services sales dropped.

Revenues for the quarter ended Sept. 30 were $13.3 million compared to $15.4 million for the same period last year.

Net loss was $542,000, or $0.02 per basic and diluted share, compared to a net loss last year of $275,000, or $0.01 per basic and diluted share.

The Sports Club Company operates and owns sports and fitness complexes nationwide under the brand name The Sports Club/LA.

Iconix net income increases in Q3

Iconix Brand Group (Nasdaq: ICON) said its third-quarter profit rose 25 percent. Fitness EM licenses the Danskin brand name for fitness equipment from Iconix’s property, Triumph, formerly known as Danskin.

For the quarter ended Sept. 30, profit was $20.5 million, or $0.28 per share, from $16.4 million, or $0.27 per share, last year. Excluding non-cash interest related to the adoption of the new accounting treatment for convertible debt, it said income totaled $0.31 per share.

Revenue rose 8 percent to $59.4 million from $55.1 million a year ago.

The company reiterated 2009 earnings guidance of $1.17 to $1.22 per share, excluding one-time items, on revenue of $215 million to $220 million.

Iconix expects a profit of $1.25 to $1.30 per share in 2010, excluding one-time items. It predicted revenue of $260 million to $270 million.

Separately, Iconix said it agreed to take a controlling interest in the Ecko portfolio of brands. The deal is expected to close in the fourth quarter.

Under Armour sales up 16 percent for Q3

Third-quarter profit for Under Armour (NYSE: UA) rose slightly on higher sales of its athletic apparel and footwear.

Quarterly profit rose 2 percent to $26.2 million, or $0.52 per share, from $25.7 million, or $0.51 per share last year.

Revenue rose 16 percent to $269.5 million from $231.9 million a year ago.

Sales of apparel rose 7 percent to $215.4 million, while footwear more than doubled to $33 million, from $13.1 million last year.

Based on the results, the company raised its yearly guidance due to better-than-expected sales year-to-date. The company now expects 2009 revenue of $830 million to $835 million, from a previous estimate of $810 million.

Under Armour now expects earnings of $0.85 to $0.87 per share from previous expectations of $0.80 to $0.82.

It noted that expenses are expected to be higher due to higher personnel costs, including increased funding of the company’s performance incentive plan. They are now expected to grow in the mid-teens percentage range from earlier expectations of growth in the low teens.

Despite the optimistic outlook, shares of Under Armour fell Oct. 27 as investors worried that the company’s fourth-quarter profit would disappoint after it issued full-year guidance that implied slower sales for the rest of the year. Shares fell $3.82 to close at $29.27 on a volume of 1.9 million.

Raymond James analyst Dan Wewer told clients in a research note that the company’s prediction for full-year profit implied that fourth-quarter revenue growth would slow to about 11.6 percent. He added that executives said operating expenses would be under pressure in the fourth quarter, and maintained an “underperform” rating on the stock.

GSI narrows Q3 loss

GSI Commerce (Nasdaq: GSIC) narrowed its net loss for the third quarter and also signed an agreement to acquire Retail Convergence.

For the quarter ended Oct. 3, net loss was $9.4 million, or $0.18 per share, compared to a net loss $14.2 million, or $0.30 per share.

Revenue was up to $190.3 million from $186.8 million.

Loss from operations was $9.9 million compared to $16.5 million last year.

Looking ahead, the company expects a modest increase in FY ’09 net revenues compared to FY ’08. Income from operations is expected to be at least $3.0 million to $7.0 million

In other company news, GSI paid $350 million for Retail Convergence, the parent of RueLaLa.com website, which holds private sales of sought-after items at discounts, and SmartBargains.com. The acquisition should close in a month, it said.

Champion parent sales fall 8 percent in Q3

Hanesbrands (NYSE: HBI), parent of Champion, reported an 8-percent drop in third-quarter sales. Revenue was $1.06 billion versus $1.15 billion in the same period last year.

It earned $41.1 million, or $0.43 a share, compared with $15.9 million, or $0.17 a share, a year earlier. Excluding items, the company said it earned $0.63 a share.

Brunswick declares dividend

The board of directors of Brunswick Corp. (NYSE: BC), parent of Life Fitness, declared an annual dividend on its common stock of $0.05 per share payable Dec. 15 to shareholders of record on Nov. 24.

–Compiled by Wendy Geister

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