Fitness financials: Acquisitions bolster Forzani's Q3 bottom line, plus Amer, Finish Line, Sports Club/LA, George Foreman, Costco, Wal-Mart

Fitness financials: Acquisitions bolster Forzani's Q3 bottom line. Amer signs a multi-currency credit facility. Finish Line raises guidance for year. Sports Club's reports lower net loss for Q3. November sales results for Costco. Wal-Mart reports November sales, confirms December expectations.

Acquisitions bolster Forzani’s Q3 bottom line
Boosted by its Nevada Bob’s franchise and National Sports, the Forzani Group (TSX: FGL) posted third-quarter sales of CDN $307.6 million (USD $263.3 million), a 19.5 percent increase over last year’s CDN $257.4 million (USD $220.3 million). Without the two acquisitions, the existing retail business generated sales of CDN $279.0 million (USD $239 million), an 8.4 percent increase over last year.

Revenue, consisting of corporate store sales, wholesale sales, service income, equipment rentals, franchise fees and franchise royalties, was CDN $305.4 million (USD $261.4 million), up CDN $39.7 million (USD $34 million), or 14.9 percent over the comparable period last year. Excluding Nevada Bob’s and National Sports, revenues were CDN $283.1 million (USD $242.3 million), a 6.5 percent increase over the prior year. Earnings were CDN $6.5 million (USD $5.6 million), or $0.20 per share, an 11.1 percent increase, compared to $0.18 per share in the prior year.

Same-store sales from corporate stores were up 3.2 percent, while franchise same-store sales increased by 8.1 percent. Among the corporate stores, Sport Chek / Coast Mountain Sports sales increased 4.2 percent while Sport Mart went down 0.9 percent.

Combined gross margin was 33.1 percent of revenue, or CDN $101.1 million (USD $86.6 million), up from 31.1 percent, or CDN $82.6 million (USD $71 million) in the previous year. The margin rate improvement was driven principally by results in the hockey equipment, athletic/casual/outdoor clothing, and footwear categories.

Store operating expenses, at 26.9 percent of corporate store revenues were flat with the prior year. The absolute dollar increase, from CDN $47.4 million (USD $41 million) in fiscal 2005, to CDN $56.5 million (USD $48.3 million) in fiscal 2006, was due to the addition of 19 National Sports stores coupled with the opening, in the past year, of 11 corporate stores (net of closings).

During the quarter, Forzani opened two Sport Chek stores, closed two Sport Mart stores and assumed the operation of one franchise store. At the end of the third quarter, it had 256 corporate stores and 198 franchise locations.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Dec. 2.)

Amer signs a multi-currency credit facility
Amer Sports reported that it signed a five-year Euro 575 million (USD $680 million) multi-currency credit facility on Dec. 1. The new facility consists of a Euro 250 million (USD $295 million) term loan facility and a Euro 325 million (USD $384 million) revolving credit facility. The facility was heavily oversubscribed, Amer said. The facility will be used to refinance existing Euro 300 million (USD $355 million) bridge facility put in place to finance the acquisition of Salomon as well as for general corporate purposes. The facility pays a margin of 0.25 percent to 0.40 percent based on Amer’s net gearing. The lead arrangers were Barclays Capital, Nordea and OKO Bank.

(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 Dec. 1.)

Finish Line raises guidance for year
Same-store sales for Finish Line increased 4 percent during the company’s third quarter and the company raised its earnings outlook. In the year-ago period, same-store sales increased 8 percent. The retailer said total sales increased 16 percent to $274 million for the third quarter, up from $235.3 million last year.

Finish Line raised its third-quarter earnings estimate to a range of $0.01 to $0.03 per share, compared with its previous guidance for a loss of $0.01 to $0.03 per share. In the 2004 third quarter, Finish Line reported earnings of $0.04 per share. Analysts forecast a loss of $0.02 per share for the quarter. Finish Line is scheduled to report third-quarter results Dec. 21, after the market closes.

Looking ahead to the fourth quarter, which ends in February, Finish Line said it now sees same-store sales rising 1 percent to 2 percent, rather than coming in flat as it previously anticipated. It expects fourth-quarter earnings of $0.58 to $0.60, on total sales of $407 million.

For the full year, the company expects same-store sales to rise 1 percent, with total annual sales at $1.31 billion. It raised its full-year earnings forecast to $1.22 to $1.26 per share, from a previous view of $1.16 to $1.21 per share.

Sports Club’s reports lower net loss for Q3
Third-quarter results for The Sports Club Company (Pink Sheets: SCYL) saw its revenue jump 8.4 percent to $11.9 million, compared to $10.9 million last year. Its new loss was $1.3 million, or $0.07 per diluted share, compared to a net loss in 2004 of $5.8 million, or $0.31 per diluted share. Operating expenses were $10.8 million compared to $11.2 million last year. The Sports Club Company, based in Los Angeles, operates and owns sports and fitness complexes nationwide under the brand name The Sports Club/LA.

George Foreman Enterprises transfers shares to CEO, launches first venture
George Foreman Enterprises (GFME.OB) said that Jewelcor Management along with its subsidiary Investment Corp. transferred 1,410,234 shares of George Foreman Enterprises’ Common Stock to Seymour Holtzman. Holtzman is the chairman, president and CEO and the controlling shareholder of JMI, as well as the co-chairman and CEO of George Foreman Enterprises. Through his controlling interest in JMI, Holtzman had previously reported beneficial ownership of the 1,410,234 shares.

The company has also entered into a new venture with Circle Group Holdings to promote and market its Z-Trim zero calorie fat replacement ingredient to major food companies, QSR and restaurant franchises, the health and wellness community and the consumer market. The transaction is the first venture announced since the launch of George Foreman Enterprises last August.

November sales results for Costco
Costco Wholesale (Nasdaq: COST) reported a smaller-than-expected 6 percent increase in November same-store sales, hurt by a strengthening U.S. dollar that deflated international results. Analysts on average expected a 7.2 percent rise. Total sales for rose about 9 percent to $4.45 billion.

Wal-Mart reports November sales, confirms December expectations
For November, Wal-Mart Stores (NYSE: WMT) reported total sales of $25.77 billion up 9.4 percent from last year’s $23.54 billion. Same-store sales for the retailer were 4.3 percent. It confirmed that it still expects 2 percent to 4 percent December sales growth at its U.S. stores open at least a year.

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