Fitness financials: Brunswick rating upgraded by Moody’s, plus Hibbett, Foot Locker, Sears

Moody's upgraded Brunswick's rating outlook to "stable" from "negative," Hibbett Sports said its fiscal first-quarter net income grew nearly 60 percent, Foot Locker said its Q1 net income jumped 74 percent, and Sears reported that its Q1 income dropped 38 percent.

Brunswick rating upgraded by Moody’s

Moody’s Investors Service upgraded Brunswick Corp.’s (NYSE: BC) rating outlook to “stable” from “negative” based on a belief that Brunswick’s credit will not deteriorate further and might even improve over the near- to midterm. It is the parent of Life Fitness and Hammer Strength.

At the same time, Moody’s raised Brunswick’s speculative-grade liquidity rating to “SGL1.”

“We believe Brunswick’s strong liquidity profile, improved cost structure, enhanced health of its dealership network and increased wholesale shipments should enable it to maintain its current credit profile, even if retail demand in 2010 declines more than the 10 percent the company is currently planning for and despite the burgeoning sovereign debt crisis,” said Kevin Cassidy, senior credit officer at Moody’s, in a statement.

Moody’s said the liquidity upgrade indicates that Moody’s believes Brunswick will maintain its strong liquidity profile for at least 12 months, including cash balances around $550 million, an expectation of positive free cash flow in 2010 even if retail demand falls 20 percent, and access to over $125 million in credit.

Hibbett’s Q1 income up nearly 60 percent

Hibbett Sports (Nasdaq; HIBB) said its fiscal first-quarter net income grew nearly 60 percent, driven by double-digit increases in footwear and apparel.

For the quarter ended May 1, the company earned $17.3 million, or $0.59 per share, compared with $10.9 million, or $0.38 per share, in the same quarter of last year.

Revenue grew 17 percent to $184.5 million, compared to $157.7 million last year.

Comparable store sales increased 14.5 percent.

“The strong sales trend we experienced in the fourth quarter of last year continued throughout the first quarter of this year and into the second quarter,” said Jeff Rosenthal, president and CEO, in a statement. “The broad-based improvement and exceptional operating margin give us confidence in our optimistic outlook for the remainder of the year.”

Hibbett raised its guidance, saying it now predicts income of $1.35 to $1.50 per share for the full fiscal year, up from its previous guidance of $1.12 to $1.30 per share.

In the first quarter, Hibbett opened two new stores and closed two stores, leaving the store base at 767. For fiscal 2011, the company expects to open 30 new stores and expand 20 high-performing locations. It will also close 10 to 15 underperforming stores.

Foot Locker Q1 net income jumps 74 percent

Foot Locker (NYSE: FL) said its fiscal first-quarter net income jumped 74 percent as the company’s steps to slash costs and shut down poorly performing locations continued to pay off.

Foot Locker posted net income of $54 million, or $0.34 per share, for the quarter ended May 1, compared with net income of $31 million, or $0.20 per share, in the year ago quarter.

Sales increased 5 percent to $1.28 billion from $1.22 billion. Same-store sales rose 4.8 percent during the quarter.

Also, its board of directors declared a quarterly cash dividend on the company’s common stock of $0.15 per share, which will be payable on July 30 to shareholders of record on July 16.

Sears’ Q1 income drops 38 percent

Heavy discounts on appliances squeezed Sears Holdings (Nasdaq: SHLD) and its first-quarter net income fell 38 percent.

Its net income was $16 million, or $0.14 per share, in the quarter that ended May 1, versus $26 million, or $0.21 per share, a year earlier.

Adjusted for a gain on the sale of real estate, pension expenses and other one-time items, Sears earned $0.16 per share.

The results contrast sharply with Sears’ recent success in boosting both revenue and net income as it closed underperforming stores and slashed expenses.

Revenue fell slightly to $10.05 billion from $10.06 billion a year ago because the company has 63 fewer stores than in last year’s first quarter.

Same-store sales at Sears stores rose 1.2 percent for the quarter and were up 1.7 percent at Kmart stores.

Sears reported a gross profit margin of 28.2 percent, down from 28.6 percent a year earlier.

–Compiled by Wendy Geister

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