Brunswick’s Q3 profit slides 59 percent
Brunswick Corp. (NYSE: BC), parent of Life Fitness, Hammer Strength and ParaBody fitness equipment, said its third-quarter profit fell 59 percent, weighed down by a drop in sales in its marine division. Its Life Fitness Division, though, boasted a 7 percent sales increase.
For the quarter ended Sept. 30, the company reported net income of $36.5 million, or $0.39 per share, versus a prior-year profit of $88.4 million, or $0.89 per share. Earnings from continuing operations, including tax-related benefits, totaled $0.54 per share, down from $0.83 per share a year earlier.
Revenue declined to $1.34 billion from $1.35 billion in the year earlier period.
Operating margins worsened to 5.6 percent for the quarter from 7.6 percent in the year-ago quarter. Brunswick blamed the decrease on a mix shift to lower-margin products, reduced production, and higher expenses due to acquisitions, inflation and greater research and development spending.
Citing the “challenging marine market,” Brunswick Chairman and CEO Dustan McCoy said in a press release that lower fixed-cost absorption on lower production adversely affected operating margins and earnings. He noted that, as previously announced, the company “cut production in certain product lines in the third quarter to make pipeline corrections.”
Sales for the Life Fitness Division increased 7 percent in the third quarter of 2006 to $136.6 million, up from $127.4 million in the year-ago quarter. Fitness segment operating earnings for the quarter totaled $12.6 million, down from 2005’s $14.2 million, and operating margins were 9.2 percent compared with 11.1 percent a year ago.
“The sales gain was driven primarily by a double-digit increase in international sales,” McCoy said in a statement. “Margins in Europe are lower than in the United States, which, along with a mix shift to lower-margin strength equipment and higher research and development spending for new products, led to the decline in operating margins.”
The board of directors declared a regular annual dividend on its common stock of $0.60 per share payable Dec. 15, 2006, to shareholders of record on Nov. 27, 2006.
In other company news: Brunswick has elected Cammie Dunaway, chief marketing officer of Yahoo, to its board of directors, effective immediately. Dunaway’s election brings the number of board members to 12, 10 of whom are independent directors.
Sales for Amer Sports’ Precor segment up 4 percent
Amer Sports reported a 4 percent increase in net sales for its Precor division, saying its “favorable development remained on track in the third quarter.”
Third-quarter net sales for Precor were Euro 60.4 million (USD $76.9 million) compared to 2005’s Euro 57.9 million. Sales were up 12 percent for the nine-month period, Euro 192.6 million (USD $245.4 million) versus Euro 171.4 million last year.
Although EBIT was up 26 percent — Euro 22.1 million (USD $28.1 million) versus Euro 17.5 million — for the year, third-quarter EBIT was down 15 percent — Euro 6.0 million compared (USD $7.6 million) to Euro 7.1 million last year.
In its third-quarter analysis, Amer said that Precor continued to develop well and that sales, particularly to fitness clubs, have kept surging in North America.
Amer’s total third-quarter net sales were Euro 471.9 million (USD $601.4 million) from 2005’s Euro 483.6 million. Gross profit was also down — by 6 percent — to Euro 192 million (USD $244.7 million) from Euro 204.2 million last year. Earnings per share were Euro 0.52 compared (USD $0.66) to Euro 0.53 last year. EBIT for the quarter was down 9 percent: Euro 57.9 million (USD $73.7 million) compared to Euro 63.5 million last year.
Amer’s outlook for 2006 remains the same, estimating that full-year sales will be approximately Euro 1.8 billion (USD $2.29 billion) and earnings per share Euro 0.90 to 1.05 (USD $1.14 to $1.33).
(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 Oct. 25.)
Bally plans to reduce board to 5 members
The board of directors for Bally Total Fitness (NYSE: BFT) said it will not nominate Steven Rogers for re-election as a director when his term expires. The company did not give a reason for the board’s decision.
Interim chairman Don Kornstein, currently a Class III director, will become a Class I director, and the board will nominate him for re-election as a Class I director for a new three-year term at the annual meeting, Bally said.
Additionally, the board voted to reduce its size ultimately to five members from nine. The size of the board will immediately be reduced to six members, the number of directors currently serving, and will be cut again to five at its annual meeting, when the directorship currently held by Rogers will be eliminated.
Life Time Q3 profit up 27 percent
Life Time Fitness’ (NYSE:LTM) third-quarter profit rose 27 percent on increased membership dues, and raised its guidance for the year.
Net income grew to $13.6 million, or $0.37 per share, from $10.7 million, or $0.29 per share, a year ago. Revenue rose 33 percent to $134.7 million from $101.6 million last year.
Life Time Fitness said membership dues increased by 31 percent, and same-center revenue grew by 8.3 percent, year-over-year.
The company raised its profit forecast for the year to between $1.33 and $1.35 per share on revenue of $507 million to $512 million, up from previous estimates of $1.30 to $1.32 per share on revenue of $502 million to $512 million.
Separately, Life Time Fitness has elected John B. Richards and Joseph S. Vassalluzzo to its board of directors. Richards most recently served as the president and CEO of Red Door Spa Holdings until May 2006, and he continues to provide consulting services to the company. Vassalluzzo has been an independent advisor to retail organizations, with a primary emphasis on real estate, since August 2005.
Crocs acquires EXO Italia
Crocs (Nasdaq: CROX) has acquired EXO Italia. Headquartered in Padova, Italy, EXO Italia designs and develops EVA (Ethylene Vinyl Acetate) based finished products, primarily for the footwear industry. Since 1993, EXO Italia has worked with several leading branded consumer companies to produce EVA-based footwear for the global marketplace. Ron Snyder, president and CEO of Crocs, said, “EXO’s expertise in design, product, tool, and process development will be a tremendous asset to us as we look to further diversify our footwear offerings and attract new consumers to the Crocs brand.”
Wal-Mart lowers October sales forecast…again
Wal-Mart Stores (NYSE: WMT) is poised to deliver its weakest same-store sales results in nearly six years in October. The sluggish sales forecast was the second time in less than a week that Wal-Mart cut its October sales outlook and analysts said they expect the decline to trigger aggressive price-cutting beginning this week that could pressure profit margins.
Wal-Mart reported that October same-store sales results inched up 0.5 percent. That’s below an earlier forecast of a 2 percent to 4 percent gain and is also lower than the pared-down forecast Wal-Mart gave at an analyst meeting a week ago.
At that time, Wal-Mart executives said October sales at stores open longer than a year should come in “about” 1.3 percent higher, a result that would have been on par with September’s disappointing results.
A 0.5 percent gain would be the worst sales gain since a 0.3 percent rise in December 2000.
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