Everlast jumps into U.S. fitness equipment ring, licensing never-ending

With a flurry not unlike the punches thrown by the contestants on NBC's "The Contender," Everlast Worldwide Inc. has made several licensing moves in the fitness segment over the last month from fitness equipment to videos, both here and abroad.

With a flurry not unlike the punches thrown by the contestants on NBC's "The Contender," Everlast Worldwide Inc. has made several licensing moves in the fitness segment over the last month from fitness equipment to videos, both here and abroad.

Leading the way was a licensing deal with M&M Fitness LLC for the development of a line of aerobic and weightlifting equipment to be marketed in the United States -- a deal that was signed about a month ago.

The New York City-based M&M Fitness will produce and market aerobic equipment including treadmills, steppers, elliptical trainers and stationary bikes, and weightlifting equipment free weights, home gyms, weightlifting benches, weight bars and other equipment, all to carry the broadly recognized Everlast name and logo.

So broadly recognized that a Nielsen Product Placement Rankings report for the last week of March showed Everlast took the top spot for all product placements by all brands on network television. The report showed that Everlast received a combined total of 169 recognized placements, partly as a result of its involvement with the reality boxing series, "The Contender."

Bikes, bells, treads and trainers
With that kind of worldwide recognition, why take on fitness equipment the likes of bikes and treadmills? While at first the jab into the fitness market seems a bit of a stretch for a company known for its boxing roots, Everlast senior vice president of licensing, Hal Worsham, tells SNEWS® that fitness is right in Everlast's ring.

"Our brand is really known as much for fitness as it is for boxing. Many of the health clubs of today were born out of boxing gyms only 30 years ago," Worsham said. "It really is a 50/50 image that we have between boxing and fitness. It is a natural extension for us."

So natural, in fact, Everlast (www.everlast.com) has been licensing fitness equipment overseas for several years, including the past four years in Japan, according to Worsham. So the entry into the U.S. market is really just an extension of its brand. Or, should we say, yet another extension of the Everlast brand.

The U.S. equipment is expected to hit sporting goods stores late this year or early next year in mid-range price points.

"We want to ship high-quality product to the sporting goods channel. We won't be one of the lower-end treadmills or home gyms, but we won't be the highest either," said Worsham. "We will be a legitimate brand for fitness equipment. We will be one of the better brands on the floor."

Worldwide sights set
But the company isn't looking just here and to Japan to build a fitness brand. It has also set its sights recently on Thailand and on the United Kingdom for heavy fitness equipment, a hand-held exercise line and some martial arts products. Additionally, Everlast has also entered into a licensing agreement with Goodtimes Entertainment for development of fitness videos and ancillary products, which will be marketed worldwide via infomercial, mass retail, the Internet and other channels.

"The timing for us in the fitness channel is especially strong right now," Worsham said.

Wall Street seems to think the same: For the fourth quarter, Everlast (Nasdaq: EVST) reported net revenues advanced 20.3 percent to $14.8 million compared to $12.3 million in 2003. The revenue increase was driven by strong men's apparel sales of $4.5 million, which had a whopping 200 percent increase over the 2003 period, along with a 14 percent increase in net licensing revenues.

"We have gotten so much exposure on 'The Contender' and in 'Million Dollar Baby,'" said Worsham, "that our name has never been stronger -- and that's saying a lot."

SNEWS® View: While we can't say that there is a dire need for more mid-range treads or home gyms, we are a little intrigued by the moves Everlast is making. Despite the crowded aisles in the price range, there is still a dearth of recognizable brands in fitness. With the increasing brand recognition driven by a savvy licensing strategy -- does practically a week go by that we don't hear of another deal? -- Everlast may itself be a "contender" to gain public awareness of its name in fitness equipment, just as Fitness Quest could with its license of the New Balance name for equipment. If Everlast does make inroads at retail, however, it may come at the price of eroding another company's market share. In the end, how many products at the low- and mid-range price points can the market support?


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