Fitness 2002: SNEWS reviews the year and peeks ahead

SNEWS offers a walk through the fitness news, events, and people that made 2002 memorable -- even if some would rather not be remembered at all. And since history is frequently the map of our future, we couldn't resist a peek ahead either.
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Although still a young industry in the sports world as a whole, the fitness business has managed to hold its own -- perhaps even better than other industries did in 2002 despite a sluggish economy and hesitant consumer spending. The big companies seem to be getting bigger -- acquiring other smaller companies, or forging partnerships and alliances to expand their reach. In addition, large fitness equipment manufacturers -- even while continuing their search for maturity and broader acceptance by traditional business markets inside the United States -- are already reaching beyond North America. Europe, it seems, has become the next frontier for large-scale growth in the next decade. The growth estimations in Europe are large, and none of the U.S.-based companies want to be left unprepared or scrambling to be the last man in. That means the likes of Precor, Life Fitness, Icon, Horizon, Vision, Nautilus and others are setting up or expanding their offices and sales networks abroad.Â

With mergers, alliances, and acquisitions being the big story of 2002 on the U.S. front, The Nautilus Group (until May, Direct Focus) has been a huge story that will continue to have impact. Now parent to Bowflex, Nautilus, Schwinn and, as of early 2002, StairMaster, Nautilus has become a force to be reckoned with as it expands its product line so retailers and clubs don't need to go any further than its doors.

But Brunswick (aka Life Fitness parent) won't be left behind quickly: LeMond Fitness' Revmaster, left out of the StairMaster purchase by Nautilus, quickly formed an exclusive alliance with Life Fitness, giving the Brunswick company an indoor cycling program --without the long-term program and product development work.

In another deal, Precor was bought in October by Amer Group of Finland (also parent to Suunto, Atomic and Wilson) in Amer's stated quest to be the No. 1 sporting goods company in the world by 2004. We'll see how progress toward that goal moves ahead since we now have, well, less than a year to get there.

For 2003 and 2004, many companies are expanding their product lines to include cardiovascular, strength, stretch, home, commercial and/or light commercial so they too can become one-stop shops for buyers. Yet in a refreshing hiccup, newbie Octane Fitness joined the fitness scene in December -- with (gasp) one category and only two products. And founders swear that's all they want to be. Nevertheless, mergers, acquisitions and alliances will continue to occur, and smaller companies -- unless they have a truly specialized niche or specialty product -- will struggle.

For everybody, big and small, fueling consumer spending and navigating those dollars toward their own company's products is the big game to win. Surveys have found consumers to be jaded and weary -- products from sweaters to treadmills, and stores of all kinds all look the same, leaving consumers without any kind of excitement to buy a product because it speaks specifically to them in any way emotionally. If that holds true for any industry, it holds true for fitness equipment and sporting goods.

One dumbbell, one bench, one bike, one treadmill all look like the next pretty much -- gray, metal, intimidating. Most people couldn't tell you the model of their shoes or shorts to save their life. Companies are trying to be a little different with products -- emphasis on "a little" since most are afraid to be the first one to break the mold. Did FedEx get as successful as it did without facing a few jeers? (A purple and orange logo for goodness sake!) So "different" here means a curved bar on equipment instead of a straight one, a round tube instead of square, a charcoal gray paint job instead of black (how daring). Sure, everyone giggled at Cybex's string of Popsicle-colored treadmills at a show earlier in the year, but you noticed, didn't you? They made you smile, yes?

And get us on the topics of stores -- owners and managers of fitness stores and sports departments or sporting goods stores need to take a hard look once again at human emotion. Humans gravitate to warmth and anything that speaks to their core. Equipment stores are usually not much more than a small warehouse-like building filled with rows of equipment. We know how we react to the likes of Costco-like warehouse stores -- teeth gritted and shoulders tensed, and not a place where you want to hang around. How do store managers expect human beings to like shopping for equipment if it is a cold and intimidating place? We think in the coming years that stores and equipment that will pull slowly to the front of the pack will be those that really and truly think outside of the box and begin thinking in a way that will attract consumers who are not, well, fitness geeks.

As the economy slumped and some industries wailed about slow sales, fitness has already shown that it can keep its head above water and adapt. Consumers turn back to matters that concern their health, fitness and recreation in times like these. Fitness is poised to grow even more, not only in North America, but also around the world. With a little hard thought and envelope-edge-pushing, the industry could grow even more quickly.

With those SNEWSy thoughts in mind, let's take a quick gander through the year and the stories and companies that made it what it was and what it will become in the next year:

Financial Wins and Woes

The bigger they come, the harder the fall. That's what The Nautilus Group found out when it rang the bell at the New York Stock Exchange on May 21 when it joined that exchange and left its legacy as Direct Focus, known for the infomercial-famed Bowflex. With stock prices that had reached into the 40s and analysts that were a-twitter over its newfound sweetheart, Nautilus quickly found spotlights aren't always good news. Biography discrepancies were found, some accounting brought into question, and daytraders took sides on the debate. But after having added Schwinn Fitness to its fold, then StairMaster, the company found its stock prices crashing like a dropped weight stack. Realizing that no-news-wasn't-always-good-news, the company at the end of the year finally hired an outside PR/image agency, which we expect will work up the company and help it groom its public appearances and responses. Filling the moat and raising the gate, you see, isn't always the answer to what may be perceived as bad news.

The West Coast dockworkers labor dispute hit home across the fitness world as the slowdowns, lockouts, the return (with the backup of ships) caused nail-chewing across the board. The back-to-work order in October helped, but still left some companies with slightly slower late fall sales.

Puma gains near cult status with sales increases that are about 60 percent. Even German politicians are wearing the athletic shoes in public appearances.

Acquisitions, Alliances and Mergers

Where do we start? It's been quite a year, with more likely to come. Nautilus finalized its deal to buy ailing StairMaster in February after winning the company in January in a closed-door auction. Bally Total Fitness bought trendy Crunch Fitness in January. Mad Dogg's Spinning forges an alliance in February with Star Trac as that company's indoor cycling program after settling months of disputes with Schwinn, aka now Nautilus.

LeMond's Revmaster strikes out on its own in late spring after being left out of the deal where Nautilus bought StairMaster since Nautilus already had its own program, then in June forges an exclusive alliance with Life Fitness. Keys Fitness and Ironman sign a licensing agreement in July for Keys to make Ironman-branded equipment. (Yes, the Hawaii Triathlon company.)

Russell Corp. of sweatsuit fame acquires women's athletic brand Moving Comfort in late August, while Bell Sports takes over Bollinger fitness accessories company, which had been ailing partly due to Kmart's financial woes. But mergers don't stop at the retailer walls: The Fitness Experience and Exercare announce a merger in August, making them the No. 2 fitness specialty retailer in size, only behind Omni Fitness. Quinton Treadmill takes back its medical treadmill line from StairMaster, which had become part of Nautilus.

And, in the one of the biggest acquisitions of the year, which SNEWS called a month before the announcement: Amer Group of Finland purchased Precor from ITW. Amer, with a goal to be the No. 1 sporting goods company in the world by 2004, also owns Wilson Sporting Goods, Atomic skis, and Suunto electronic products.

New Beginnings, Transitions

Reconsidering its name after Sept. 11, 2001, Ground Zero equipment manufacturer changes its name to Free Motion Fitness. Good move.

In the spring and summer, companies took a look at marketing, with Precor adopting a new campaign called "Move Beyond," and Sports Art revamping its entire look with new colors, logo and themes, emphasizing "Rethink, Reshape, Redefine."

Hugh Walton is ousted from Hind. We still aren't sure why except he didn't want to leave Boulder, Colo., where the Saucony subsidiary was based. Brian Enge is brought in to replace him practically while his seat is still warm. Both good people, but a bad PR move all around by Peabody, Mass.-based, parent Saucony, which then in the fall announced it would re-locate Hind to its East Coast headquarters.

Jeff Dilts, formerly of Free Motion and Cybex, leaves to take over development at the National Academy of Sports Medicine and hits the ground running. Within months, the group announces new programs, staff, workshops and alliances.

In the category of sports food, Clif Bar announced a new salty snack bar called MoJo that can cause hours of debates and severe emotional responses. Honey Stinger, a honey-based gel, was introduced, as well as a sports drink called Hydrade. Also, Clif Bar founder Gary Erickson completed the buyout of his former partner, becoming the company's sole owner.

Northern Lights unveils a new line of light commercial equipment in the fall with prices so low (thanks to the Canadian peso of its manufacturing homeland) that the company is nearly embarrassed to tell. Then, Octane Fitness bucks the trend as a new company that is itty-bitty with dreams only to stay itty-bitty -- Octane rolls out with one category and two products, saying it will stick to making ellipticals and making them right. Somehow refreshing, as other companies seem to want to just add categories, thinking that if they can do one thing they most certainly can do another.

Transitions: Julie King leaves Life Fitness PR department; exercise physiologist Edmund Burke dies; and Keys vice president Cliff Koraska suddenly disappears from the company in August mid-show.

Product Line Expansions

In the opposite of Octane's quest to stay small and focused, others are expanding, leaving you constantly questioning what is reality: Horizon Fitness adds a specialty retail line and adds dozens of retailers. Vision Fitness adds a light commercial push. True takes on the strength category with a huge rollout at the Health and Fitness Business show in August. Nautilus, long known as the master of strength, adds home cardio pieces.

Cybex's attempt at a new category rolls out then gains a name: the Arc Trainer.

And Smooth Fitness, the company that just deals on the Internet and can raise the hackles of some equipment suppliers, rolls out a line of cardio equipment for, yes, brick-and-mortar specialty called "Evo by Smooth Fitness."

Now You See It, Now You Don't

Health and Fitness Business magazine was licensed to On-Site Fitness magazine by VNU in a deal hammered in the early hours of 2002. Only to have On-Site Fitness fold a month or so later with its principals disappearing into thin air without comment about what would happen to the other magazine. VNU took it back, but then killed it.Â

In one of the last dot-come deaths, FitnessMX.com, an e-procurement site for supplies and equipment for fitness clubs and facilities, gives up in April. The fitness world just wasn't ready yet.Â

Restructuring

Kmart, as expected, filed for Chapter 11 bankruptcy protection in January and is still relaunching, closing stores and trying to figure it out.

The Super Show is still jokingly called The Not So Super Show by many after its January event, but must have realized it needed work or die. The management company brings on former Cybex CEO Peter Haines in the spring to give it the once-over. By July, the company announces its new WOSI or the World of Sports Innovation, but don't call it "woosie." The WOSI is promised to be more gallery than trade show and be a true showing of new stuff at its grand unveiling at the end of this month.

Fila can't figure out who's going to buy it, when, if ever, and is still hanging on by a thread. Cybex moves in to revamp its marketing department, while it's still counting on this year's launching of many new pieces of equipment to turn the tide of losses.

Legal Squirmishes

We can't begin to cover this one in brief since "in brief" and "legal" don't really belong in the same sentence. But as a quick overview: If you go into the court websites and do a search in the local court of a resident major company (say Washington State or Utah), you will find lawsuits. Many of them. Going back and forth like paper airplanes in the back of a classroom of bored students.

Now-defunct Pyramid Fitness wins a court settlement of $900,000 in damages from Cybex, which actually has to write off a total of $2.2 million once you count in legal fees and other costs. Ouch.

Precor wins its patent re-exam regarding its elliptical, then marches ahead on lawsuits that were on hold involving Life Fitness and Sports Art. Iron Grip of course sues everybody, then lines up licensing agreements. Sill pending, among others, is the suit against Icon and Sears. It did settle with Hard Gear. In a turn of events, Ivanko wins legal fees in a court dismissal in August of a lawsuit by Iron Grip.

The Federal Trade Commission files complaints against ab-toning devices' claims -- you know, those things that zap your middle while you sit on the couch and, so they say, tone and strengthen.

Icon sues Nautilus in August for infringement of patents, and then Nautilus turns around in December and sues Icon allegedly because of patent infringement on its Bowflex machine. The Icon attorneys claim Nautilus wants only to retaliate for its original suit. The beat goes on.

Precor also sues Nautilus regarding (what else??) elliptical patent infringements. And Vectra Fitness is suing both Body Solid and Icon in separate cases because of alleged, yes, patent infringements.

It's the Internet, Take It or Leave It

Smooth Fitness uses Internet technology to its advantage and rolls out a design-your-own feature for treadmills and ellipticals that is much like Dell computer's model -- pick and choose the components you want and order it online.

Rumors that Made You Giggle

Brunswick is selling Life Fitness, Technogym is buying Precor, Nike is buying Precor, Wilson Sporting Goods is buying Precor. Maybe you're buying Precor?

Obesity Prevails

How much can we say here? North Americans are still fat and out of shape. They know it. They have trouble doing anything about it. Whoever can figure out how to attract the public to exercise and to stick to it will win the battle AND the war.

Bush rolls out Healthier U.S. Initiative with aplomb and lots of photo ops in June -- but despite being the most fit president and the best example of fitting in fitness, he puts no money behind it. "If you're interested in improving America," Bush said, "you can do so by taking care of your own body." Gee, President Bush, a little funding would be nice, too.

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