Fitness financials: Bally approves $50K monthly stipends for acting CEO and chairman, plus George Foreman Enterprises, Hanesbrands, Health Fitness

Fitness financials: Bally approves $50K monthly stipends for acting CEO and chairman. Dutton lowers rating on George Foreman Enterprises. Sara Lee spin-off company debuts on NYSE. Health Fitness appoints new chairman.
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Bally approves $50K monthly stipends for acting CEO and chairman
According to an 8-K filing with the SEC on Sept. 8, Bally Total Fitness (NYSE: BFT) said it approved a stipend of $50,000 a month for acting CEO Barry Elson. It also approved monthly payments of $50,000 to interim Chairman Don Kornstein. Their compensation is retroactive to Aug. 11, when they were tapped to replace former Chairman and CEO Paul Toback who resigned, the filing said. Both Kornstein and Elson were elected to the company's board in January.

Also, Adweek reported that Bally has named Eastwest Marketing Group to handle creative and promotional chores following a review. Bally reportedly spent $75 million in measured media last year and close to $50 million through the first half of 2006, per Nielsen Monitor-Plus.

Dutton lowers rating on George Foreman Enterprises
Dutton Associates lowered its rating of George Foreman Enterprises (OTCBB:GFME) to "Speculative Buy" and set a 12-month $4 price target. The research firm said it revised its rating from "Strong Speculative Buy" since the company's structural relationship with George Foreman, which is now over one year old, has not yet resulted in the completion of one deal.

It said in a research note: "Our initial rating in November 2005 was based on George Foreman's record as an endorser and marketer of consumer products, the visibility of a transaction with Circle Group Holdings (now Z Trim) and the potential of a transaction(s) with consumer product companies. While Foreman's endorsement credibility has not been diminished, the Z Trim deal ended in litigation and the company has been silent on marketing relationships with other companies."

It added that it believes the company is screening and probably negotiating with other potential relationships. If a deal is struck, it said the target price and the rating are subject to upward revisions based on the consummation and an analysis of a transaction.

Sara Lee spin-off company debuts on NYSE
Hanesbrands Inc. (NYSE: HBI) shares rose more than 6 percent on Sept. 6, as investors rallied behind the stock's first day of trading on the New York Stock Exchange and Credit Suisse predicted strong earnings growth for the Sara Lee spin-off company. After its first day of trading, shares closed at $21.11, up $1.31 from its $19.80 opening.

Hanesbrands, formerly known as Sara Lee Branded Apparel, was spun off from packaged foods company Sara Lee, which in 2005 announced its intention to spin off the unit, which includes Champion, in order to focus on its core food, beverage and household products business. In connection with the spin-off, Hanesbrands made a one-time payment of $2.4 billion to Sara Lee.

In a client note, Credit Suisse analyst Omar Saad said Hanesbrands' unique position as middleman and manufacturer, as well as huge volumes, would help outweigh competition from private label brands. Profit margins will also improve once the company starts to shift more functions overseas, Saad added. He initiated coverage of the company with an "Outperform" rating and $25 target price.

Health Fitness appoints new chairman
Health Fitness Corp. (OTCBB: HFIT) has named Mark W. Sheffert as chairman of the board. He has been a member of the Health Fitness board since 2001. Sheffert succeeds John W. Penn, chairman of the board since 2003, who remains a member of the board. Sheffert is chairman and CEO of the Minneapolis-based investment banking, corporate renewal and management advisory firm, Manchester Companies.

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