Fitness financials: Big 5 cuts Q2 forecast due to weaker same-store sales, plus Everlast, Hibbett Sports, Sears, Costco, Wal-Mart

Fitness financials: Big 5 cuts Q2 forecast due to weaker same-store sales. Hidary sues to buy Everlast; lawyer files class action suit for shareholders. Hibbett Sports shares rise on analyst upgrade. Sears lowers Q2 earnings guidance, shares drop. Costco reports June sales results. Wal-Mart June same-store sales climb.

Big 5 cuts Q2 forecast due to weaker same-store sales
Big 5 Sporting Goods (Nasdaq: BGFV) lowered its second-quarter earnings forecast after sales came in at the lower end of the retailer's target range, and it saw same-store sales fall by 0.2 percent, the first quarterly decline in more than 11 years.

The company now expects earnings between $0.23 and $0.26 per share in the quarter ended July 1. That is down from a previous range of $0.25 to $0.33 per share.

Total sales in the period climbed 2.9 percent to $217.8 million from $211.8 million last year.

The company plans to report second-quarter results in the first week of August.

Shares fell $1.26, or 5 percent, to $24.01 in afternoon trading on July 12.

In other company news: Michael Miller, a director with retailer Big 5, sold 10,000 shares of common stock under a prearranged trading plan. In a Form 4 filed with the SEC, Miller reported he sold the shares July 9-10 for $25.10 to $25.30 apiece.

The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Hidary sues to buy Everlast; lawyer files class action suit for shareholders
New York-based investor group Hidary Group has filed a lawsuit against Everlast Worldwide (Nasdaq: EVST) to force the company to honor a buyout agreement with Hidary, according to a July 12 SEC filing. Now an Everlast shareholder is asking the company to reconsider Hidary's buyout offer.

Everlast agreed to a $26.50 per share offer from Hidary on June 1, but later received a competing bid from Brands Holdings for $30 per share. Everlast terminated its deal with Hidary on June 28 to accept the rival bid, although Hidary offered to boost its price to $30.55 and make other necessary changes.

Hidary's lawsuit, filed with the Court of Chancery of the State of Delaware, seeks to prevent Everlast from merging with Brand Holdings, a unit of Sports Direct International, and hold Everlast to its earlier agreement with Hidary. Hidary, which owns a 36.1 percent stake in the company, is also seeking damages.

Hidary's suit alleges that Everlast breached its contract and "willfully refused to negotiate in good faith."

Since Everlast terminated its agreement with Hidary, Hidary has raised its offer to $31.25 per share and Brands Holdings has lifted its offer to $33 per share.

Aquamarine Capital Management, a 2.9-percent shareholder of Everlast, said Everlast's refusal to negotiate with Hidary may represent a breach of the board's fiduciary responsibility to obtain the best offer for its shareholders.

Aquamarine said the board hasn't conducted an open and transparent bid process to achieve the highest possible offer. It agreed that Everlast should have considered Hidary's revised bid superior to Brands Holdings' offer.

Aquamarine also criticized Everlast for agreeing to breakup fees that make it more difficult for a higher bid to emerge. Hidary's latest offer was structured to allow shareholders to roll up to 50 percent of their investment into the private company. Aquamarine had agreed to roll its 127,993 shares into Hidary's original $26.50 per share offer.

Aquamarine asked the board to go back to the negotiating table with Hidary.

In other company news: The Law Offices of Brian M. Felgoise, P.C. said on July 10 that a class action has been commenced on behalf of shareholders of Everlast in connection with the offer by Sports Direct to acquire all of the outstanding shares of Everlast.

The case is pending in the Delaware Court of Chancery against certain officers and directors. The goal of the lawsuit is to seek the highest possible offer for the public shares.

Hibbett Sports shares rise on analyst upgrade
Shares of Hibbett Sports (Nasdaq: HIBB) rose July 12 after an analyst gave the company an "Outperform" rating, saying the shares are attractively priced given the company's growth potential.

Friedman, Billings, Ramsey & Co. analyst Jeff Sonnek set a 12-month target price for the stock of $37.

Hibbett shares rose as high as $2.09 to $30.62 in day's trading to close at $29.30 on July 12. The stock has traded as low as $18.90 and as high as $33.95 over the past year.

Sonnek wrote in a client note that the benefits of Hibbett's overhaul of its supply chain and merchandising systems have yet to be realized. He also called the chain a "consistent growth story" in terms of its sales rate and earnings performance.

"Hibbett's unique market positioning allows for significant unit growth, as the company's small-format stores offer brands and service not typically provided by the competition," Sonnek wrote. Hibbett targets small-town markets of about 30,000 to 100,000 people.

Last month, Hibbett said it expects annual store growth of 15 percent, primarily in the South and Southwest.

Sears lowers Q2 earnings guidance, shares drop
Sears Holdings (Nasdaq: SHLD) sent out a warning that its second-quarter earnings will likely fall well below expectations because of more disappointing sales at its Sears and Kmart. The news tanked Sears' stock, which fell more than 10 percent to a 10-month low before rebounding slightly.

For the quarter ending Aug. 4, Sears expects to earn between $160 million and $200 million, or $1.06 and $1.32 per share. That includes a $0.08 per share gain from bankruptcy-related settlements and investing activities. Analysts had expected second-quarter earnings of $2.12 per share for the company.

During a nine-week period that ended July 7, same-store sales at Kmart's U.S. locations fell 3.9 percent while same-store sales fell 4 percent at Sears.

Separately, Sears said it approved the purchase of up to $1 billion of its common shares, in addition to the $121 million worth of shares that remain available for repurchase under the company 's current buyback program. Since late 2005, Sears has repurchased nearly 14 million shares at a total cost of $1.9 billion.

Sears shares fell $17.20, or 10 percent, to $154.21 on July 10.

Costco reports June sales results
Costco (Nasdaq: COST) reported net sales of $6.35 billion for the month of June, the five weeks ended July 8, an increase of 10 percent from $5.78 billion in the same five-week period last year.

The company's total same-store sales for June were 6 percent -- U.S. same-store sales were 5 percent, while international same-store sales were 10 percent.

Wal-Mart June same-store sales climb
June same-store sales for Wal-Mart Stores (NYSE: WMT) rose 2.4 percent excluding fuel sales. The company also maintained its second-quarter earnings guidance, saying its target range is achievable despite a tough environment.

Total sales for the five weeks ended July 6 rose 9.4 percent to $35.81 billion from $32.74 billion, with the namesake Wal-Mart Stores chain posting a 7.1 percent sales gain, to $22.94 billion. Sales at Sam's Club warehouse chain rose 9.6 percent to $4.42 billion, and international sales climbed 15.9 percent during the month to $8.45 billion.

Same-stores sales in June excluding fuel sales rose 1.6 percent at Wal-Mart Stores and 6.9 percent at Sam's Club stores. Same-store sales in June 2006 rose 1.3 percent companywide.

Looking ahead, the company sees July same-store sales growth of 1 percent to 2 percent and second-quarter earnings-per-share guidance of $0.75 to $0.79.

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