Fitness financials: Canada's Forzani Group reports Q2 in the black, plus Sport Chalet, Bally, Cybex, adidas/Reebok, Finish Line

Fitness financials: Canada's Forzani Group reports Q2 sales results. Sport Chalet ranked No. 1 by consumers in retail survey. Liberation second hedge fund to enter into confidentiality agreement with Bally. Cybex receives thumbs-up from brokerage. Finish Line Q2 same-store sales drop.
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Canada's Forzani Group reports Q2 sales results
After suffering a profit loss in the same quarter in 2005, Forzani Group (FGL.TO) is in the black for the 2006 second quarter, as Canada's largest sporting goods retailer overhauled some of its storefronts.

The company, whose outlets include Sport Chek, Sports Experts and Coast Mountain Sports, as well as specialty retailer The Fitness Source that it bought in early 2006, said it earned CDN $1.9 million (USD $1.7 million), or 6 Canadian cents a share, for the quarter. That compares with a loss of CDN $2.3 million, or 7 Canadian cents a share, for the same quarter a year earlier. Its results included a non-recurring, non-cash charge of 1 Canadian cent a share related to income tax rate changes, it added.

Retail sales rose 11 percent to CDN $337.9 million (USD $304.9 million) compared to CDN $305.1 million last year, boosted in part by the recent acquisition of The Fitness Source chain. Same-store sales were up 5.4 percent in corporate outlets and 6.9 percent in franchise locations -- for an overall increase of 6 percent. At the time of the acquisition, Fitness Source, which provides equipment and accessories for both residential and commercial use, reported annual sales of CDN $20 million (then equivalent to about USD $17.4 million).

Forzani said the revitalization of its Sport Chek and Sport Mart stores, as well as changes made to merchandising and inventory management processes, helped lift results.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Sept. 1.)

Sport Chalet ranked No. 1 by consumers in retail survey
Sport Chalet (Nasdaq: SPCHA and SPCHB) was ranked by consumers as the No. 1 most desired retailer in the 2006 Retail Demand Today Report published by Kanbay Research Institute (KRI), an independent research company. It topped the list ahead of Kohl's, Amazon.com and Tiffany, among others.

KRI said the study identifies the top performing retailers in 16 major retail categories including sporting goods. Sport Chalet gained the top spot among all retailers across the 16 categories, which spanned the specialty, luxury, discount and online categories.

In the 2006 study, KRI conducted 6,674 web-based interviews with U.S. consumers, rating 104 of the leading retail companies to discern how well their desires are being met and identify emerging trends in the industry. The report, which was released last week, is entitled "Retail Demand Today: How Well Retailers Deliver on America's Shopping Desires." To download a copy, click here or contact info@kanbayresearch.com.

Liberation second hedge fund to enter into confidentiality agreement with Bally
Following in the footsteps of Pardus Capital Management, Liberation Investment Group recently executed a confidentiality agreement with Bally Total Fitness (NYSE: BFT). Liberation said Bally had agreed to make information on its business and financial position available to it on a confidential basis.

The investment fund said in a filing with the SEC that it could arrange "an extraordinary corporate transaction" such as an acquisition, sale of the company, reorganization or recapitalization of Bally.

Pardus said it held a 14.8 percent stake in Bally, and Liberation said it holds an 11.2 percent stake in Bally through its director Emanuel Pearlman, according to the filing.

On Aug. 11, Bally announced the ouster of CEO Paul Toback, lowered its outlook and said its search for a buyer had been unsuccessful. It elected Don Kornstein as interim chairman and Barry Elson as acting CEO. Both were on a dissident slate of board members, nominated by Pardus and elected in January. Elson was also backed by the company.

After the news, the stock jumped as much as 12 percent in morning trade on the New York Stock Exchange on Aug. 29. It closed the day at $2.91, up $0.24 from the previous day's closing.

Cybex receives thumbs-up from brokerage
On Aug. 30, Roth Capital initiated coverage on Cybex International (Amex: CYB). The brokerage gave Cybex shares a "buy" rating. It closed the day at $6.44, up $0.24 from the day before.

Turnaround expected for Reebok in Q4, adidas CEO says
A German magazine quoted adidas CEO Herbert Hainer as saying that adidas (ADSG.DE) expects a turnaround in sales at U.S. subsidiary Reebok by the end of the year.

"I am confident that we will see rising order intakes in the final quarter of this year," Hainer told Germany's Focus Money magazine in an interview. "While we still expect sales to fall in the middle single digits for 2006, we see rising sales in 2007."

adidas blames Reebok's declining sales on weak footwear business, and the fact that adidas, not Reebok, now equips the U.S. NBA basketball league. But Reebok will contribute to the group's earnings per share in 2006, the company said.

Finish Line Q2 same-store sales drop
For the second quarter, Finish Line (Nasdaq: FINL) reported that same-store sales decreased 6.6 percent at the company's name-brand locations, and fell 4.8 percent at its Man Alive stores. Total sales for the quarter fell nearly 1 percent to $338.6 million from $341.6 million in the year-ago quarter.

The company said it bought back 1.1 million shares during the quarter. Under its current 5 million share buyback authorization, Finish Line has repurchased 2.6 million shares at a cost of $35.5 million. The buyback authorization expires at the end of 2007.

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