Cybex Q2 sales down on weak consumer spending, in non-compliance with banks
Amidst a weak sales environment, Cybex International (Nasdaq: CYBI) said its sales for the second quarter were down as its customers, particularly fitness clubs and similar facilities, continue to be cautious and delay purchases.
"The equipment manufacturing industry continues to struggle in this long downturn of activity," said John Aglialoro, CEO and chairman, on a call July 30 with investors. "We are continuing to look at cost-cutting opportunities,…and we're ready to grow rapidly once the opportunity presents itself."
For the quarter ended June 27, net sales were $27.8 million compared to $33.1 million for the corresponding 2008 period, or down 16 percent. Of that, cardiovascular equipment sales were down 7 percent, while strength sales were down 27 percent. Sales were down both in North American and internationally, or 16 percent and 18 percent, respectively. Aglialoro blamed higher strength equipment sales decreases on clubs contracting and also waiting on upgrades.
It reported a net loss of $2.1 million, or $0.12 per diluted share, compared to net income of $.1 million, or $0.01 per diluted share, reported for the corresponding 2008 period.
For the six-month period, net sales were $56.7 million compared to $72.9 million for 2008. Its loss was $3.5 million, or $0.20 per diluted share, compared to net income of $1.4 million, or $0.08 per diluted share, for 2008.
"Margins have been negatively affected by several factors, most particularly the lower sales levels. We expect fitness clubs to resume purchasing to previous levels in the future, and in the meantime, we are focusing on other markets that will represent incremental sales to Cybex," said Aglialoro in a statement.
The company continues to control costs, reducing second-quarter SGA by more than $1 million, or 10 percent, compared to the 2008 second quarter.
It noted that steel costs declined in the second quarter, but it was anticipating a greater impact on margins in the next quarter due to the reduction in steel costs than it realized in the second quarter.
In addition, Cybex's intended re-entry to the retail market has been marked by fits and starts.
"We keep trying to saddle up that horse,” Aglialoro said. He noted the first Arc Trainer for the home had problems so the company is trying again, though now is not the best time due to the financial situation's effect on retailers. He said the company was looking at other ways to reach the consumer, including big box and other retail and may not use a middle man, adding that the company would have an announcement soon for a potential 2010 debut.
Cybex also said it is in violation of certain financial covenants in its loan agreements and is negotiating with its banks, but anticipates receiving waivers for these violations. On the July 23 call, Aglialoro said the company is in non-compliance with two banks: One had already verbally agreed to a waiver, and the company he said was confident the other would do the same.
Nevertheless, Aglialoro said it is a 40-percent to 60-percent chance the company will have a profitable fourth quarter this year.
"As the tide rises, all boats go up," he said, "but I'm looking to take some market share from our competitors since we make better products."
Q2 sales up, profit down for Life Time Fitness
Life Time Fitness (NYSE: LTM) said a membership increase boosted its revenue for the second quarter, but its profit was down from a year earlier.
Net income dropped 7.9 percent to $18.3 million, or $0.46 per share, compared with $19.8 million, or $0.50 per share, a year earlier.
Revenue was up 10 percent to $212.5 million from $192.4 million a year earlier as the company focused on membership growth and retention.
EBITDA grew 6.7 percent to $61.2 million from $57.4 in 2008.
Looking forward, the company adjusted upward expectations for next year, saying it now expects earnings for 2010 to reach $67 million to $71 million, an increase from the previous $62 million to $68 million range. The earnings per share range is now between $1.65 and $1.75, up from the previous $1.55 to $1.70. Revenue is expected to be $830 million to $860 million.
Hibbett hires new VP of merchandising
Hibbett Sports (Nasgaq: HIBB) said Rebecca Jones will join the company in August as vice president of merchandising.
Jones is currently vice president/general merchandise manager at Jo-Ann Fabric and Craft Stores. Prior to joining Jo-Ann Fabric in 2003, she served as vice president/divisional merchandise manager at Wal-Mart Stores from 1999 to 2003.
She began her retail career at Fred Meyer Stores in 1982, serving in various operations, planning, buying and merchandising positions, including vice president/divisional merchandise manager from 1997 to 1999.
Finish Line co-founder retiring
Finish Line (Nasdaq: FINL) said co-founder and board member David Klapper is retiring and will be succeeded by Norman Gurwitz. Klapper has been a Finish Line board member since 1982.
Gurwitz serves as an Emmis Communications adviser. He will join Finish Line's audit and compensation committees, with the term on those committees ending next year.
The company also declared a regular quarterly dividend of $0.03 payable on Sept. 15 to shareholders of record Aug. 28.
--Compiled by Wendy Geister
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