Fitness financials: Gaiam swings to Q1 net loss, plus Iconix, adidas, Sport Chalet

Gaiam swungs to a Q1 net loss, Iconix saw sales drop 9 percent in Q1, adidas saw its Q1 profit plummet 80 percent, and Sport Chalet amended its credit facility and released preliminary Q4 results.

Gaiam swings to Q1 net loss

Gaiam (Nasdaq: GAIA) swung to a loss in the first quarter battered by costs from closing an unprofitable business and large reductions in payroll and related severance payouts. On an annual basis, the company said cost savings generated by these measures will be about $10 million.

Net loss for the quarter was $3.1 million, or $0.13 per share, compared to net income of $2.2 million in the same period last year.

Revenue for the first quarter ended March 31 fell 14.2 percent to $55.9 million from $65.2 million recorded in the same period last year. The company said the drop was from a variety of reasons, including a decrease in consumer spending, closure of businesses and conservative retail buying throughout the quarter.

Gross profit decreased to $31.0 million, or 55.4 percent of revenue, from $41.0 million, or 62.9 percent of revenue, in the comparable quarter last year. The company said the change in gross margin reflects its investment in the lower margin solar business, and the effect of higher deductions and allowances to retailers.

Selling and operating expenses dropped 2.8 percent to $33.9 million from $34.9 million during the same quarter last year, partially reflecting recent cost control initiatives.

Operating loss for the first quarter of 2009 was $6.2 million compared to an operating gain of $2.7 million in the same quarter last year.

Iconix sales drop 9 percent in Q1; raises guidance on acquisition

Iconix Brand Group (Nasdaq: ICON), parent of Danskin Fitness, posted a 9-percent drop in first-quarter sales and said it has purchased a 50 percent share in Hardy Way, maker of the Ed Hardy brand. The acquisition, and the possibility of additional acquisitions later in the year, led Iconix to raise its 2009 forecast.

For the quarter ended March 31, Iconix revenue was down 9 percent to $50.5 million compared to $55.7 million in the first quarter of 2008.

Net income dropped 5 percent to $15.6 million, or $0.26 per diluted share, versus $16.5 million, or $0.27 per diluted share, in the prior year quarter.

EBITDA for the first quarter was $36.3 million, a 6-percent decrease as compared to $38.8 million in the prior year quarter. Free cash flow for the quarter was $29.8 million -- down 8 percent from last year's $32.6 million.

Looking ahead, the company now expects to earn between $1.30 a share and $1.35 a share, up from its earlier view of $1.20-$1.30 per share. It's also raising its 2009 revenue guidance to be between $218 and $225 million compared to its previous guidance of $210 to $220 million.

Q1 profit plummets 80 percent for adidas

adidas (ADSG.DE) said its first-quarter operating profit fell almost 80 percent to EUR 58 million (USD $77.5 million), hurt by higher costs in emerging markets and rising restructuring costs at U.S. brand Reebok.

First-quarter sales were EUR 2.58 billion (USD $3.45 billion). Its operating margin narrowed to 2.2 percent from 10.8 percent a year earlier.

The company said it will close regional offices in Europe and Asia to help save EUR 100 million (USD $133.7 million) after mounting costs at its Reebok brand. It added that it could also close underperforming retail stores.

adidas anticipates full-year 2009 earnings per share breaking even in the first half of the year, then in the second half, earnings would turn significantly positive -- although remaining lower than a year earlier.

Overall, it said 2009 margins, net income and earnings per share would decline due to higher operating costs. Group sales would drop at up to mid-single-digit rates.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of May 5.)

Sport Chalet amends credit facility, releases prelim Q4 results

Sport Chalet (Nasdaq: SPCHA and SPCHB) said has amended and expanded its existing credit facility with Bank of America, N.A., giving the company additional financial flexibility. It also released early earnings results for the fourth quarter and 2009 fiscal year.

Under the terms of the amended credit agreement, the company's availability increases up to an additional $10.0 million until October 2010. The amendment increases the revolver limit by more than 20 percent to $55.0 million from January to August and also allows for seasonal advances up to $75.0 million from September to December.

Also, Sport Chalet released preliminary financial results for Q4 and the 2009 fiscal year, saying its results reflect the difficult macro environment that began in the western markets in which it operates.

The company expects to report fourth-quarter net sales of $84.5 million compared to $96.8 million in the same period of the prior year. Comparable store sales declined 18 percent. Its net loss will be in the range of $10.4 million to $11.0 million, or $0.73 to $0.76 per diluted share, compared to a loss of $2.8 million, or $0.20 per diluted share.

For fiscal 2009, Sport Chalet anticipates net sales of $372.5 million compared to $402.5 million in the prior year. Comparable sales declined 13 percent from fiscal 2008. Its net loss will be in the range of $51.5 million to $52.1 million, or $3.58 to $3.61 per diluted share, versus $2.1 million, or $0.15 per diluted share, last year.

The company said in a statement: "To date in fiscal 2010, the company's sales trends have improved compared to those in the last half of fiscal 2009. Sport Chalet's sales and operating margin are exceeding its plan established with its lenders."

Sport Chalet will report full financial results in early June.

--Compiled by Wendy Geister

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