Fitness financials: Nautilus sees leap in Q4 profit, shares up on analyst “buy” rating, plus Hibbett, Gaiam, Sport Chalet, Nike, Foot Locker, Costco, Wal-Mart

Fitness financials: Nautilus sees leap in Q4 profit, shares up on analyst 'buy' rating. Hibbett posts 25.1 percent Q4 sales increase. Gaiam repurchases 2.5 million shares. Sport Chalet reports record Q3 results. Nike identifies women's fitness among significant growth categories. Foot Locker Q4 same-store sales drop. Costco reports January sales results. Wal-Mart January sales up 10.7 percent.

Nautilus sees leap in Q4 profit, shares up on analyst 'buy' rating
Nautilus' (NYSE: NLS) fourth-quarter income rose more than sixfold, leaping to $12.9 million, or $0.41 per share, from about $2 million, or $0.06 per share, during the year-ago period. That, plus a "buy" rating on the stock by BB&T Capital Markets, drove up the company's shares 9.4 percent.

Net sales for the three months ended Dec. 31, 2006, were $199.3 million compared to $182.0 million for the corresponding period last year, up 10 percent and the largest single quarter in the company's history.

For the full year, the company generated $681.5 million in net sales compared to $631.3 million in the previous fiscal year, an 8 percent increase. Net income for fiscal year 2006 was $29.1 million or $0.90 per share, compared to $23.0 million or $0.68 in fiscal 2005.

Including pro forma adjustments, 2006 net income was $26.1 million or $0.81 per share, compared to $21.4 million or $0.63 per share in 2005, an increase in earnings per share of 29 percent.

Following the results, BB&T Capital Markets analyst Laura Richardson said in a research note to clients that the results were a "significant recovery," and said Nautilus better managed its product rollouts and operating costs in 2006 compared with 2005.

"We are also encouraged about the company's recent decision to work more closely with a Chinese factory that accounts for about one-third of its overseas sourcing," Richardson said in the note. "Its closer relationship should yield about 5 cents per share in cost savings during 2007." Richardson was referring to news a week earlier that Nautilus was going to acquire its China-based contract manufacturer.

Richardson also praised Nautilus' revenue growth. "Fourth-quarter sales growth was positive in all channels, for the first time in over a year, with more attention to marketing helping in the direct channel and a new leasing program helping in the commercial channel," she wrote.

For fiscal 2007, the company said it expects net sales growth of approximately 10 percent and diluted earnings growth of 20 percent to 30 percent from a 2006 pro forma base of $0.81 per share. For the first quarter of 2007, the company estimates that net sales will be in the $185 million to $195 million range, with expected earnings of $0.18 to $0.21 per diluted share.

Richardson noted that Nautilus' first-quarter earnings guidance is a tad low as analysts expect earnings of $0.21 per share. But she raised her 2007 earnings estimate by $0.09 to $0.99 per share, and upgraded the company to "Buy" from "Hold."

RBC Capital Markets also inched up Nautilus' target based on the report. "We are inching up our target to $19 from $18 reflecting a slightly increased multiple assumption of 16x on our 2008 estimate of $1.20," wrote Ed Aaron. "This change reflects appreciation of the peer group and our view that the earnings outlook is becoming more stable." Aaron also said the earnings were on track.

"We are encouraged that this quarter marks an end to a painful streak of downward estimate revisions," Aaron wrote for RBC. "We view it as a likely indication that an achievable and stable earnings base has been put into place."

In addition, Nautilus' board of directors declared a regular quarterly dividend of $0.10 per common share, payable March 9, 2007, to stockholders of record as of Feb. 20, 2007.

Shares advanced $1.56, or 9.4 percent, to close at $18.20 on the New York Stock Exchange on Feb. 8. The stock has traded between $11.10 and $19.05 during the past 52 weeks.

Hibbett posts 25.1 percent Q4 sales increase
Net sales for Hibbett Sporting Goods (Nasdaq: HIBB) rose 25.1 percent -- $151.2 million versus $120.8 million last year -- in the fourth quarter. Same-store sales increased 5.9 percent for the comparable 13-week period.

For the 53-week fiscal year ended February 3, 2007, net sales increased 16.3 percent to $512.1 million, compared with $440.3 million for the 52-week period ended January 28, 2006. Comparable store sales for the year increased 3.8 percent for the comparable 52-week period of fiscal 2007.

"Our comparable store sales were very strong in the second half of the year with a 6.6 percent increase," Mickey Newsome, chairman and CEO, said in a statement. "In the fourth quarter, activewear, licensed apparel, footwear and team sports equipment were all positive. Comparable store sales were led by youth apparel and youth footwear."

For the quarter, the company opened 25 new stores and closed 2 stores. For the year, it opened 74 new stores and closed 10 stores, bringing the total to 613 stores in 23 states.

In other company news: Hibbett Sporting Goods Inc. just announced that Hibbett Sports, Inc. became the holding company for Hibbett Sporting Goods. The change, effective Feb. 10, means each Hibbett Sporting Goods shareholder will exchange shares on a one-for-one basis for Hibbett Sports stock. The stock will trade under the same symbol on the Nasdaq. The holding company was formed to correct a technical error with respect to certain of the company's shares and to separate the new parent organization from the existing operating business.

Gaiam repurchases 2.5 million shares
Gaiam (Nasdaq: GAIA) purchased 2.5 million shares of its common stock held by Revolution Living for $13.14 per share.

Gaiam said the price of $13.14 a share represented the average share price over the last 90 days. The company's repurchase of the shares reduced the number of its outstanding shares by about 9 percent.

Revolution Living is a unit of Revolution LLC, the investment company started by AOL co-founder Steve Case.

Sport Chalet reports record Q3 results
Third-quarter sales for Sport Chalet (Nasdaq: SPCHA and SPCHB) were up 15.1 percent. The sales growth reflected nine new stores resulting in a $12.1 million, or 12.4 percent, increase in sales on a same-day basis, it said.

Sales for the three months ended Dec. 31, 2006, were $114.7 million compared to $99.7 million for the same period last year. Same-store sales on a same-day basis increased $3.5 million, or 3.8 percent.

Gross profit as a percent of sales increased to 32.5 percent from 31.9 percent primarily as a result, the company said, of the leverage created by increased same-store sales against relatively fixed occupancy costs.

Net income for the third quarter increased 31.4 percent to $4.0 million, or $0.28 per diluted share, compared to net income of $3.0 million, or $0.22 per diluted share, for the third quarter last year.

Selling, general and administrative expenses as a percent of net sales remained relatively flat at 26.4 percent compared to 26.5 percent for the same period last year as leverage created by increased same store sales was partially offset by expenses associated with new stores which take time to reach operating efficiency. Overall, SG&A expenses increased $3.9 million over the year ago quarter primarily due to the additional stores.

Sport Chalet also reported that it plans to open six to eight new stores during the year as well as completing two store remodels. The majority of the new stores will be focused on adding density to current markets, namely Southern California and Arizona. The company also anticipates entering a new market in 2007 with a store opening planned in Utah.

In addition to the store opening initiatives for 2007, the company also plans to relocate four buildings, which currently serve the La Canada Flintridge, Calif., market into a single 45,000-square-foot store in the proposed La Canada Flintridge Town Center in calendar 2008.

Nike identifies women's fitness among significant growth categories
Speaking at an investor conference at Nike (NYSE: NKE) headquarters, CEO Mark Parker and other executives said Nike's connection with consumers and a new focus on six main athletic target areas will drive demand, together with innovative product design. Nike executives added that worldwide revenue could rise 53 percent to $23 billion within five years.

The six segments, called "growth categories," include women's fitness, running, soccer, basketball, men's training and sports culture. The categories, which currently drive 76 percent of the company's revenue, could drive 75 percent of its growth over the next five years, said Charlie Denson, Nike's brand president.

Nike currently holds a 19 percent share in the women's fitness segment, and hopes to build it by developing new products aimed at cardio fitness, strength training, yoga, Pilates and dance.

As part of the shift to more customized offerings to consumers, the company said it would open 100 stores worldwide in the next three years in premium shopping areas, with half of them in the United States.

The stores will be an opportunity to focus on "premium consumer experiences" that will elevate the brand and provide a testing ground for new products, Parker said, which should help to differentiate Nike from competitors.

Foot Locker Q4 same-store sales drop
Foot Locker's (NYSE: FL) fourth-quarter same-store sales dropped 3.4 percent, compared with a rise of 3.9 percent in the year-ago period. Total sales in the three months ended Jan. 27 fell 0.6 percent to $1.55 billion from $1.56 billion last year.

For the year, same-store sales slipped 1.2 percent and total sales came in flat at $5.65 billion.

Foot Locker's fiscal year and quarter ended Feb. 3, making them one week longer than the respective year-ago periods. The company's reported sales figures exclude the extra week, during which it booked $92 million in total revenue.

Costco reports January sales results
Costco (Nasdaq: COST) reported net sales of $5.57 billion for the month of January, the five weeks ended Feb. 4, 2007, an increase of 7 percent from $5.21 billion in the same five-week period last year. Total same-store sales were up 2 percent.

Wal-Mart January sales up 10.7 percent
Wal-Mart (NYSE: WMT) said total net sales for the month of January were $31.693 billion, up 10.7 percent from $28.633 billion the year before. Same-store sales for the month decreased to 2.2 percent from 4 percent in the same period last year.

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