Fitness financials: Nautilus to sell commercial business unit, plus Iconix, Big 5, Nike

Nautilus announced it would sell its commercial business unit, Iconix Brand Group lowered its full-year earnings forecast, Big 5 Sporting Goods said its third-quarter earnings would be up, and Nike said its Q1 profit was flat while revenues were down.

Nautilus to sell commercial business unit

Nautilus (NYSE: NLS) said it is putting its commercial business unit on the sales block and listing the related assets as discontinued operations in its third-quarter results as part of a restructuring plan to cut costs and focus on its direct-to-consumer and retail businesses.

CEO Edward Bramson said in a statement that the divestiture would help to improve operating margins, utilize capital more efficiently and focus the organization on the higher-growth consumer fitness business. It plans to record a loss on the value of the assets in the third quarter.

"Our business model and operations are now positioned to place greater emphasis on the brands in our direct-to-consumer and retail businesses and will enable us to better leverage our restructured consumer operating model," added Bramson in a statement.

Those assets include a manufacturing plant and three warehouses in Virginia; the StairMaster and StepMill brands; the commercial indoor cycling line; the commercial strength and cardio equipment including the Nautilus ONE strength line. It has hired Robert W. Baird & Co. to help find a buyer.

The company reported it keep the Nautilus, Schwinn and Universal brands as part of its consumer retail business.

Iconix reduces full-year guidance

Iconix Brand Group (Nasdaq: ICON), parent of Danskin Fitness, lowered its full-year earnings forecast partly on the transition of another brand's license to a new licensee.

The company now anticipates adjusted profit in a range of $1.17 to $1.22 per share, down from its prior guidance of $1.30 to $1.35 per share.

Iconix said the Rocawear license transition would likely hurt its prior earnings outlook by about $0.04 per share. The company also said a June equity offering that included 10.7 million shares being issued, which increased its Sept. 30 share count to 73.5 million from 62.8 million, would affect earnings by about $0.12 per share.

The company reduced its full-year revenue guidance to a range of $215 million to $220 million. Its previous outlook was for sales of $223 million to $230 million.

For the third quarter, Iconix forecasts adjusted earnings of about $0.26 to $0.28 per share with revenue in a range of approximately $53 million to $56 million.

Although Iconix cut its outlook, Lazard Capital Markets analyst Todd Slater wrote in a client note that the company still expects decent revenue growth amidst a tough economy. While Iconix assumes it won't have any acquisitions, Slater wrote there's a chance that it may make a purchase and boost results. He lowered his share price target by $1 to $20.

Shares of Iconix dropped $3.54, or 22.4 percent, to $12.26 in afternoon trading. The stock has ranged from $5.11 to $18.30 over the past year.

Big 5 optimistic about Q3 profi

In a preliminary report, Big 5 Sporting Goods (Nasdaq: BGFV) said it expects third-quarter earnings results to be up, explaining that expense control efforts, improved merchandise margins and rising sales are contributing factors.

The company now anticipates net income at or near the upper end of its $0.27 to $0.34 per share guidance. It added that same-store sales grew 1.6 percent in the quarter.

The company expects to issue third-quarter financial results during the first week of November.

Nike's Q1 profit flat, revenue down

Nike (NYSE: NKE) reported a slight rise in profit but a 12-percent dip in revenue for the first quarter as consumers continued to hang onto their discretionary dollars.

Earnings for the quarter ended Aug. 31 were $513 million, or $1.04 per share, versus $510.5 million, or $1.03 per share, in the same quarter last year.

Revenue for the company fell 12 percent to $4.8 billion.

During the quarter, revenues in North America dropped 5 percent to $1.8 billion. Footwear revenues declined 4 percent to $1.2 billion, apparel revenues decreased 9 percent to $444 million, and equipment revenues were down 5 percent to $98 million. North America earnings increased 10 percent to $411 million.

First-quarter revenue for Western Europe was down 18 percent to $1.1 billion and profit decreased 11 percent to $289 million. Revenue for Central and Eastern Europe declined 33 percent to $286 million, with earnings down 35 percent to $82 million. Revenue for Greater China was down 16 percent to $416 million; profit was up 7 percent to $149 million.

Nike executives said while consumers remain cautious, the company is focused on long-term growth and it will focus on product innovation for growth opportunities. The company has cut jobs, trimmed operations and lowered inventory levels to maintain its profitability during the recession.

The company's future orders fell 6 percent compared to last year. Orders scheduled for delivery from September 2009 through January 2010 total $6.2 billion.

Looking ahead, Nike said it expects overall revenue to be down in 2010, although sales should improve in the second half of the year.

--Compiled by Wendy Geister

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