Pardus plans to nominate board members with or without Bally
Pardus Capital Management LP sent Bally Total Fitness Holdings Corp. (NYSE: BFT) a letter Oct. 17 stating that it plans to nominate members to the health club operator's board of directors. Pardus holds a 14.4 percent stake in the company.
Bally's management has interviewed candidates previously proposed by Pardus, which according to the letter to Bally's management is seeking to enhance shareholder value and restore public confidence. "However, as of the date of this letter, no further progress has been made with respect to the proposed candidates," Pardus said in the letter, which was also filed with the U.S. Securities and Exchange Commission.
Pardus, which holds 5 million common shares in its capacity as the investment manager of Pardus European Special Opportunities Master Fund, said it intends to formally nominate candidates at the company's annual shareholder meeting scheduled for Jan. 26, 2006, with or without Bally.
Pardus also expressed concern over a two-month delay to commence a previously announced consent solicitation in respect to Bally's debt securities may signal management's pursuit of alternative transactions. Those transactions are "designed to entrench management" and are not in the shareholders' best interests, Pardus said. It added that Bally should not undertake any asset sales, a sale of the business, equity financings or debt financings until the Bally's restated financial statements are publicly available and a stockholders meeting for the election of directors has been held.
U.S. health clubs revenue up 5.3 percent for Q2
After reviewing stats from a recently conducted survey of 12 mid-size U.S. health and sports club companies, the IHRSA club association said that commercial health club financial performance improved for the quarter ending June 30, 2005, relative to the same period last year.
In the second quarter, the IHRSA Index found that the companies -- representing 139 facilities -- grew their total revenue an average of 5.3 percent to $13.3 million for the second quarter. The participating companies also reported improved same-store revenue for clubs that have been in operation for at least two years, by an average of 5.3 percent to $11.5 million.
The study also showed that the average earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) improved by 16 percent to $3.4 million. As a percentage of total revenue, EBITDAR, was 25.9 percent of revenue for the second quarter of 2005 and 23.5 percent of revenue in 2004.
Survey results for the quarter also showed total membership/dues revenues of $9.2 million, a 4.5 percent change, and total non-dues revenue of $4.14 million, a 7.2 percent change. Also total membership accounts were up 6.9 percent to 37,158, with same-store total membership accounts at 30,608, up 3.5 percent.
The quarterly survey was conducted by Industry Insights for IHRSA.
adidas stands behind 2005 forecast
adidas-Salomon (ADSG.DE) recently confirmed its 2005 profit and sales forecasts and mid-term goals, saying that it still expects new income to increase by 20 percent this year. Sales were expected to see mid-to-high single-digit growth, adjusted for currency effects, it said. The company also reiterated that it expected double-digit percentage net income growth in the medium term following the Reebok acquisition, while sales were expected to grow at a rate in the mid-to-high single digits.
Consumer trends group warns of tough holiday season for retail
With U.S. consumers expected to keep a much tighter rein on expenses, retail companies are looking at a gloomy holiday season and overall fourth quarter, according to consumer-trends tracker America's Research Group. One of the retail gauges -- the Standard & Poor's retail index -- may log its first fourth-quarter decline in nine years, which analysts warn can only be avoided by a warmer-than-usual winter, an easing of crude prices or heightened innovation from retailers.
When September retail sales were reported, chains that sell gasoline, including Wal-Mart Stores and Costco Wholesale, posted better-than-expected sales growth. But several apparel retailers and department stores missed forecasts, and some trimmed profit forecasts as heavy markdowns eroded margins.
Retailers are caught in a Catch-22 situation where their costs, such as transportation costs, are going up and won't be changing in the short term. Meanwhile, their consumers are going to be extremely deal-focused, America's Research Group said. If retailers don't offer strong incentives to consumers during the holiday season, it expects markdowns of as much as 60 percent to 70 percent after Christmas.
Winmark reports more stores, less money
Retail franchiser Winmark Corp. (Nasdaq: WINA), parent of Play It Again Sports, reported a lower third-quarter net income of $926,100, or $0.14 per share diluted, compared to $1.01 million, or $0.15 per share diluted, in 2004. Winmark's revenue for the quarter was $6.3 million, down 4 percent from last year's $6.5 million.
John Morgan, chairman and CEO, said in a statement, "The third quarter saw our franchising business grow the number of franchisees and increase royalties over last year. The leasing business is still in the start-up stage and activity has been mostly limited to building infrastructure."
Winmark has 805 stores in operation and an additional 36 franchises awarded but not open. Of the stores in operation, there were 405 Play It Again Sports as of Sept. 24.
EU authorities approve Amer's buy of Salomon
Amer Sports had cleared another hurdle in its acquisition of Salomon from adidas-Salomon with the approval by the EU competition authorities on the buy-out. The U.S. competition authorities already gave their OK recently. Amer said the transaction is expected to be completed within the next week. The Salomon business segment includes the related subsidiaries and brands Salomon, Mavic, Bonfire, Arc'Teryx and ClichÃ©. According to the agreement, the final price will be set in accordance with net assets as of Sept. 30. Amer Sports and adidas companies said they will cooperate for a maximum period of three years to ensure smooth transition of the businesses.
Retail sales up 0.2 percent in September
U.S. retail sales rose a slightly weaker-than-forecast 0.2 percent in September after car purchases tumbled, but sales excluding autos were helped by higher gasoline prices, the Commerce Department reported. Wall Street analysts forecast retail sales to rise 0.4 percent in September following an upwardly revised 1.9 percent fall in August. August retail sales had initially been reported as a 2.1 percent decline.
Excluding autos, retail sales rose 1.1 percent, compared with expectations for a 0.8 percent advance, building on the 1.0 percent increase in August. Some sources of discretionary spending showed weakness, with clothing sales down 0.2 percent, sporting goods and sales from hobby, book and music stores off 0.9 percent and department stores sales declining 0.5 percent.
Analysts fear high energy prices could sap consumer spending, on top of any negative fallout from Katrina and Rita, although the economic evidence so far has been mixed. The Federal Reserve expects U.S. growth to be held back somewhat in the second half of 2005 due to the storms, but then pick up as reconstruction-related spending kicks in.
Wal-Mart keeps October forecast
Wal-Mart Stores (NYSE:WMT) said it will maintain its October sales forecast, and expects a 2 percent to 4 percent increase in October sales at its U.S. stores open at least a year. It said 10 of its stores remained closed due to Hurricane Katrina, and one from Hurricane Rita. At the height of the storms, the retailer had closed more than 100 stores in each of the hurricane-affected regions.
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