Fitness financials: Raise for Bally CEO questioned by shareholder, plus Finish Line, Sears

Fitness financials: Raise for Bally CEO questioned by shareholder.Finish Line posts good Q2 showing. Sears' same-store sales down. Wal-Mart reports August sales.
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Raise for Bally CEO questioned by shareholder
A large investment group, which already expressed concern about Bally Total Fitness Holding Corp.'s still-MIA 10-Q filing (see SNEWS® Fitness financials, Aug. 30), has now issued a request that the company delay the $100,000 raise approved for CEO and Chairman Paul Toback. Liberation Investment Group LLC, which owns 6.68 percent of Bally common stock, had recently reprimanded Bally (NYSE: BFT) for not filing its 10-Q on time. Once again Liberation manager Emanuel Pearlman contacted Bally's board of directors, stating he and the group found it disturbing that the board and the CEO had time to address Toback's raise (from $475,000 to $575,000), but still had not filed its 10-Q which he considered a more pressing matter -- all in light of the financial and accounting questions swirling and a pending class-action lawsuit.

Pearlman's Aug. 30 letter included the following:

"This is an extremely sensitive time for the Company, and it is essential that the market have confidence that the current leadership is able to prioritize and intensely focus on enhancing shareholder value. In order to avoid the appearance that the interests of the CEO and the shareholders are not in alignment, I request the Board ask Paul Toback to delay the implementation of his new contract until the Company files its 10Q for the period ended June 30, 2004. I think this request is more than reasonable, especially as many of the shareholders have seen a significant decrease in the value of their investment in the Company over the past year."

He added that he wants to work with Bally to create value for all shareholders. Liberation Investment Group owns approximately 4.5 million shares of Bally common stock.

Finish Line posts good Q2 showing
Second-quarter same-store sales for Finish Line (NasdaqNM: FINL) rose 6 percent, beating analyst estimates that forecast a 5.3 percent increase. Total sales for the quarter ended Aug. 28, 2004, rose 15 percent to $312.2 million from $270.8 million in the year-ago period. Year-to-date, same-store sales rose 10 percent, and total sales were up 19 percent to $570.1 million from $478.6 million. Since the beginning of fiscal 2005, the sporting goods retailer has included Internet sales in same-store sales results, which increased second-quarter and year-to-date figures by 1 percent. Finish Line said it is comfortable with second-quarter earnings guidance of 85 cents to 87 cents per share, compared with analyst consensus estimates of 87 cents.

Finish Line said it expects inventory levels to rise 16 percent to 18 percent per square foot by the end of the second quarter, reflecting the Labor Day calendar shift and the later back-to-school selling season in the Northeast and other markets. During the second quarter, Finish Line opened 14 stores and remodeled six existing stores. As of Aug. 28, it operated 564 stores compared to 510 a year ago, an increase of 11 percent.

Sears' same-store sales down 6.1 percent
Sears, Roebuck and Co. (NYSE:S) reported a worse-than-expected 6.1 percent drop in August sales at stores open at least a year, hurt by lackluster back-to-school sales. The department store chain added that total sales in the four weeks ended Aug. 28, 2004, were $1.91 billion, down 7.1 percent from a year earlier. Analysts had expected a 2.5 percent drop in August same-store sales.

Wal-Mart reports August sales
Wal-Mart Stores (NYSE: WMT) reported net sales for the four-week period ending Aug. 27, 2004, of $21.199 billion, an increase of 8.8 percent over the $19.490 billion in the same four-week period in the prior year. The Wal-Mart division's sales for the four-week period were $14.296 billion, up 7.0 percent over sales of $13.362 billion in the same four-week period in the prior year. Comparable sales for the division were 0.1 percent compared to last year's 6.6 percent.

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