Keys Fitness has acquired the Image Spa division from Icon Health & Fitness for $6.6 million. Â
The deal, which is expected to double Keys' revenues to more than $100 million, will operate as a separate Keys division called Keys Backyard, according to Tom Womack, a spokesperson for the Garland, Texas-based, company with a full-line of exercise equipment, fitness and gym accessories and apparel.
"Keys sees this as an opportunity to get into another segment of the industry that it was not able to address previously," Womack told SNEWSÂ®. "We see this as a nice complement to the home fitness market."
Womack said Keys sees the addition of what is the No. 3 spa manufacturer in the country -- also Home Depot's No. 1 brand, according to Womack -- as a nice complement to its line. The line is distributed through Wal-Mart and Costco, among others. Icon, however, apparently saw it differently.
"The outdoor recreation equipment operation was not making a positive contribution to earnings and required substantial capital," Colleen Logan, Icon vice president of marketing, told SNEWSÂ®. "It is just not a part of our core business going forward."
Keys will move the new spa division from its current Mesquite, Texas, home in mid- to late summer after subleasing the current space from Icon, which had housed the Image Spa division along with Icon's light exercise product division. Icon recently announced the move of the light exercise products division (called ICON Fit Elements, as of Jan. 1, 2005) to Logan, Utah.
The company also announced in late September it had pulled the plug on its Jumpking trampoline subsidiary, which was to be phased out by late this year. That division was also based in Mesquite, Texas. At the time of that announcement, an SEC filing by Icon stated the company was taking the action "as a result of management's continuing review of its business strategies, plans and operations."
In a quarterly earnings call with analysts and media on Jan. 13, Icon CFO Fred Beck said the two businesses in the last six months had realized $84 million in sales, but also had an EBITDA loss of $8.2 million and demanded a working capital investment of $54.5 million. Beck said the businesses were losing money, and therefore the company made a decision to "get out as quickly as it can" rather than take additional losses while drawing out an exit.
Beck said the company is laying off about 1,000 people between the two, dropping total Icon employees to about 4,000.