The dust of two months of disarray in the mid-Atlantic and Northeastern fitness retail markets has started to settle -- but not without even more sudden changes in the last week.
What the state of the region was:
>> Operating as LFI Holding, Ron Mendola of Key2Fitness with his team that included Paul Bastianelli, former Leisure Fitness CFO and strategist, had bumped elbows with the Florida-based Busy Body/Gyms To Go (GTG) team over the D.C.-area markets left vacant after the involuntary Ch. 7 bankruptcy filed against Leisure Fitness in mid-September. Both LFI and GTG had decided to roll up their sleeves and take on the area, with Precor -- left without a retailer -- going with GTG. (Click here to see a Nov. 7, 2008, SNEWS® story, “LFI asserts plans to open asap in mid-Atlantic; Gyms To Go ready to march into region too.”)
>> The HEST fitness team out of Texas, now going by its corporate name “The Fitness Group,” had decided to move into the Northeastern market with the license to use the Precor Home Fitness brand as its retail moniker. Management was already unpacking and moving into spaced formerly occupied by one of Precor’s past retailers in the area, Total Fitness, which had gone dark in late spring. (Click here to see a Nov. 17, 2008, SNEWS story, “Precor partners with HEST team for Precor Home Fitness stores in Northeast.”)
>> Meanwhile, FHI’s Omni Fitness stores in the region began holding store closing sales upon court approval and some doors have been shuttered as a part of that company’s Ch. 11 bankruptcy reorganization. (Click here to see a Nov. 7, 2008, SNEWS story on the ongoing FHI process, “Court allows FHI to move ahead on store closing sales.”)
What the status of the region is now:
>> Gaining Leisure’s tangible and intangible assets and leases from the U.S. Bankruptcy Court, District of Delaware, over GTG, the Mendola LFI group has now re-opened eight of the former Leisure Fitness stores under their management as of Nov. 20. The stores, still using the Leisure name and staffed mostly by employees from the old Leisure Fitness, that opened included Tyson’s Corner, Va.; Annapolis, Md.; Columbia, Md.; Wilmington, Del.; Newark Del.; Bear, Del.; Montgomeryville, Penn.; and Ardmore, Penn. Bastianelli told SNEWS that the Rockville, Md., store should be open soon and the group could open two others before the end of the year. There’s “a lot going on right now,” he said in an email on Thanksgiving morning after he had scrambled earlier in the week to place advertisements in area media prior to the Thanksgiving kick-off of holiday shopping.
>> The Florida GTG group on Nov. 19 pulled out of its plans to move quickly into the area, citing the need to continue to focus on its current region.
“Based on the economic conditions and the ever-changing environment, we decided it was best for our core business to pull back and not hold up the capital for further growth potential down the road,” co-owner Carlos Vazquez told SNEWS.
Vazquez had previously announced plans to open two or three stores by Thanksgiving and up to six this year with the support of Precor.
“We feel good about the decision,” Vazquez added, noting for now the company was going to stick to its stores in Florida and Georgia.
>> Meanwhile, the newly dubbed Precor Home Fitness stores on the East Coast have started to open, including the one in Framingham, Mass., that SNEWS had photos of in its Nov. 17, 2008, story. Per a reporter on the scene, a “yes, we’re open” banner had been hung as of Nov. 25, but boxes of GoFit accessories sat stacked on the floor partly unpacked in front of a nearly empty slat wall. The smattering of Precor equipment seen a week earlier remained similar except the addition of a home gym and a couple of pieces now in front of the show windows. Click here to see a Nov. 19 story, “The Fitness Group now official umbrella for Precor Home Fitness, Texas Home Fitness, HEST Fitness,” and click here to see a Nov. 17, 2008, story with photos, “Precor partners with HEST team for Precor Home Fitness stores in Northeast.”)
>> But that still left Precor without mid-Atlantic area retailers. Enter The Fitness Group -- again. Added to its stores in Texas and (newly opened) Northeastern branches was now going to be a new area: Precor Home Fitness (PHF) stores in the mid-Atlantic region since the new Leisure Fitness, led by Mendola, does not now sell Precor.
This spreading out across the country from Southwest to Northeast to mid-Atlantic means The Fitness Group will soon have stores per its website (http://mytexashomefitness.com) in Texas, New York, New Jersey, Maine, Massachusetts, Vermont and Connecticut. The site still doesn’t list the mid-Atlantic areas of Virginia, D.C., Maryland and Delaware, some of which it will also now take on -- again with the Precor Home Fitness name.
“Precor Home Fitness is a licensed trademark and brand asset, and is licensed for use in specific markets,” Precor spokesman Jim Zahniser told SNEWS. “We piloted the concept in the Seattle area with Scott (Egbert) and are seeing how it applies in other markets.”
Amer Group filed for the trademark registration in May 2005, and was granted the trademark in July 2006. Egbert opened his first Precor Home Fitness stores in the Seattle area in 2005 after buying the area’s Fitness Showcase stores. (Click here to see a Jan. 5, 2005, SNEWS story, “Egbert buys Seattle-area Fitness Showcase; stores to become Precor Home Fitness.”)
The Fitness Group endeavor is led by former longtime Precor manager Mike Connolly, who as of Nov. 20 no longer works for Precor. Most recently, he had been the Northeastern commercial rep.
Precor realigns distribution with PHF and Sport Chalet
For Precor, Zahniser explained, the PHF stores are a way to step away from typical fitness retail with equipment lined up all in a row: “One of the great values of the Precor Home Fitness model is that it ensures that Precor products will be presented in a highly branded, consultative environment, with fewer SKUs. It can be seen as an evolution of what’s proven to be one of the more successful retail models -- both for retailers and Precor.”
So far, the PHF stores will remain in the Seattle area, while The Fitness Group will take on the name in Dallas and Houston, Texas, regions, as well as in the Northeastern and mid-Atlantic areas.
In addition to the PHF stores, Precor has now also opened Sport Chalet in the California, Arizona and Nevada markets as its exclusive retailer, returning to its early years in consumer products when it sold certain equipment in large sporting goods stores. Zahniser noted a “history of distribution in that channel.”
“Of course, this isn’t to say that all sporting goods stores would be a good fit,” Zahniser told SNEWS. “Sport Chalet is differentiated by going deep into specific activities -- their investment and market presence in scuba is the case in point.
“Also, Sport Chalet’s market footprint of 55 stores allows us to quickly recharge the channel in areas where we needed to rebuild,” he added, referring primarily to its sudden lack of distribution in those areas due to FHI’s bankruptcy affecting its Busy Body Home Fitness stores in the West.
However, many of the Sport Chalet stores won’t necessarily get much Precor equipment until what it has is sold off, vacating floor space, per what SNEWS learned when a reporter called a Sport Chalet store in California. We were told that only the new stores, such as one in Los Angeles and Concord, Calif., would have the full array soon.
“We’ll be getting every single treadmill and elliptical they have,” said a manager, noting 23 SKUs, but maybe not for holiday. “We’re trying to clear out what we have now.”
He did politely point a customer to an area Busy Body store, where they were closing out Precor equipment, in case the customer wanted to get it sooner rather than later. He did, however, add that if the person found something he or she liked, they could likely get it shipped for free to his store, where the customer could pick it up.