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Today's news...3/11/05

MARCH 11, 2005 -- Reebok Rapped For 50 Cent Connection

An regular columnist at the New York Daily News urged the city and state controllers to sell off their combined 400,000 shares Reebok stock for its support of 50 Cent, whose posse recently got into a shoot-out with another posse at a New York radio station in which one posse member was shot. Errol Lewis took Reebok to task for running ads for the former drug dealer everywhere, including the Cartoon Network. Louis wrote: "I asked Reebok to explain how using 50 Cent as a company rep squares with the firm's Standards of Business Conduct, in which Reebok promises to act 'with the utmost integrity in all that we do.'

"A Reebok spokeswoman responded by describing the Reebok brand as celebrating 'individuality and authenticity,' and stating that '50 Cent epitomizes the position in unique and exciting ways.'

"Wonderful. Reebok's pitchman has one song in which, to the sound of gun clip being racked, he raps lyrics 'come and take your life away.' Advance clips from a new video show a cartoon image of 50 Cent firing away." Lewis also cited Vivendii Universal and Emmis Communications for their support o 50 Cent. The city and state own 500,000 shares of the latter. They also own 976,000 shares of Vivendi. The Philadelphia-based Racial Unity has called for a boycott of Reebok, Lewis said.

Remember the good old days when a shoe company only had to worry if an endorser beat up his girl friend or got caught with a couple of grams of coke? Now they worry if their spokespeople will get shot and killed. But then they can still come out with commemorative shoes. Worse would be if tye spokespeople actually kill someone.

TSA Sales Were Flat In 4Q

The Sports Authority's 4Q sales were $713.8 million compared with $712.0 million in the prior year's 4Q. Comp-store sales decreased 2.2% from last year's results, in line with previous guidance. Net income for the fiscal year ending January 29, 2005 was $47.3 million, or $1.79 per diluted share, excluding the effect of after-tax merger integration costs of $13.3 million, or $0.50 per diluted share, compared to $2.11 per diluted share in the prior year, excluding the effect of after-tax merger integration costs of $26.7 million, or $1.37 per diluted share, and income related to non-recurring events and a related tax benefit of $1.9 million, or $0.10 per diluted share. Pro-forma combined earnings for the prior year was $1.58 per diluted share.

Total sales for FY04 were $2.44 billion compared to $1.76 billion in the prior year. YTD comp-store sales for the combined company decreased 2.0 % from last year's combined company results.

For FY05, TSA is forecasting comparable store sales of approximately 2% and diluted EPS of $1.90 to $1.95, excluding the impact of any lease accounting adjustments, the expensing of stock options and based on 26.5 million diluted shares. TSA is expecting the impact of the lease accounting adjustments to reduce diluted EPS approximately $0.08 to $0.10 for the fiscal year. The company is currently analyzing the impact of expensing stock options in anticipation of the adoption of Financial Accounting Standards Board Statement No. 123R. This analysis is not yet complete however, based on current information, TSA anticipates the impact in the 2H05 to be a reduction of diluted EPS of approximately 2¢-4¢. The company currently expects to open 14 new stores, relocate four stores and close six stores during the year.

Gander Mountain 4Q Sales Rose 30%

4Q04 sales increased at Gander Mountain 30.3% to $237.2 million, an increase of $55.2 million over 4Q03. Comp-store sales declined 5.4% after an increase of 12.2% in the 4Q03 and 12.0% in 4Q02. Net income was $17.6 million, an increase of 42.0%.

Total sales for FY04 were $642.1 million, an increase of 31.2%. Comp-store sales decreased 2.5%, after an 11.5% increase in fiscal 2003. The company reported net income for the year of $800,000, compared with net income of $700,000 in 2003. The company opened 19 stores in FY04 versus 10 in FY03, incurring pre-opening expenses of $9.1 million in FY04 compared to $5.7 million in FY03.

Excluding the impact of lease-related accounting adjustments, the company reported net income for the year of $2.5 million, compared to net income of $1.5 million in FY03. The net expenses related to lease accounting issues totaled $1.7 million in 2004 and $800,000 in 2003, substantially all of which related to pre-opening rent expense for the construction and store set-up periods prior to the lease commencement date.

"We certainly are not satisfied with our bottom-line results in 2004. However, we remain confident in our ability to grow this business profitably in 2005 and beyond," said Mark Baker, president and CEO. "We continue to be excited about Gander Mountain's customer focused culture that is fostered by our more than 5,000 great associates every day."

Apex Foot Health Will Be Aetrex Worlwide

After more than half a century as a factor in the therapeutic footwear and foot care industries, Apex Foot Health Industries is about to launch a rebranding effort that will include changing the company's name and brand structure. Effective May 1, 2005, Apex will be known as Aetrex Worldwide, Inc.

The name change partially stems from the results of the company's Aetrex Performance Footwear line, introduced early last year to various markets. "The success of the Aetrex line became symbolic of a whole new direction for our company," said Larry Schwartz, CEO. "In the twentieth century, we built a brand that represented the highest quality products for foot comfort, therapy and protection. We will continue to offer these fine products, but will also expand our casual and athletic footwear lines, introducing innovative designs that provide the utmost in comfort and performance while satisfying demands for the latest twenty-first century styles."

Aetrex Worldwide will be offering three unique catalogs of products: Aetrex Performance Products, Apex Healthcare Products and Aetrex Technology & Education. The Technology & Education catalog will highlight the high-tech software and Internet products that Apex has introduced to the footwear industry, including iStep digital foot analysis systems and the web site Foot.com, which hosts more than 200,000 visitors per month.

The company has promised that all current Apex products will remain in the lines, including Ambulators, Ariyas, Lyncos, Anti-Shox, and more. In addition, this summer Aetrex will introduce several new athletic styles including new running shoes, hiking footwear and athletic walkers.

Sporting Goods Imports Rise 7.4% In 2004

The dollar value of sporting goods imported into the US increased by 7.5% in 2004. It's the third consecutive year of increased value of sports goods. This is the main finding of SGMA's analysis of the US Commerce Department's statistical data on imports of athletic footwear, jogging/warm-up apparel, and 14 sports equipment categories. SGMA reports that the total declared value of U.S. sporting goods imports for 2004 was $10.426 billion compared to $9.7 billion for 2003.

Total sporting goods equipment imports showed strong growth, up 11.3% in 2004 to total $4.96 billion. Among the major equipment categories, sleeping bags/tents (+26%), gym/exercise equipment (+14.9%), and inflated balls (14.5%) topped the list of growth items. Imports of roller skates (-14.2%), ice hockey (-5.3%) and "other" equipment (-6%) had the largest declines in dollar value.

The sports equipment export leaders are China (58.9%), Taiwan (8.3%), Canada (3.9%), Mexico (3.8%), and South Korea (1.9%). China's share increased from 56% to 59%, slightly less growth than in 2003. Market shares for Taiwan, Canada, Mexico, and South Korea declined in 2004 compared with 2003.

Athletic footwear dollar value totaled $4.4 billion, a 6% increase from 2003. Total athletic footwear pairs imported increased by 4.7% from 394 million pairs in 2003 to 413 million in 2004. The average price per pair increased by 1.2% from $10.52 to $10.65, continuing a trend toward slightly higher prices for a second consecutive year.

China is the dominant exporter of athletic footwear to the US, with a market share of 76.7% of the total dollar value in 2004. China's share has maintained about a three-quarters share since 2000. Indonesia's share fell to 8.8%. Vietnam widened its lead over Thailand for third place with an 8% share and is challenging Indonesia for second place.

The Commerce Department's coverage of athletic clothing and activewear is minimal in relation to the total amount of product actually imported in these categories. But specific import data for jogging/warm-up apparel, such as jackets, pants and sweatshirts is reported. For 2004, the total dollar value for these apparel items was $1.06 billion, a decrease of 2.5% compared with $1.09 billion in 2003.

You may have noticed the US trade deficit rose 4.5% in January. But the day before the numbers were released, The New York Times noted that Chinese textile exports jumped about 75% in January. That's from a Chinese government report, and it does not include apparel shipped via Hong Kong. In January 2004, China shipped 941,000 cotton knit shirts. In January 2005, it shipped 18.2 million. The US Bureau of Labor Statistics reported 12,200 US job were lost during January in the apparel/textile businesses.

AC Research reiterated its accumulate rating on Adidas-Salomon. Merck Finck & Co upgraded the company from hold to buy. The target price has been raised from EUR 124 to EUR 133. Merrill Lynch maintained its neutral rating on Adidas-Salomon, but while raising the EPS estimate for 2005 from EUR 8.33 to EUR 8.49… BB&T Capital Markets maintained a buy rating on Hibbett Sporting Goods, while raising estimates. The 12-month target price has been raised from $31 to $33.

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Cartoon Network
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sporting goods

Errol Lewis
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 Breaking Headlines
Today's news...3/11/05
MARCH 11, 2005

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