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Today's news...5/17/05

MAY 17, 2005 -- American Sporting Goods Buys AND 1

American Sporting Goods has acquired basketball footwear and apparel company AND 1. ASG owns Avia, Ryka, Nevados, Yukon, Turntec, NSS and Apex, with revenues in excess of $220 million annually. The acquisition of AND 1 is a strategic fit for ASG as they look to build strength in areas of reaching the young, male consumer as well as reaching an international market base, ASG CEO Kevin Wulff declared: "It complements our multi-brand business model by providing strength to areas within ASG that need it, such as the very large consumer group of teen boys and young adult basketball enthusiasts and our underdeveloped international and apparel business, just to name a few." Seth Berger, current AND 1 CEO, will report directly to Wulff. AND 1 has been on the block for some time without attracting a buyer.

Dick's Takes Profit Hit From Merger Costs

Dick's Sporting Goods reported net 1Q income, excluding merger integration and store closing costs of the Galyan's acquisition, of $12.2 million, or 23¢ per share, as compared to earnings guidance of 18¢-20¢ per share excluding merger integration and store closing costs. This compares to GAAP net income and earnings per share of $10.6 million and 20¢, respectively, and proforma, combined company net income and earnings per share of $5.0 million and 10¢, respectively, for 1Q04.

Including after-tax merger integration and store closing costs of $19.5 million, or 36¢ per share, Dick's reported a 1Q net loss of $7.3 million, or 15¢ per share as compared to earnings guidance of a loss of 19¢-21¢ per share including merger integration and store closing costs.

Total sales for the quarter increased 57% over last year to $570.8 million due to a comp-store sales increase of 3.2%, the opening of new stores, and the inclusion of the former Galyan's operations in this year's quarterly results. Dick's is planning to include the converted Galyan's stores in the comp-store base beginning in 2Q, as the re-branding and re-merchandising effort of all converted Galyan's stores has been substantially completed as of the end of 1Q05.

GSI Will Service General Nutrition's E-Commerce Site

GSI Commerce Inc has signed a multi-year agreement to provide a comprehensive e-commerce solution for General Nutrition Corp, the largest global specialty retailer of nutritional supplements. The agreement calls for GSI Commerce to provide GNC with an e-commerce solution that includes core technology, fulfillment and customer care operations. GNC, which currently sells its products online through a third-party, will open its own online store using GSI's solution.

GNC's new e-commerce business is expected to launch in 4Q. "The migration from our current third-party selling model to a model in which we are taking full control of our direct-to-consumer channel in a way that most effectively capitalizes on our strong brand awareness and existing store base is an important step for GNC," said Joseph Fortunato, GNC EVP/COO.

Everlast Teaming Up With PAL Leagues

Everlast Worldwide entered into an agreement with the National Association of Police Athletic/Activities Leagues, Inc. and will serve as the "Official Boxing Equipment and Apparel of National PAL Boxing" on an exclusive basis. Under the terms of the agreement, Everlast will undertake a cause-related marketing campaign which will involve various retailers and buying groups as well as the production of Everlast/National PAL Boxing co-branded merchandise to increase awareness and fundraising efforts for the more than 350 PAL Chapters nationwide. Everlast will provide boxing gloves, headgear, shoes as well as boxing apparel (including trunks, jerseys, robes, warm-ups, etc.) for the National PAL Boxing Championships and the elite National PAL boxing team.

On another note, NBC has decided not to renew The Contender reality series in which Everlast had prime product placement.

Callaway Settles With Spanish Importer

Callaway Golf Europe announced that Golf 56, a chain of Spanish golf shops, had formally agreed not to illegally import Callaway Golf products from outside the European Economic Area in exchange for the dropping of a lawsuit filed by Callaway Golf Europe in Granada.

The settlement reached between the parties also resulted in forfeiture of illegally imported products and payment of a substantial portion of Callaway Golf Europe's legal fees.

Callaway Golf Europe filed suit vs Golf 56 based on European law that prohibits such grey market imports from outside the EU. "We are very pleased with this result," remarked Neil Howie, MD of Callaway Golf Europe. "We filed this suit because we believe that our network of Preferred Retailers provides an outstanding experience to consumers, and we did not want the grey market to interfere with a system that is working for us, our customers and consumers. The result vindicates our decision and permits us to continue to offer this high level of service and support." (Source: SGB UK)

Six Companies Get FLA Acceptance

The Board of Directors of the Fair Labor Association voted to accredit six Participating Companies' compliance programs, signifying a satisfactory completion of each company's three-year initial implementation period and a finding by the FLA that the company is in substantial compliance with FLA requirements to implement a rigorous workplace code of conduct in factories making the company's products.

The compliance programs of Adidas-Salomon, Eddie Bauer, Liz Claiborne, Nike, Phillips-Van Heusen and Reebok apparel received accreditation following an extensive performance review based upon independent factory monitoring and verification reports of supplier facilities conducted by accredited external monitors, and a thorough audit of the required monitoring protocols, training programs and auditing systems in their programs.

"Accreditation in simple terms means accountability and verification. FLA's purpose is to cultivate a culture of respect for workers and we do this by holding companies accountable to the workplace code of conduct," said Auret van Heerden, FLA president/CEO. "Collectively these companies are responsible for consumer products made in 2,800 factories in 62 countries. Each of them has worked hard to establish a workplace standards program that complies with the FLA’s considerable requirements. We hope that consumers and others interested in the programs of these companies will consult the FLA's first two annual reports and the tracking charts which report on the monitoring of factories by the FLA’s accredited available through the FLA website and will also look for the FLA's third annual report due for publication later this year."

Adele Simmons, chair of the board of directors, noted that accredited programs are reviewed for re-accreditation every two years. "No participating company ever stops implementing its compliance program, and the FLA never stops evaluating them," Simmons said. "Accreditation is an important milestone, and we congratulate the companies that have achieved this distinction, but we now look to them to achieve even higher levels of compliance and to play leadership roles in an effort to lead further development of conditions for factory workers around the world."

FLA is a non-profit organization that combines the efforts of industry, non-governmental organizations, colleges and universities to promote adherence to international labor standards and improve working conditions worldwide. The FLA Workplace Code of Conduct specifies compliance with forced labor, child labor, harassment, abuse, nondiscrimination, health and safety, freedom of association and collective bargaining, wages and benefits, hours of work, and overtime compensation.

Morgan Stanley Likely To Appeal Coleman Judgment

Morgan Stanley is likely to appear the $604 million judgment vs it as a result of jury trial in Florida. Financier Ron Perelman is suing the investment bank charging he was misled about the financial viability of Sunbeam when he sold his controlling stake in Coleman Co. to Sunbeam for cash and stock. Morgan Stanley was acting as Sunbeam's investment banker during the transaction. Subsequently, Sunbeam went belly up and Perelman's stock was worthless. Morgan Stanley had taken a $360 million reserve earmarked for the suit. But it will likely base its apparel on the decision of the judge who ordered jurors to assume Morgan Stanley might be involved in the inflation of Sunbeam's numbers. This was in response to Morgan Stanley failing to produce internal e-mails related to the sale.

Bob's Stores' 1Q sales were $59.4 million (-3.1%). The chain had an operating profit of $1.3 million in 1Q04, but lost $6.5 million in 1Q05. The loss was in line with plan, parent TJX Companies said. TJX said it was pleased with the improvements in Bob's merchandise margins.

Sportsman's Warehouse leased two 48,000-square-foot spaces. It plans a new branch currently under construction in North Central San Antonio. The new stores are expected to open in August. Bass Pro Shops plans a 200,000-square-foot branch in San Antonio. Academy Sports & Outdoors already has six stores in the market.

VNU Expositions named two new team to the Laguna Beach-based Sports Group. Jim Palmer has been brought on as the new group marketing director for VNU Sports Group which produces Outdoor Retailer Summer and Winter Markets, Health + Fitness Business, Fly-Fishing Retailer World Trade Expo, ASR Trade Expo and Interbike International Bicycle Expo. Malia Alani has been hired as the east coast account executive for the Outdoor Retailer and Fly-Fishing Retailer Tradeshows.


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Sporting goods industry
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Everlast Worldwide Inc.
Callaway Golf Company
Ryka Inc.

merger integration
store closing costs
e-commerce solution
grey market

Kevin Wulff
Seth Berger
Nutrition's E-Commerce Site
Adele Simmons

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