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Today's news...6/2/05

JUNE 02, 2005 -- Stride Rite Buying Saucony For $140 Million Net

The posters on Saucony's Yahoo! message board were right. Stride Rite entered into a definitive agreement to acquire Saucony for $23 a share. This amounts to approximately $170 million. Existing cash at Saucony brings the net transaction value to approximately $140 million. In its past FY, Saucony sales were $166.7 million. The company slipped in 1Q05 as revenues were down 109% and net profit off 24.6%. The company failed to spot trends early enough.


The transaction is expected to close in the summer of and is subject to regulatory approval, approval by the holders of at least two-thirds of Saucony's Class A shares and the holders of at least two-thirds of Saucony's Class A and B shares voting together as a single class, and other customary closing conditions. Certain of Saucony's senior executives and their affiliates representing approximately 49% of Saucony's Class A common stock and 25% of Saucony's combined Class A and Class B shares have agreed to vote in favor of the merger. Stride Rite has requested that CEO John Fisher serve as a consultant for about a year following the closing. Last September, Saucony gave golden parachutes to its top five people in the event of a sale.


Keen Founder Working On Etonic Relaunch

Etonic Worldwide will have a new line of running and walking styles ready to launch in July 2005 designed by consultant Martin Keen, the original designer of the very successful Keen footwear brand. The shoes will begin shipping to retailers in January 2006. The line features performance running and walking products that combine design with high-end materials and Etonic proprietary technologies.

Tom Seeman, Etonic CEO, confirmed that Etonic has been preparing since last year to bring the running and walking divisions in-house. "At the time of our decision we notified our licensee Kinetic Sports, allowing them ample time to phase out of the business and of course, giving us time to develop our 2006 line. Strategically, we can now leverage our resources and build a stronger global brand." The move unites the running and walking shoe division with Etonic's high profile golf business and newly launched bowling line.

The company has tapped former New Balance executive Gary Siriano to lead the newly formed division. Siriano brings 24 years of product development expertise back to Etonic where he worked from 1990-1999. "Our initial development builds on Etonic's heritage in the technical categories of Stability Cushioning and Motion Control," said Siriano. "Martin and I both enjoy a strong understanding of the brand and our history of innovation that has led the market."

Kinetic Sports' license, signed in 2000 with Etonic's former owner, Spalding Sports Worldwide, will end on December 31, 2005, with an inventory sell-off period running to mid-2006.


Cabela's Balks At Revealing Terms Of Texas Aid

Cabela's is getting financial benefits from the state for its new Ft. Worth store. But what is the value of the benefits it has been receiving is a mystery. According to the Austin American-Statesman, Cabela's has filed suit vs Texas Attorney General Greg Abbott, claiming release of the information would "cause substantial harm to Cabela's." It also wants details of the economic impact of its stores to remain undisclosed, claiming the Texas Public Information Act does not apply to information regarding government deals.


According to the Austin American-Statesman, the suit, filed in state district court, follows a request by the newspaper for documents relating to $600,000 promised to Cabela's from the Texas Enterprise Fund.


ispo & Surf Expo In Tradeshow Pact

ispo formed a joint venture with Surf Expo. The details of the cooperation agreement will be discussed during the ispo summer 05 in Munich, as well as at the Surf Expo, held from September 15-18, in Orlando. "This cooperation of Surf Expo and ispo will benefit the board sports industry, meaning, for example, that US customers visiting Europe and ispo visitors coming to Florida will be offered VIP treatment; furthermore appointments and marketing measures will be discussed," said Dieter Tremp, US senior associate. The new partnership will ensure that the interests of all parties among the board and beach segments on both sides of the Atlantic are protected. The segments contribute $3.5 billion to the board sports industry each year. The Surf Expo and the board_ispo will offer an extensive service package to benefit exhibitors and retailers. A similar pact between ispo and Outdoor Retailer never worked out.


1Q Finish Line Sales Hit $291 Million

The Finish Line reported 1Q net sales of $291.2 million, an increase of 13%. Comp-store net sales for increased 2% on top of a 14% increase reported for the comparable 13-week period last year.

The net sales include the sales of Man Alive, a wholly owned subsidiary, which was acquired on January 29, 2005. However, the net sales of Man Alive are not included in the comp-store net sales for either period reported.

COB/CEO Alan Cohen stated: "We are pleased to report our tenth consecutive quarterly comparable-store sales gain. The 2% gain for the quarter was on top of a combined two-year comparable increase of 28%. Sales were lead by premium product including new technologies and marquee shoes from our brand partners and resulted in an 8% increase in the average selling price of footwear and improved product margins for the quarter. Our inventory level remains on plan and is expected to be up 2%-4% on a comparable per-square-foot basis and fresher than one year ago.

"These results, going against our most difficult quarterly comparisons for the year, give us positive momentum as we enter the second quarter and prepare for the important back-to-school selling season."

The company expects that diluted 1Q EPS will be in the guidance range of 24v to 26¢ per share. For 1Q04, it reported 21¢. During 1Q, the company opened 28 new Finish Line stores, remodeled seven existing stores and closed one store. It also opened one Man Alive store, a new prototype, during this period. For FY06, the company plans to open 70 new Finish Line stores, remodel 25 existing stores and close three to five stores. Additionally, it plans to open 10-15 Man Alive stores during the year. As of May 28, 2005, it operated 625 Finish Line stores compared to 550 at May 29, 2004. In addition, Finish Line store square footage increased 12% to 3,547,000 square feet compared to 3,164,000 square feet at May 29, 2004. As of May 28, 2005, Man Alive operated 38 stores totaling 107,000 square feet.


Pacific Sunwear of California reported that total May sales were $80.7 million, an increase of 11.3% over total sales of $72.5 million. Total company same-store sales increased 0.4% during the same period. By concept, PacSun same-store sales increased 0.5% and d.e.m.o. same-store sales decreased 0.6%. Total sales for the first 17 weeks of FY05 were $360.6 million, an increase of 13.4%. Total company same-store sales increased 2.4% during the same period. By concept, PacSun same-store sales increased 2.4%, and d.e.m.o. same-store sales increased 2.4%.


Shoe Carnival reported May sales increased 11.5% to $48.0 million. Comp-store sales increased 7.1% in May 2005. Sales for the first four months of 2005 increased 10.7% to $208.7 million. Comp-store sales increased 5.9% for the seventeen-week period. Based on the strength of May sales, the company now expects comp-store sales to increase between 3% and 5% in 2Q05. Previously, the company had expected an increase of between 2% and 4%.


Zumiez, a leading specialty retailer of action sports-related apparel, footwear, equipment and accessories, today announced that total net sales for the four-week period ended May 28, 2005 increased 31.3% to $10.7 million. The company's comp-store sales increased 10.2% for the past month, versus a comp-store sales increase of 6.9% in the year ago period.


Big 5 Sporting Goods said the Nasdaq Listing Qualifications granted the company an extension until August 12 to file its Form 10-K for its past FY and its Form 10-Q for its first quarter this year and to continue the listing of the company's common stock on the Nasdaq National Market pending such filings. As previously announced, Big 5 is not in compliance with Nasdaq requirements for continued listing as a result of its failure to file with the SEC its FY04 Form 10-K and its 1Q05 Form 10-Q. Its common stock is therefore subject to delisting from the Nasdaq National Market.


Nike confirmed to ESPN.com that it "no longer has a relationship" with Jason Giambi. He has been seen wearing Mizuno, but there is no indication of a contract.


Camillus Cutlery selected Bear Enthusiast Marketing Group as its agency if record for its four brands: Camillus, Western Knives, CUDA and Becker Knife & Tool USA.


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Quick links: One-click access to topics in this article.

Categories
Sporting goods industry
Inventory
Apparel manufacturing
Same-store sales
Stores

Companies
Saucony Inc.
Stride Rite Inc.
Saucony's Class A
Surf Expo
The Finish Line Inc.

Concepts
same-store sales
Finish Line
net sales
comp-store sales
square feet

People
Gary Siriano
John Fisher
Martin Keen
Tom Seeman
Greg Abbott





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