Cybex to Change Pricing in 2010

MEDWAY, MA — As the health club market continues to struggle, Cybex International, Medway, MA, is increasing its focus on markets beyond health clubs and changing its pricing, according to John Aglialoro, Cybex CEO.

Aglialoro noted the changes last month in a third quarter financial call with shareholders and analysts.

“We are going to adjust our list prices according to value,” Aglialoro said. He added that Cybex is competitive in the treadmill market, and the company's Arc Trainer was superior to ellipticals, something that would be reflected in the products' list prices.

“We're going to approach each of the products according to value,” he added. “Where we see a disparate pricing like the Arc Trainer vs. the ellipticals, we're going to price accordingly. We're going to sell for value, and that will give us a lot of flexibility to provide good pricing for the customer but within a balance we can handle.”

The pricing will extend to the strength side, too.

“We're going to price some of our strength equipment well above the competition based on value,” Aglialoro said, noting the company's new Bravo Functional Trainer, which he said had done well in some university research tests. “If we find ourselves locked in to where our value is not as good, we will lower list prices… . We need to separate ourselves from the competition based on the work and products we fashion with our engineering and our design, so that's what we're going to do.”

Aglialoro also noted that Cybex would focus more of its attention on the government, military, condominium and university markets as those markets expand. During the past 10 years, he said that health clubs went from being 85 percent of the market to now being about 50 percent of the market. The growing side of the market is now in the military, government/municipalities (fire and police departments) and universities.

“So we see that the changing customer base is something we need to respond to,” he said.

Aglialoro added that in the past 10 years, 80 percent to 90 percent of the revenues were coming from the United States market, but now the international market is opening up more, so the company will also expand its focus internationally.

Both North American and international sales were down for the company in the third quarter, but domestic sales were down 24 percent while international sales were down 6 percent.

Cybex's third quarter 2009 net sales figure was $29 million compared to$35.8 million for the same period last year. Cybex had net income for the quarter of $0.1 million compared to $0.3 million during the corresponding period last year.

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