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Fitness Equipment Manufacturers Experience Fourth Quarter Sales Decreases

Overland Park, KS — The economy has taken a bite out of sales for some of the larger equipment manufacturers in the fitness industry, particularly in the fourth quarter of 2008.

Although numbers from Nautilus Inc. were not available as of press time, Life Fitness, Cybex and Precor reported lower sales in the fourth quarter. However, Matrix, which does not report financials on a quarterly basis, reported higher net sales for 2008.

Life Fitness, which is the fitness segment of Brunswick Corp., Lake Forrest, IL, had sales increases in the first three quarters of 2008, but fourth quarter 2008 domestic sales dropped 20 percent to $171.8 million. That fourth quarter drop led to a 2 percent decline in sales for the full year for Life Fitness. In 2008, Life Fitness reported domestic sales of $639.5 million. International sales also slumped in the fourth quarter, dropping 18 percent from the previous year's quarter but increasing 3 percent for the year from 2007.

Cybex, Medway, MA, started 2008 well, reporting that net sales were up in the first quarter of 2008 by 15 percent over the corresponding 2007 period. However, by the fourth quarter of 2008, the sales picture had turned. Fourth quarter 2008 sales were down 12 percent to $39.3 million compared to $44.5 million for the corresponding 2007 period. The company reported a net loss for the fourth quarter of $10.9 million, including an $11.3 million goodwill impairment charge, compared to net income of $3 million for the corresponding 2007 period.

For 2008, the company's net sales were $147.9 million compared to $146.5 million for 2007. The net loss for 2008 was $9.1 million compared to net income of $9.8 million in 2007.

John Aglialoro, chairman and CEO of Cybex, says that he expects first quarter 2009 sales to be below first quarter 2008 sales.

“Fitness clubs appear to be cautious in making expansion investments and have reduced their capital expenditures,” Aglialoro said in a release announcing the financials. “Looking forward, while the company is not certain how long these conditions will persist, we expect sales to rebound as the economy recovers.”

Precor, Woodinville, WA, had a 31 percent decrease in net sales during the fourth quarter 2008 compared to the same period in 2007, according to its Finnish parent company, Amer Sports. For the year, Precor's net sales decreased 24 percent.

“[The] fitness market continued to be a challenge, and Precor performed below expectations,” Roger Talermo, president and CEO of Amer Sports, said in the company's 2008 annual report.

The company's report also noted: “Due to the globally weak macro-economic environment, the short-term outlook for Precor remains uncertain. Many customers are impacted by the tight credit market and are postponing their investments in new fitness equipment. The long-term fundamental drivers of the fitness market remain positive, and Precor is well-positioned for a rapid recovery as the broader economy begins to improve. Precor is focused on strengthening retail distribution in the United States and geographical expansion.”

Matrix Fitness Systems, Cottage Grove, WI, is a private company that does not disclose financials on a quarterly basis, but it did report that its 2008 U.S. sales increased by 25.7 percent over the corresponding 2007 period. Globally, the company's sales grew 25.1 percent over the prior year. However, Matrix would not disclose dollar figures for its sales, nor would it disclose its net income for the year.

Although Matrix experienced growth in 2008 sales, it was slower growth than the company had seen in the previous two years, both of which had triple-digit percentage growth in U.S. sales.

“Much of our domestic growth can be attributed to increased market penetration and our commitment to customer service,” Chris Clawson, Johnson Health Tech North America Corp. president and CEO, said in a release from the company. Matrix is the commercial brand of fitness equipment under Johnson Health Tech North America. “In 2008, we aggressively invested in our marketing efforts and in new product development. The increased marketing and launch of new products has enabled our sales team and distribution partners to further develop our commercial base of clients over the past 12 months.”

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