Life Fitness, Mettawa, Illinois, reported a 7.8 decrease in first quarter 2019 net sales ($225.2 million), according to financial earnings released by its parent company, Brunswick Corp., on April 25. It also shared that the spin-off of Life Fitness and other fitness brands from Brunswick will now occur in the second quarter instead of the first quarter, as previously indicated.
The decrease in first quarter 2019 revenue marks the brand's second consecutive quarter of revenue decline. Brunswick CEO David Foulkes said this revenue decrease reflected lower sales to value-oriented clubs along with softness in select global markets.
International sales represented 49 percent of the quarter's business ($110.1 million). However, this was a year-over-year decrease of 10 percent.
Notably, the company also reported $139.1 million in operating losses during the quarter. This compares to $11 million in operating earnings during the same period in 2018.
The earnings report states: "[This] included $138.3 million of restructuring, exit, integration, and impairment charges, mostly related to an impairment of goodwill resulting from a re-evaluation of the fair value of the fitness reporting unit, which was informed by significant progress made on the sale process, and $1.7 million of separation costs."
In March 2018, Brunswick announced its board of directors had approved a spin-off of the company's Life Fitness Division into an independent, standalone, publicly traded company, temporarily known as FitnessCo. The division includes the Life Fitness, Cybex, SCIFIT and Hammer Strength brands.
Brunswick had previously indicated the spin-off would occur during the first quarter, but Foulkes said the company is now expecting to complete the split by the end of the second quarter.
"We have made significant progress on separation and are very encouraged by the strong level of buyer interest in sales process," Foulkes said during an April 25 earnings call. "Consequently, while we continue to maintain our preparedness for spinning the business, we have confidence that we will be in a position to announce a sale of the fitness business as expeditiously as possible in the second quarter."
In October 2018, Brunswick announced the creation of a management board that will oversee the corporation's spin-off of Life Fitness as well as and the appointment of Jason Worthy as president of Life Fitness, replacing Jaime Irick.