Just One ThingJust One ThingState of the Industry 2008

Health+Fitness Business Expo

SNEWS Survey ResultsSNEWS Survey Results

Retail Sales Up or Down

2005

20052005

2006

2006

2006

2007

2007

2007

0102030405060708090

Up Down Even

200520062007

““We don’t sell the cheapest We don’t sell the cheapest vacuum on the market, but vacuum on the market, but price price

is only one component of is only one component of valuevalue….”….”

“…“…And customers want value.”And customers want value.”-David Oreck

The Perfect StormThe Perfect Storm

Soaring inflation in ChinaWeak U.S. dollarHigh steel pricesSkyrocketing petroleum costsIncreased food/energy prices

A Ray of Hope…A Ray of Hope…

• Small-cap stocks on the rise:

“…If you are going to bet on a recovery, small caps are going to lead the charge.”

Other small company indices soaring, while Dow Jones / S&P show only modest gains.

…… or An Endless Storm?or An Endless Storm?

• Deloitte Research Leading Index of Consumer Spending fell again

“Housing prices … are the biggest drag on the index.”

Also: unemployment up, layoffs continue, wage growth stagnates, home prices fall…

Positive ForcesPositive Forces

National agendaIncreased obesityGrowing inactivityMore awarenessSoaring healthcare costs

Total Retail Sales, Fitness EquipTotal Retail Sales, Fitness Equip

2004

20052006

2007 2008

2003

4.6004.700

4.800

4.900

5.000

5.1005.200

5.300

5.400

5.500

5.600

Year

Tota

l Ret

ail $

$$, i

n B

illio

ns

200320042005200620072008

??

Source: NSGA The Sporting Goods Market in 2008

Home Equipment Sales, 2007Home Equipment Sales, 2007(Total retail value: $5.5 billion)(Total retail value: $5.5 billion)

0.1

0.2

1.9

2.6

4.6

8.4

8.4

10.4

55.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Steppers ($5.5m)

Rowers ($10m)

Wt Benches ($106m)

Hand Wts ($142m)

Free Wts ($251m)

Stationary Bikes ($462m)

Ellipticals ($462m)

Home Gyms ($570m)

Treadmills ($3,048m)

% of total units sold

Source: NSGA “The Sporting Goods Market in 2008”

Total Retail Sales, by ChannelTotal Retail Sales, by Channel

SF SFSF

SFSG SG

SGSG

Net

Net Net Net

Sears

Sears

SearsSears

05

1015202530354045

2003 2004 2005 2007

Year

% o

f dol

lars SF

SGNetSears

Source: NSGA “The Sporting Goods Market in 2008”

Gym Membership DeclineGym Membership Decline

32.8

39.4

44.1

41.5

50

0 10 20 30 40 50 60

2000

2004

2007 (forecast)

2007 (readjusted)

2010 goal

Year

U.S. memberships in millions

Source: IHRSA

SNEWS Retail SurveySNEWS Retail Survey

What categories are you

considering carrying, expanding or learning more about

in the next year?

Answers?Answers?• Backyard swingsBackyard swings• Pool tablesPool tables• SaunasSaunas• BikesBikes• Outdoor furnitureOutdoor furniture• Children’s swingsChildren’s swings• Natural / organic productsNatural / organic products

Source: SNEWS Fitness Retailer Survey 2008

Retail ForecastRetail Forecast

407.3 390.9 385.4 399.6363.5 377.3 389.4

441.1

358.1

0

100

200

300

400

500

May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09

Month

Valu

e, in

bill

ions

USD

Source: Financial Forecast Center (Forecasts.org)

Retail Sales TrendRetail Sales Trend

Source: Financial Forecast Center (Forecasts.org)

What isWhat is Just One ThingJust One Thing

we can do this year we can do this year to “save” the industry?to “save” the industry?

Curly:Curly: One thing. Just one thing. One thing. Just one thing.

You stick to that and everything else You stick to that and everything else don't mean sh--.don't mean sh--.

Mitch:Mitch: That's great, but what's the That's great, but what's the one thing?...one thing?...

““That's what you've got to figure out.”That's what you've got to figure out.”

Just One ThingJust One ThingState of the Industry 2008

Health+Fitness Business Expo