ICON Health & Fitness, Inc.

1500 South 1000 West
Logan, Utah 84321
U.S.A.
Telephone: (435) 750-5000
Fax: (435) 750-3917
Web site: https://www.iconfitness.com

Private Company
Incorporated:
1977 as Weslo Design International, Inc.
Employees: 2,200
Sales: $450 million (2017 est.)
NAICS: 339920 Sporting and Athletic Goods Manufacturing

Based in Logan, Utah, ICON Health & Fitness, Inc., designs, manufactures, and markets home fitness equipment and accessories under several popular brand names. Perhaps best known as the maker of NordicTrack treadmills, the company also sells fitness technology accessories under the iFit label, as well as ProForm exercise bikes, treadmills, and elliptical machines. Other company brands include Freemotion (treadmills and other cardio and strength-training equipment), Weider (weight-based strength-training equipment), HealthRider (home fitness equipment), and Lotus (yoga gear). ICON also sells a range of products under the licensed Gold's Gym label. ICON is headquartered in Logan, Utah, and operates satellite offices in Europe.

ORIGINS AND PREDECESSOR FIRMS

In 1977 two college students started a small import business that would eventually become ICON Health & Fitness. Longtime friends Scott Watterson and Gary Stevenson were majoring in business at Utah State University in Logan, Utah, when they and Bradley Sorenson incorporated Weslo Design International, Inc., under Utah law. According to the company's incorporation papers, its original purpose was to “engage in wholesale and retail sales of clocks, furniture, marble, metals, insulation, and other raw materials and manufactured items, and to engage in export and import sales of such items, and to invest and make investments in real and personal property, and to engage in any business whatsoever.” After graduating from Utah State, the founders expanded their product line by selling wood-burning stoves. To balance the seasonal sales of the stoves, they began selling trampolines and minitrampolines, their entry into the exercise equipment field.

COMPANY PERSPECTIVES

We help people live their best, healthiest lives.

By 1994 Weider Health and Fitness was considering taking Weslo, Inc., and ProForm Fitness Products, Inc., public, but instead it decided to sell the two subsidiaries to Bain Capital, a Boston-based investment firm headed by Mitt Romney, who had ties to Utah through his membership in the Church of Jesus Christ of Latter-Day Saints. Weider initially received $159.3 million in cash while keeping 25 percent ownership. Besides Bain Capital, the new owners included founders Stevenson and Watterson and other executives. They incorporated ICON Health & Fitness, Inc., on November 14, 1994, by combining Weslo; ProForm; Legend Products, Inc.; and American Physical Therapy, Inc., a Weider division. Watterson became ICON's chairman and CEO, and Stevenson served as president and chief operating officer.

Meanwhile, in 1993 the company had begun using television information commercials (infomercials) to sell its products. “Where we once marketed our products exclusively to the retail trade, the introduction of infomercials opened doors for our company to successfully reach the consumer directly,” Watterson explained in ICON's January 1996 newsletter. Its first major infomercial demonstrated the benefits of the ProForm Crosswalk treadmill. By January 1995 ICON's direct marketing program included print, broadcast, and direct-mail operations. Celebrities such as figure skater Peggy Fleming, baseball star George Brett, and National Football League quarterbacks Roger Staubach and Steve Young eventually promoted ICON products in infomercials and various other formats.

NEW PRODUCTS AND CHALLENGES

Product innovations continued to fuel ICON's growth during the mid-1990s. For example, in 1995 the company introduced ProForm Crosswalk treadmills with a trademarked Space Saver feature that allowed home users to store the Crosswalk vertically. In 1996 ICON added 25,000 square feet of office space to its Logan, Utah, headquarters.

Also in 1996 ICON sold bonds to raise $82.5 million, most of which it used the following year to acquire HealthRider, Inc., a Salt Lake City company that sold a popular line of exercise equipment and had more than 250 retail outlets in 33 states. Its founders, Gary H. Smith and his wife, Helen, had in 1990 discovered the HealthRider machine designed by Doyle Lambert. After acquiring the patent rights, the Smiths incorporated ExerHealth, Inc., in 1991, with Gary Smith as the new company's president and CEO. In 1992 ExerHealth began using infomercials to sell its HealthRider, primarily to customers over the age of 40. The company soon added aeROBICRider and SportRider, two lower-priced versions of its original product. In 1995 ExerHealth was renamed HealthRider, Inc., and began international sales using LaForza Limited to distribute its products in Europe. That year HealthRider recorded $250 million in revenues.

In 1997 ICON also acquired Hoggan Health Industries, a 20-year-old exercise equipment manufacturer. Unlike ICON, with its emphasis on home exercisers, Hoggan made equipment for institutional use in rehabilitation and fitness centers. ICON's annual sales were $836.2 million in fiscal 1997. That same year the company faced two challenges. First, in June 1997 the Federal Trade Commission (FTC) charged ICON and three other fitness equipment companies with false advertising that exaggerated the fitness and weight-loss benefits of their machines. While denying any wrongdoing, ICON and the other companies admitted they could not back up any of their advertising claims. They all agreed not to make future claims without valid documentation. No fines or penalties were involved. The four companies settled quickly with the FTC to avoid expensive court actions.

Also in 1997 ICON voluntarily recalled 78,000 ProForm R930 Space Saver Riders after receiving reports of injuries caused by the product closing into the upright storage position while being used. ICON cooperated in this recall with the Consumer Product Safety Commission, which worked with many other companies to prevent more injuries from similar products.

NORDICTRACK ACQUISITION

KEY DATES
1977:
Weslo Design International, Inc., is founded.
1988:
Weider Health and Fitness, Inc., purchases Weslo and ProForm.
1994:
ICON Health & Fitness, Inc., is incorporated.
1997:
ICON acquires HealthRider, Inc., and Hoggan Health Industries.
1998:
ICON buys the bankrupt NordicTrack from CML Group Inc.
2000:
The company acquires Ground Zero Design of Colorado Springs.
2001:
ICON acquires FreeMotion Fitness Inc.; the company signs a licensing deal with Gold's Gym International.
2011:
ICON acquires the Altra athletic footwear brand.
2018:
ICON sells the Altra shoe brand.

ICON Health & Fitness bid first to acquire Nordic-Track, and in December 1998 NordicTrack announced its intent to be acquired by ICON. The Utah company paid $12 million for the Minnesota-based firm, which by that time had closed its retail stores. Although NordicTrack had declined as a business, its brand name remained popular. ICON used that reputation as it offered new NordicTrack brand products. By 2000 NordicTrack treadmills, elliptical machines, recumbent bikes, and strength-training machines were available, some with small TV screens and internet access.

In the late 1990s ICON began offering its products through licensing agreements with other firms. For example, in 1998 it signed an agreement with Reebok to produce home exercise equipment to be sold under the Reebok name. By 2000 the company had offered the brand names NordicTrack, ProForm, and HealthRider under various licensing agreements. Meanwhile, in 1998 ICON introduced its new ProForm Club Series of commercial treadmills, which surprised the fitness industry because ProForm previously was sold only to home consumers.

For the fiscal year ending May 31, 1999, ICON Health & Fitness recorded total annual sales of $710 million, down about 5 percent from its 1998 total of $749 million. However, it also had a smaller net loss in 1999 ($7.8 million) than in 1998 ($9.5 million). In fiscal 1999, “ICON chose to reduce its sales to longtime customers Service Merchandise, Venture Stores and Caldor, all of whom had credit problems,” said ICON marketing executive Colleen Logan in a September 1, 1999, press release. “That choice, although it reduced the Company's topline sales, helped protect its financial position.”

Also in 1999 ICON introduced a website for its recently acquired line of NordicTrack products. Cyber shoppers at www.nordictrack.com were invited to buy the company's products on a retail basis or through an online auction system. The interactive site also allowed people to type in personal data and then receive a health report with recommendations for better health.

INTRODUCTION OF IFIT

In early 2000 ICON expanded its use of the internet by launching iFit.com , host to “the world's first Internet-controlled fitness equipment.” This new technology allowed exercisers to plug their equipment into their computers and then use the iFit.com website to select various programs that could adjust speed, incline, resistance levels, or weight levels to get the best workout. The iFit.com technology received several awards in 2000, including a Best Value honor from the Good Housekeeping Institute and the Most Innovative Product designation from the retail chain Sports Authority.

In 2000 ICON began designing and manufacturing eight models of scooters priced from $39 to $129. ICON distributed its more expensive scooters through Sears department stores as well as through Sports Authority, Dick's Sporting Goods, Oshman's, and other sporting goods stores.

Groundbreaking was held in August 2000 for a new Texas industrial park that ICON would occupy. Located in Mesquite in the Dallas–Fort Worth area, the Skyline Business Park would accommodate ICON's plans for a 400,000-square-foot distribution facility. In December 2000 ICON announced it would not participate in the Super Show 2001 in Las Vegas. Described as the world's major trade show for sports equipment and fitness apparel, the Super Show had included ICON ever since it was first held in 1986. Bad timing and the show's general decline in the late 1990s were two factors involved in ICON's decision, which was supported by spokespersons from both Sears and Dick's Sporting Goods.

ICON IN THE 21ST CENTURY

At the start of the new millennium, ICON faced several challenges. It had to continue to find new customers, because most fitness machine owners would not consider purchasing a second fitness machine. The customer base was limited to middle- or upper-class people or clubs that catered to such people. On a positive note, the U.S. economy, although declining, remained basically healthy at the time, so many could afford to purchase ICON's products.

ICON continued to look for ways to bolster revenues and profits. Its 2001 purchase of FreeMotion Fitness Inc. expanded its foothold in the commercial and specialty fitness markets. That year the company also signed a licensing agreement with Gold's Gym International, one of the largest fitness chains in the world. The deal allowed ICON to manufacture and market a line of fitness equipment under the Gold's Gym brand name.

The U.S. economy began to weaken dramatically after the terrorist attacks in the United States on September 11, 2001, and continued to head toward what many analysts feared would be a recession. The fitness equipment market remained somewhat shielded from this decline. It grew from $3.7 billion in 2000 to $4.2 billion in early 2007. ICON failed to capitalize on this growth, however, and its profits began to fall. Accordingly, the company announced job cuts in 2007. It shuttered its manufacturing facility in Clearfield, Utah, and moved most of its operations to its plant in Logan. To cut transportation costs, it also made changes in storage and shipping. For instance, in 2005 it opened a new distribution center in Savannah, Georgia.

During this period ICON also remained focused on offering cutting-edge products. In 2006 it released the NordicTrack Viewpoint 3000 treadmill, which included a MP3 port, a built-in flat-screen television and sound system, and an iFit workout card that helped users plan workout routines and set weight-loss goals. Although the U.S. economy continued to falter in 2008, ICON not only focused on developing new products but also worked diligently on controlling costs while attempting to shore up profits. To this end, the company laid off more than 200 employees at its Utah headquarters and consolidated its European operations in 2009.

Besides its struggles to remain competitive in the fitness equipment marketplace, ICON also faced other challenges and setbacks in the early 21st century. In 2009 the company sued competitor Octane Fitness over an alleged patent infringement only to lose in court. After a precedent-setting legal battle, ICON was eventually ordered to pay Octane's $1.6 million in legal costs. In 2010 the company agreed to recall some 33,000 inversion benches sold under the Gold's Gym, Nordic-Track, and Weider Club labels after some units began dropping users on their heads as a result of a design flaw.

ALTRA FOOTWEAR ACQUISITION

ICON had in the past made various forays into the apparel and footwear sectors with negligible sustained success. In 2011 the company gave the athletic shoe market another try, acquiring the Altra brand. Designed by a shoe store owner in Orem, Utah, specifically for running, the brand had already established a cult following by the time it joined the ICON family. At the time, the shoes only came in one model, the “Instinct.” Within four years ICON would expand the line to 35 models and place them in 600 U.S. stores, along with retail outlets in 23 other countries. “We wanted to be in the running shoe industry because obviously it's a complement to our business,” ICON marketing chief Colleen Logan told Lance Frazier in the Herald Journal in 2015. “We've had success through bringing innovations that really make a difference. They change how you get results.”

The Altra experiment proved initially profitable, but ICON ran into trouble with other marketing efforts during this period. In 2013 the FTC alleged that the company had broken its 1997 agreement concerning unsubstantiated advertising claims with a new commercial that suggested ProForm Ab Glider users could lose substantial weight with only three minutes of exercise per day. Calling the matter a “misunderstanding,” ICON agreed to pay a $3 million fine the following year.

ICON was also streamlining in other ways. In late 2017 Altra shoes were available in 1,000 stores in more than 50 countries. Although the brand generated about $50 million per year for ICON, Watterson and his team decided that jettisoning what was essentially a side endeavor would provide the company with capital to expand its core fitness equipment business while also improving its operational efficiency. “The global health and wellness industry is exploding, and we're doubling down on that growth,” Watterson explained in a statement quoted by Opsahl in the Herald Journal in March 2018. The sale of Altra to VF Corporation, owner of the North Face and Lee apparel brands, was finalized in June 2018.

David M. Walden
Updated, Christina M. Stansell; Chris Herzog

PRINCIPAL SUBSIDIARIES

Icon Health & Fitness Ltd (UK); Icon Health and Fitness SAS (France).

PRINCIPAL COMPETITORS

Cybex International, Inc.; Life Fitness, Inc.; Nautilus Inc.

FURTHER READING

Frazier, Lance. “In Four Short Years, ICON's Altra Shoes Have Carved out a Significant Niche.” Herald Journal (Logan, UT), March 6, 2015.

Harvey, Tom. “Ads Featuring Elisabeth Hasselbeck, Other Claims Bring Fine for Utah Company.” Salt Lake Tribune, September 20, 2014.

“ICON Continues 21-Year Profit Streak; Receives Sears Order for 75,000 New Treadmills; Now Hiring for 250 Open Positions.” Business Wire, September 1, 1999.

Oberbeck, Steven. “Logan Exercise Equipment Manufacturer to Lay Off 250.” Salt Lake Tribune, January 18, 2007.

Opsahl, Ken. “ICON Hiring ‘Business as Usual’ Despite Pending Layoffs.” Herald Journal (Logan, UT), July 30, 2015.

———. “ICON Optimistic in Wake of Big Layoff.” Herald Journal (Logan, UT), December 12, 2015.

———. “Sale of ICON's Altra Footwear to N.C. Company in the Works.” Herald Journal (Logan, UT), March 20, 2018.

———. “Still Making Strides: ICON Co-founder Discusses State of Company in Its Third Decade.” Herald Journal (Logan, UT), February 6, 2011.

Saint, Steven. “Maker of NordicTrack Buys Springs Firm.” Colorado Springs Gazette-Telegraph, January 6, 2001.