Keys Fitness Products has finalized an agreement with ICON Health & Fitness to acquire that company’s Image Spa division, the nation’s 3rd largest manufacturer of self-contained home spas and related accessories. The agreement increases the gross annual sales of Keys Fitness to more than $100 million. Effective immediately, Keys Fitness will incorporate the spa company’s entire product line as part of a new leisure products division known as Keys Backyard. Production will remain concentrated at Image Spa’s facility located in Mesquite, Texas.

Acquisition of Image Spa will allow Keys Fitness to further expand its product line and reach an entirely new market not previously targeted by the company. It will also uniquely position Keys Fitness as a leader in the $2-billion a year home spa industry while simultaneously reinforcing its position as a turnkey resource for home fitness and leisure products. Image Spa sales have doubled in volume every year since 2002; to help maintain this momentum, the spa manufacturer’s sales, marketing and customer service teams will join Keys Fitness to provide leadership for the new Keys Backyard division. Mike Dolder, previously Vice-President of Sales for Image Spa, will head Keys Backyard. The owner of Keys Fitness, Tim Chen, will serve as CEO of both divisions.

Since its formation in 1996, Image Spa has experienced substantial growth as a result of direct shipments to consumers and retail partnerships with national mass market retailers for sale in-store, at special events, and online. This trend is expected to continue as The National Kitchen and Bath Association forecast the installation of 769,061 home spas in 2004. According to the National Pool & Spa Institute, the average spa owner is married, middle-aged, well educated, and lives in a mid/upper-income suburban household. Nearly half of all hot tubs sold in 2003 were to families with children under the age of 18 living at home. These demographics are a good sign for the spa industry, which has begun to focus on Baby Boomers who have money to spend on remodeling and upgrading their bathrooms and homes.

“Although overall spa sales have grown only about 10% annually for the past several years, direct delivery of spas is up 50% since 2003,” said Mike Dolder, Vice-President of Sales for Keys Backyard. “As a result, the direct-to-consumer system utilized by Home Depot lends itself to growth in not only spas, but also fitness, outdoor and other new categories for mass merchant retail. The system reduces inventory exposure and improves the overall customer shopping experience.”

“The acquisition of Image Spas uniquely positions our company as a leader in home leisure products, including both the home spa and fitness categories,” said David Williams, COO of Keys Fitness. “In addition to accessing an entirely new market segment, we have also enhanced our marketing and operational capabilities allowing both divisions to more effectively serve our customers.”

“More than 5-million homes in the United States have a hot tub and new unit sales exceed 400,000 annually, of which, 93% are self-contained units of the type manufactured by Keys Backyard,” Dolder continued. “Given the huge growth potential of this market, combined with the superior resources and distribution channels of Keys Fitness, this acquisition offers an ideal opportunity for us to solidify a dominant leadership position within the home spa industry over the next several years.”