EPS in Line with Company Guidance
PLAINFIELD, Ind., Nov. 20 /PRNewswire-FirstCall/ — Galyan’s Trading Company, Inc. (Nasdaq:GLYN) announced financial results for the fiscal 2002 third quarter and nine months ended November 2, 2002.
Fiscal Third Quarter Results
Galyan’s reported a net loss of ($1.5) million, or ($0.09) per share on a fully diluted basis, for the fiscal 2002 third quarter, in line with the Company’s previously stated guidance of a loss of $(0.08) to $(0.10) per fully diluted share. In the fiscal 2001 third quarter, the Company reported a fully diluted net loss of ($0.01) per share, on a net loss of ($168,000).
As previously reported, net sales were $129.8 million for the fiscal 2002 third quarter, a 23.7 percent increase from the $104.9 million in sales during the same quarter last year. Comparable store sales for the fiscal 2002 third quarter declined 2.2 percent. Athletic footwear, athletic apparel, accessories, fitness and ski equipment led increases in sales in comparable stores. These were offset by declines in hunting, camping and outerwear, against a post September 11th surge in these categories in the fiscal 2001 third quarter.
Also previously announced, the Company’s Greenwood, Indiana store was damaged by a tornado and closed on September 20, 2002. Since that date, the store has been removed from comparable store sales computations. Fiscal 2002 third quarter and year-to-date results were impacted by an estimated $1.6 million dollars of lost sales due to the Greenwood store closing. Including the estimated lost sales from the Greenwood store, total company sales would have been $131.4 million for the third quarter, within the range of Company guidance of $130.0 million to $136.0 million. The sales loss from the Greenwood store did not have a negative impact to fiscal 2002 third quarter earnings, as the Company recognized income from insurance proceeds to cover the lost earnings for the period.
Gross margin in the fiscal 2002 third quarter was 27.7 percent, consistent with the fiscal 2001 third quarter. For the fiscal 2002 third quarter, selling, general and administrative expenses were 29.2 percent of net sales compared with 27.6 percent of net sales in the fiscal 2001 third quarter. This increase in selling, general and administrative expenses resulted primarily from increased marketing expenses primarily in support of our expansion program of $4.8 million or approximately $0.16 per share compared to $2.9 million or approximately $0.10 per share in the fiscal 2001 third quarter; and higher pre-opening costs of $2.5 million or approximately $0.08 per share compared to $1.2 million or approximately $0.04 per share in the fiscal 2001 third quarter.
Year to Date Results
Net earnings were $2.0 million, or $0.12 per share on a fully diluted basis, compared with a net loss of ($8.1) million, or ($0.60) per share on a fully diluted basis, for the same period last year. The loss for the nine months ended November 3, 2001, excluding an extraordinary loss of ($6.8) million after tax from the early extinguishment of debt, was ($0.10) on a fully diluted basis, on a loss of ($1.3) million.
Net sales for the nine-month ended November 2, 2002 and November 3, 2001 were $385.6 million and $307.8 million, respectively. Comparable store sales have increased 1.5 percent year-to-date in fiscal 2002. The athletic apparel, athletic footwear, accessories, fitness and baseball categories led the sales gains in comparable stores.
Gross margin for the nine-month period improved to 28.6 percent of net sales compared to 28.2 percent last year, primarily resulting from the leveraging of buying, selling and occupancy expenses. Selling, general and administrative expenses were 27.4 percent compared with 26.5 percent of net sales last year resulting from increased marketing expenses primarily in support of our expansion program and higher pre-opening costs due to more store openings in fiscal 2002.
Robert B. Mang, Chief Executive Officer and Chairman of the Company, commented, “In this uncertain environment, our aggressive approach to managing our business and our ongoing focus on operational excellence serves us well. We continue to invest in the tools and resources that will help us optimize our merchandising mix and inventory levels and select outstanding new store locations. We will continue to maintain a disciplined posture relative to capital spending as we look to intelligently expand our retail store base. We are encouraged by the improving trends in our business over the last few weeks and remain confident in our ability to demonstrate the competitive distinction that is the foundation of Galyan’s.”
Galyan’s opened five stores during the fiscal third quarter of 2002: Arlington, TX in the Dallas market; Colorado Springs, CO; Geneva, IL in the Chicago market; St. Louis, MO; and Henderson, NV in the Las Vegas market. The Company has opened one store in Danvers, MA during the fourth quarter, which expands Galyan’s reach to include the Boston market. This brings Galyan’s total number of stores to 34 for fiscal 2002, compared with 26 stores at the end of fiscal 2001. Last year’s store count includes the Greenwood store which is currently closed as a result of the tornado on September 20, 2002.
Additionally, the Company has currently signed leases for eight of the nine expected new stores to be opened in fiscal 2003, which includes a new Greenwood store.
Mang continued, “We are well positioned as we enter into the fourth quarter, particularly with inventory and cost control measures. Our stores have never looked better and we have the programs in place to capitalize on the sales opportunities that are available to us. As we have previously stated, we expect to report earnings in the range of $0.97 to $1.01 per fully diluted share for the fiscal 2002 fourth quarter.”
Galyan’s is a specialty retailer that offers a broad range of products that appeal to consumers with active lifestyles, from the casual consumer to the serious sports enthusiast. Galyan’s operates 34 stores in 17 states and offers outdoor and athletic equipment, apparel, footwear and accessories, as well as casual apparel and footwear.