The Sports Authority, Inc. (NYSE:TSA), today announced results for Gart Sports for its second quarter ended August 2, 2003.
On August 4, 2003, Gart Sports Company and The Sports Authority, Inc. announced that they had completed a merger of equals. The results for the second quarter represent Gart Sports only. Combined company results for the new Sports Authority will be provided beginning with the third quarter.
Second quarter net income, including the effect of one time merger integration costs of $1.7 million, or $0.08 per fully diluted share, totaled $5.3 million, or $0.42 per fully diluted share. Excluding one time merger integration costs, second quarter net income was $6.3 million or $0.50 per fully diluted share, compared with $0.48 per fully diluted share in the prior year’s quarter.
Total sales for the 13 weeks ended August 2, 2003 increased 2.2% to $267.5 million compared with $261.7 million in the prior year’s second quarter. Second quarter comparable store sales decreased 0.6% from last year.
Net income for the 26 weeks ended August 2, 2003, including the effect of one time merger integration costs of $1.7 million, or $0.08 per fully diluted share, and income related to non-recurring events and a related tax benefit of $2.0 million or $0.15 per fully diluted share, totaled $9.4 million, or $0.75 per fully diluted share. Excluding these items, fully diluted earnings per share for the 26 weeks was $0.68 compared with $0.72 per fully diluted share in the prior year’s comparable period.
Total sales for the 26 weeks ended August 2, 2003 decreased 2.1% to $495.9 million compared with $506.7 million in the prior year’s 26 weeks. Year-to-date comparable store sales decreased 4.5% from the same period last year.
Doug Morton, Vice Chairman and Chief Executive Officer of The Sports Authority stated, “We are pleased we were able to deliver a slight earnings per share improvement during the quarter, excluding one-time merger integration costs, versus the prior year. Comparable store sales were strong during the quarter in the outdoor and exercise categories, however, soft sales of athletic footwear and skates continued to put pressure on the top-line. Despite the challenging sales environment, we produced a 40 basis point gross margin rate improvement during the quarter while achieving inventory per square foot levels that are 2.3% less than the prior year.”
Mr. Morton concluded, “As we begin the third quarter, we are encouraged by recent trends in both comp store sales and margins for the recently combined companies. We remain dedicated to fully maximizing our strong position in the market and capitalizing on the many opportunities that lie ahead.”
For the second half of 2003, the Company is forecasting sales for the merged entity to be approximately $530 million in the third quarter and earnings to be between $0.03 and $0.05 per fully diluted share based upon fully diluted shares of 25.5 million. The Company is forecasting sales in the fourth quarter to be approximately $720 million and earnings to be between $1.04 and $1.06 per fully diluted share based upon fully diluted shares of 25.5 million. For fiscal year 2003, the Company expects earnings to be between $1.85 and $1.90 per fully diluted share based upon fully diluted shares of 19.3 million. All earnings estimates are exclusive of one-time merger integration costs.
For fiscal year 2004, the Company is forecasting sales to be approximately $2.6 billion and earnings to be approximately $2.50 per fully diluted share based upon fully diluted shares of 25.8 million. All earnings estimates are exclusive of one-time merger integration costs.
The Sports Authority, Inc., headquartered in Englewood, Colorado, is one of the nation’s largest full-line sporting goods retailers offering a comprehensive high-quality assortment of brand name sporting apparel and equipment at competitive prices. The Sports Authority operates 389 stores in 45 states under The Sporrts Authority(R), Gart Sports(R), Sportmart(R) and Oshman’s(R) names. The Company’s e-tailing websites, located at thesportsauthority.com, gartsports.com, sportmart.com and oshmans.com, are operated by GSI Commerce, Inc. under license and e-commerce agreements. In addition, a joint venture with AEON., Ltd. operates 43 “The Sports Authority” stores in Japan under a licensing agreement.
This announcement may contain, in addition to historical information, certain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those currently anticipated as a result of a number of factors, including risks and uncertainties discussed in Gart Sports’ and The Sports Authority’s filings with the Securities and Exchange Commission. Those risks include, among other things, the competitive environment in the sporting goods industry in general and in the specific market area of Gart Sports and The Sports Authority, consumer confidence, changes in discretionary consumer spending, changes in costs of goods and services and economic conditions in general and in the company’s specific market areas, unseasonable weather and those risks generally associated with the integration of the two companies. The Company assumes no obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements as a result of new information or future events or developments.