FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–May 23, 2003–The Sports Authority,Inc., the nation’s largest full-linesporting goods retailer, today reported net income of $0.5 million or $0.01 perdiluted share for the first quarter ended May 3, 2003, versus $1.7 million or$0.05 per diluted share for the first quarter of the prior year. However, on acomparable basis this year’s first quarter net income, excluding non-routinecharges and the impact of EITF 02-16, “Accounting for Consideration receivedfrom Vendors,” amounted to $1.5 million or $0.04 per diluted share versus $1.0million or $0.03 per diluted share on a pro forma tax-adjusted basis last year.
Last year’s first quarter income was not reduced by income tax expensewhereas this year’s first quarter income was tax-effected by the Company’s estimatedeffective tax rate of 39%. This year’s first quarter net income also wasreduced by after-tax charges of (1) $0.4 million due to the change in accountingunder EITF 02-16, and (2) $0.6 million related to store restructuring and exitcosts.
Sales for the first quarter were $339.1 million versus $353.5 million for thefirst quarter of the prior year. Comparable store sales decreased by 5.7% dueto extreme weather patterns throughout the period, compounded by a softeconomy and the effect of the war in Iraq.
Marty Hanaka, Chairman and Chief Executive Officer commented, “While thefirst quarter sales environment was extremely challenging, all other facets of ourbusiness were very well controlled. We maintained our gross profit margin asa percent of sales at last year’s 26.8% level and were able to reduce SG&Aexpenses by $3.8 million, thereby also maintaining last year’s expense ratio at26.1% of sales. Furthermore, merchandise inventories year over year decreased$8.4 million or 4.9% on a square foot basis, while related accounts payableincreased by $6.9 million or 5%. Total debt also decreased by over $39 million,ending the first quarter at 37% of capitalization. I believe this serves as ahealthy and solid foundation for our pending merger with Gart Sports, which isexpected to close during July.”
About The Sports Authority
The Sports Authority, Inc. is the nation’s largest full-line sporting goodsretailer, operating 204 stores in 33 states. The Company’s e-tailing website,http://www.thesportsauthority.com, is operated by GSI Commerce Solutions, Inc.under a license and e-commerce agreement. In addition, a joint venture withAEON Co., Ltd. operates 41 “The Sports Authority” stores in Japan under alicensing agreement. The Sports Authority is a proud sponsor of the Boys & GirlsClubs of America.
Forward Looking Statements
Certain statements contained in this press release constitute “forwardlooking statements” made in reliance on the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995. As such, they involve risks anduncertainties that could cause actual results to differ materially from those setforth in such forward looking statements. The Company’s forward lookingstatements are based on assumptions about, or include statements concerning, many important factors, including without limitation, consumer confidence, changes indiscretionary consumer spending and consumer preferences, particularly as theyrelate to sporting goods, athletic footwear and apparel and the Company’sparticular merchandise mix and retail locations; the Company’s ability toeffectively implement its merchandising, vendor relationship, inventory control,marketing, store remodeling, electronic commerce, supply chain, logistics and otherstrategies; increasing competition from other retailers; unseasonableweather; fluctuating gross profit margins; product availability; capital spendinglevels; and other risks detailed in the Company’s Securities and ExchangeCommission filings. The Company undertakes no obligation to release publicly theresults of any revisions to these forward looking statements to reflect events orcircumstances after the date such statements were made.
Statement with respect to the pending merger between the Company and GartSports Company
Gart Sports and The Sports Authority stockholders and other investors areurged to read the joint proxy statement/prospectus and other materials which willbe filed by Gart Sports and The Sports Authority with the SEC. Thesedocuments will contain important information, which should be read carefully beforeany decision is made with respect to the merger. When documents are filed withthe SEC, they will be available for free at the SEC’s website athttp://www.sec.gov. Documents are also available for free from the contact persons listedabove.
Gart Sports, The Sports Authority and their directors, executive officers,certain members of management and employees, may be deemed to be participants inthe solicitation of proxies in connection with the proposed merger.Information regarding the persons who may, under the rules of the SEC, be considered tobe participants in the solicitation of stockholders in connection with theproposed merger are set forth in the joint proxy statement/prospectus filed withthe SEC. Reference is also made to the companies’ latest annual reports andannual stockholder’s meetings proxy statements as filed with the SEC, includingGart Sport’s Proxy Statement for its Annual Meeting held on June 7, 2002 andThe Sports Authority’s Proxy Statement for its Annual Meeting held on May 30,2002, which may be obtained for free in the manner set forth above.