NEW YORK — Three sporting goods chains crossed the second-quarter finish line with improved earnings and sales, but all conceded that recent sluggishness had them limping as the fall season began.
This story first appeared in the August 26, 2002 issue of WWD. Subscribe Today.
Like their counterparts in apparel specialty retailing, Foot Locker and Galyan’s noted that there had been softness in their businesses since July. While others dealt with clouds on the horizon, Gart, based in Denver, also had to cope with smoke as forest fires impeded the summer’s results.
Foot Locker Inc. reversed year-ago losses with a profit in the second quarter, while sales rose despite some summer sluggishness.
Net income totaled $31 million, or 21 cents a diluted share, for the quarter ended Aug. 3. This compared with year-ago losses of $14 million, or 10 cents.
Excluding results of the Northern Group Canada stores, which were disposed of last year, profits grew 14.3 percent to $32 million, or 22 cents a diluted share, from $28 million, or 20 cents, a year ago.
Sales for the 13 weeks inched up 3.5 percent to $1.09 billion from $1.05 billion a year ago. Ongoing revenues were up a stronger 5.2 percent. Comparable-store sales rose 0.9 percent.
“The challenging economic environment in the United States led to a somewhat softening sales trend in July, which has continued into the first three weeks of August,” noted Matthew Serra, president and chief executive, in a statement. Sales trends should reverse course in September, he said, as year-over-year comparisons ease.
For the half, income shot up 121.7 percent to $51 million, or 35 cents a diluted share, from $23 million, or 17 cents, a year ago. Profits from ongoing operations were up a milder 12.9 percent to $70 million, or 48 cents a diluted share, from $62 million, or 44 cents, a year ago.
Revenues during the six months rose 2.6 percent to $2.18 billion from $2.12 billion in last year’s first half. Sales from continuing operations were up a stronger 4.3 percent. Comps increased 1.2 percent.
The retailer, based here, is looking for third-quarter earnings of 28 to 30 cents a share. Full-year profits should reach $1.12 to $1.14 a share.
Strong top-line growth led to big gains on the bottom line as Gart Sports Co. reported robust second-quarter results.
For the three months ended Aug. 3, Gart posted a 234.2 percent surge in profits to $6.3 million, or 48 cents a diluted share, compared with earnings of $1.9 million, or 20 cents, in the comparable period last year. Earnings per share matched Wall Street expectations.
Last year’s earnings were deflated $3.5 million from integration costs related to Gart’s acquisition of Oshman’s Sporting Goods Inc.
Net sales for the quarter also gained, increasing 10 percent to $261.7 million from $237.9 million last year, as the company’s same-store sales dipped 1.2 percent from the year-ago period.
“We faced a challenging sales environment due, in part, to unseasonably cool and wet weather in the Midwest earlier in the quarter, record drought and significant forest fire activity in the Rocky Mountain region for much of the quarter, and finally, a difficult retail environment,” said chief executive officer Doug Morton in a statement. “Despite the challenging sales environment, we produced a strong 110-basis-point gross margin rate improvement during the quarter across essentially all merchandise categories and we exercised tight controls over expenses as evidenced by a 10-basis-point improvement over last year.”
In the first half, Gart’s net income grew more than threefold, shooting up 257 percent to $8.9 million, or 72 cents a diluted share from $2.5 million, or 27 cents, in the 2001 half. This year’s first-half earnings also benefited from a favorable comparison with last year due to the $3.5 million in costs related to the Oshman’s acquisition.
Sales in the half ascended 26.5 percent to $506.7 million from $400.6 million a year ago, as same-stores sales rose 2 percent in year-over-year comparison.
Sporting goods specialty retailer Galyan’s Trading Co. reversed course and finished the second quarter squarely in positive terrain despite recent sales sluggishness.
The Plainfield, Ind.-based firm reported earnings of $3.9 million, or 22 cents a diluted share, meeting analysts’ consensus estimates. In the year-ago quarter, Galyan’s lost $3.6 million, or 27 cents. Excluding a one-time loss of $5.2 million from the early extinguishment of debt, Galyan’s reported income in the year-ago period of $1.6 million, or 12 cents.
Sales rose 23.7 percent, to $142.3 million from $115 million, and increased 2.1 percent on a comparable-store basis, but were at the low end of the firm’s plan due to July’s slowdown.
“Galyan’s experienced a strong May and June period followed by softness in July, which was felt across all sectors of our business and the retail sector overall,” Robert Mang, chairman and chief executive, said in a statement. “Despite this challenging environment, we were able to produce earnings in line with our guidance due to strong margins and cost controls.”
Mang noted new stores are tracking somewhat below expectations and, in an attempt to improve results, management will ramp up marketing. He added that the 29-unit retailer expects to open five stores in the third quarter, for a total of 35 stores by yearend, a 34 percent increase in square footage.
For the six months, earnings were $3.5 million, or 20 cents a diluted share, compared with a loss of $8 million, or 67 cents. When excluding a one-time charge of $6.8 million, or 10 cents, for the retirement of debt, the loss in 2001’s first half was $1.1 million, or 10 cents. Sales increased to $255.7 million, a 26.1 percent increase over the $202.9 million mark from the comparable period last year. Comps moved ahead 3.4 percent.
Galyan’s lowered its third-quarter estimates to a loss ranging from 8 to 10 cents a share based on expectations that comps will be down in the low-single digits to flat.