NEW YORK — A one-time tax credit offset lower sales, permitting The Sports Authority Inc. to more than triple its earnings in the fourth quarter.
This story first appeared in the March 13, 2003 issue of WWD. Subscribe Today.
For the three months ended Feb. 1, the Fort Lauderdale, Fla.-based big-box sporting goods retailer reported net income swelled 238.8 percent to $52.9 million, or $1.61 a diluted share. That compares with earnings of $15.6 million, or 48 cents, in the year-ago quarter.
Excluding a one-time tax benefit of $40.6 million, or $1.20 a share, from the reestablishment of certain deferred tax assets, as well as exit costs and impairment charges of $4.4 million, or 13 cents, net income would have been $16.7 million, or 49 cents — 0.6 percent below last year’s earnings, excluding charges and credits, of $16.8 million, or 50 cents. However, earnings per share did beat the Wall Street forecast by 2 cents.
Sales for the period slipped 3.1 percent to $388.4 million from $400.6 million a year ago, as comparable-store sales fell 4.7 percent. Licensing fees and rental income shot up 33.8 percent to $1.5 million from $1.1 million last year.
According to Marty Hanaka, chief executive, a 120-basis-point increase in gross profit mitigated “the impact of soft comparable-store sales caused by a weak economy, a short holiday shopping season and unfavorable weather patterns. During fiscal 2002, total debt decreased by $59 million on top of a $70 million decrease in the prior year.”
As reported, last month Sports Authority and Gart Sports Co. entered into a definitive agreement to merge the two companies. On a combined basis, the two retailers generated sales of approximately $2.5 billion for the full fiscal year, and operate 385 stores in 45 states.
Overall, for the full fiscal year, Sports Authority recorded net income of $59.7 million, or $1.82, a 383.1 percent vault over last year’s earnings of $12.4 million, or 38 cents. Excluding non-routine credits and special charges in both years, net income would have improved a far more modest 46 percent to $23.5 million, or 69 cents, from $16.1 million, or 48 cents, in fiscal 2001.
Sales for the year nicked up 0.8 percent to $1.43 billion from $1.42 billion a year ago, as same-store sales ticked down 0.3 percent. License and rental fees expanded 39.4 percent to $4.8 million from $3.4 million last year.
In guidance, Sports Authority said that absent a war in the Middle East, first-quarter earnings are currently forecast to break even, while full-year earnings are estimated to hit 70 to 72 cents on a diluted basis.