NEW YORK — Sporting goods retailers controlled their expenses and regained their footing with apparel margins during the third quarter, lifting most to healthy gains in net income and sales.

The exception that proved the rule, perhaps, was Galyan’s, which saw its losses widen under the weight of a weak performance in outdoor hard goods, a category in which it has high market share.

Other sports-oriented stores, however, enjoyed positive results with substantial improvements in margins and earnings and at least moderate success in lifting same-store sales. Net income increased a robust 71.1 percent in the quarter at Dick’s Sporting Goods and nearly as vigorously — 65 percent — at Hibbett Sporting Goods.

International industry heavyweight Foot Locker saw its earnings expand 37.8 percent, while the more regionally focused Sport Chalet managed a 21.9 percent increase for its fiscal second quarter.

Some highlights from the firms’ earnings results:

FOOT LOCKER INC.

Foot Locker Inc. rode healthy sales and gross margin gains to post much improved third-quarter profits.

For the three months ended Nov. 1, the New York-based sporting goods, footwear and apparel chain said net income rose to $62 million, or 41 cents a diluted share, exceeding the Wall Street estimate by 7 cents. By comparison, last year the firm had earnings of $45 million, or 31 cents. Excluding aftertax income from discontinued operations in the prior year, net earnings would have grown an even more substantial 44.2 percent from $43 million, or 29 cents.

Net sales for the period advanced 6.6 percent to $1.19 billion from $1.12 billion last year, and same-store sales ticked up fractionally, or 0.4 percent. Sales trends were especially strong in the U.S., the company said.

Moreover, a 200 basis-point expansion in gross margin to 32.6 percent of sales and a 10 basis-point contraction in selling, general and administrative costs greatly magnified top-line growth’s effect on profits.

“Our third-quarter results also benefited from a strong performance by our international Foot Locker stores and direct-to-customers business,” said chief executive officer Matthew Serra in a statement. “The improving comparable-store sales trend is expected to continue as we begin to anniversary against several factors that have negatively affected our sales growth in the U.S. over the past 12 months, namely lower average price points, a somewhat tempered promotional posture and weak external economic factors.”Serra added that Foot Locker expects improved merchandise margins, lower occupancy expense rates and tight expense management to create further operating profit margin growth going forward.

“As a result of these factors, we are optimistic that we can exceed the current Wall Street analysts’ fourth-quarter consensus estimate of 37 cents per share,” Serra said.

Overall, for the first nine months of the fiscal year, Foot Locker reported a 41.7 percent increase in net earnings to $136 million, or 92 cents, from $96 million, or 66 cents, a year ago. Excluding items from discontinued operations in both years, net income would have climbed 21.1 percent to $138 million, or 93 cents, from $114 million, or 77 cents, a year ago.

Net sales for the period increased 4.6 percent to $3.45 billion from $3.3 billion last year, but comps slipped 2.2 percent.

As of Nov. 1, Foot Locker operated 3,619 stores under the Foot Locker U.S., Lady Foot Locker, Kids Foot Locker, Champs Sports and Foot Locker International nameplates.

DICK’S SPORTING GOODS

Mid-double-digit sales growth coupled with higher gross margins to deliver a 71.1 percent jump in Dick’s Sporting Goods Inc.’s third-quarter profits.

For the three months ended Nov. 1, the Pittsburgh-based full-line sporting goods retailer posted net income of $4.7 million, or 18 cents a diluted share, which beat the Wall Street forecast by 2 cents. That compares with last year’s earnings of $2.8 million, or 14 cents.

Net sales for the quarter swelled 16.4 percent to $338.2 million from $290.6 million and comparable-store sales advanced 2.5 percent.

In a statement, Edward Stack, ceo of the 162-unit chain, noted that the same-store sales increase was achieved against a tough year-ago comparison of 5.1 percent comp growth.

For the first nine months of the fiscal year, Dick’s said net income improved 39.7 percent to $26.8 million, or $1.08, from $19.2 million, or 98 cents, last year. Sales for the period increased 13.6 percent to $996.4 million from $877.4 million a year ago and comps rose 1 percent.

In guidance, Dick’s said it expects fourth-quarter diluted earnings per share of 91 to 92 cents with same-store sales up 1 to 2 percent.GALYAN’S INC.

Poor sales of outdoor equipment and casual apparel combined with continued efforts to reduce inventory kept Galyan’s Inc. in the red for the third quarter.

For the three months ended Nov. 1, the Plainfield, Ind.-based sporting goods retailer saw losses widen to $3.6 million, or 21 cents a diluted share, from $1.5 million, or 9 cents a share, last year.

Sales for the period rose 13.8 percent to $147.7 million from $129.8 million last year. Comparable-store sales fell 5.7 percent.

“For the last several quarters the drag on our business has been outdoor hard goods,” said Robert Mang, ceo, during the company conference call. Mang went on to say that the company’s “industry high” penetration in these areas had offset gains in the athletic segment. “We’re really focusing on athletic apparel, equipment and the footwear business, where we think we have major upside potential.”

U.S. Bancorp Piper Jaffray analyst Brent Rystrom fingered the company’s aggressive markdown activity and resulting decline in gross margin, which fell to 24.8 percent from 27.7 percent last year, as a major contributor to the loss. Piper Jaffray rates the company as “market perform.”

For the nine months to date the firm posted a loss of $6.4 million, or 37 cents a diluted share, compared with profits of $2 million, or 12 cents, last year.

Sales for the period rose 14.3 percent to $440.9 million compared with $385.6 million last year. Comps fell 6.6 percent.

Galyan’s operates 43 stores.

HIBBETT SPORTING GOODS

Strong apparel sales helped Hibbett Sporting Goods Inc.’s profits soar in the third quarter.

For the three months ended Nov. 1, the Birmingham, Ala.-based full-line sporting goods retailer said net income jumped 65 percent to $5.4 million, or 34 cents, which eclipsed the Wall Street estimate by 9 cents. That compares with last year’s earnings of $3.3 million, or 21 cents.

Sales for the period ascended 17 percent to $78.4 million from $67 million a year ago, and same-store sales added 6.9 percent over last year.“[The] advance in same-store sales, especially impressive considering generally tepid sporting goods industry conditions, was led by a double-digit gain, percentage-wise, in apparel [including professional and collegiate licensed, retro looks and active],” wrote A.G. Edwards analyst Robert Buchanan in a research note. “Gross margins improved a much-better-than-expected 299 basis points, reflecting higher markups, lower markdowns, improved shrinkage and sales leverage over warehouse and occupancy costs.”

Overall, for the first nine months, Hibbett said net income increased 36.9 percent to $13.9 million, or 89 cents, from $10.1 million, or 66 cents, last year. Net sales improved 12.8 percent to $229.7 million from $203.7 million and comps grew 4.2 percent.

Looking ahead, Hibbett, which operates 404 stores, said fourth-quarter diluted earnings per share are projected at 33 to 35 cents on a 4 to 5 percent comp increase, bringing full-year earnings to $1.22 to $1.24.

SPORT CHALET INC.

Operational efficiencies paved the way for a 21.9 percent gain in Sport Chalet’s second-quarter bottom line.

The Los Angeles-based operator of 28 full service specialty sporting goods stores said that for the three months ended Sept. 30 income rose to $1.7 million, or 25 cents a diluted share, compared to $1.4 million, or 20 cents, in the like period last year. Sales for the quarter rose 9.7 percent to $61.8 million from $56.3 million, and were up 3.7 percent on a comp basis.

“This quarter’s results are a great improvement over the challenges we faced in the first quarter,” Craig Levra, chairman and chief executive, said in a statement. “I am pleased that our strategic focus provided greater gross profits and with continued efforts placed on leveraging overhead we will be able to maximize our bottom line.”

The gross margin rose to 29.9 percent of sales from 29.8 percent, as a result of the continued focus on inventory management that yielded lower markdowns, the company said. Selling, general and administrative expenses as a percentage of sales fell to 25.2 percent from 25.5 percent.

To support the firm’s growth, the firm promoted Jeff Lichtenstein, a 14-year veteran of the company, to senior vice president of risk management and value-added services, and Tim Anderson to vice president of store operations. In addition, it plans to open three new locations in fiscal 2004 and 2005, in addition to the three additional locations opening this fall.For the six months, income stumbled 24.4 percent to $1.1 million, or 16 cents a diluted share, compared with income of $1.5 million, or 22 cents. Sales for the first half rose 7.1 percent to $115.1 million from $107.5 million and advanced 1 percent on a comp basis.

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