STORES SPORT STRONG RESULTS
Byline: Dan Burrows / With contributions from Jennifer Weitzman
NEW YORK — The fourth quarter may have been a struggle for many apparel retailers, but several major sporting goods chains boosted profits or reversed losses during the period.
The Sports Authority Inc. shrugged off a brutal retail environment, unseasonably warm winter weather and shrinking sales to post higher profits in the fourth quarter.
The Fort Lauderdale, Fla.-based firm reported a 20.9 percent boost in net income to $15.6 million, or 47 cents a diluted share, compared with $12.9 million, or 38 cents, in the year-ago period. Earnings per share beat analysts’ expectations by a nickel.
Sales for the three months ended Feb. 2 receded 3.5 percent to $400.6 million from $414.9 million last year.
On a conference call with analysts, Sports Authority chief executive officer Martin Hanaka commented, “As I like to say, ‘If ifs and buts were candy and nuts, we’d all have a very good Christmas,’ and we at the Sports Authority did. Our core business is very solid. Our fourth-quarter performance was defined by a respectable 1 percent comp-store sales increase at solid margins in a very difficult retail environment. Based on current trends, we now expect our performance for the first quarter of fiscal 2002 will be better than plan.”
In other guidance, Hanaka said store remodelings are the firm’s number one growth strategy. Sports Authority plans to remodel 33 stores in 2002 with a same-store growth target of 4.5 percent. Fiscal 2002 earnings guidance was raised to 60 cents from a previous forecast of 50 cents.
Overall, in fiscal 2001, Sports Authority saw net income plummet 51.4 percent to $12.4 million, or 37 cents a share, compared with $25.4 million, or 78 cents, last year. Sales for the year dropped 4.7 percent to $1.42 billion from $1.49 billion in fiscal 2000.
Meanwhile, Foot Locker Inc. kicked its earnings up even as its sales toed the line in the fourth quarter.
The New York-based athletic retailer reported a turnaround in net income to $36 million, or 24 cents a diluted share, as compared with a net loss of $288 million, or $2.06, in the year-ago period. Excluding charges from discontinued operations in both periods, Foot Locker would have posted a loftier profit of $42 million, or 28 cents, on par with year-ago results that were battered by $296 million in aftertax losses from disposal of exited operations.
Sales for the three-month period ended Feb. 2 slipped 8 percent to $1.16 billion from $1.26 billion last year. However, excluding an extra week of selling in the year-ago quarter, sales would have risen 1.8 percent with same-store sales ahead 2.1 percent.
Chief executive officer Matthew Serra said in a statement: “I am particularly pleased that our company was able to continue to grow earnings in spite of what has been an extremely challenging environment for retail businesses across the board.”
Looking forward in the current year, Serra said growth strategies include opening 25 new Nike Michael Jordan shops in Foot Locker and Champs stores, expanding the catalog and Internet businesses and launching three new “Power Stores” here, with two in Times Square. Serra is particularly bullish on the Times Square shops where “customer traffic is expected to rival that of our highest-performing stores,” he said.
In fiscal 2001, the company reported net income of $92 million, or 64 cents a diluted share, compared with a loss of $240 million, or $1.73, in fiscal 2000. Excluding the effects of discontinued operations, the company would have reported earnings of $142 million, or 98 cents, versus earnings of $107 million, or 77 cents, in fiscal 2000. Sales nudged ahead 0.5 percent to $4.38 billion from $4.36 billion last year.
Indianapolis-based Finish Line, which sells athletic footwear, ran itself back to positive terrain in last year’s final quarter as it reported earnings of $9 million, or 36 cents a diluted share, for the three months ended March 2. This reversed year-ago losses amounting to $4.6 million, or 19 cents, which included a one-time repositioning charge of 51 cents. Excluding the charge and the benefit of the extra week, the firm would have reported income of 23 cents in the year-ago period. Sales rung in at $201.6 million for the 13-week period, 4.9 percent higher than the $192.2 million reached for the 14-week period in fiscal 2000. Comparable-store sales rose 8 percent.
Excluding the benefit from repositioning reversals in the fourth quarter of 2001, EPS would have been 34 cents.
“Our footwear sales for the quarter performed above plan as all categories — men’s, women’s and children’s — showed continued strength, and our apparel and accessory sales posted a comp-store sale gain for the first time in 15 quarters,” Alan H. Cohen, president and ceo, said in a statement.
With the improved results, Finish Line also increased its EPS forecast to a range of 37 to 39 cents for the fourth quarter of this year, from 34 to 38 cents, and, for the full year, 87 to 91 cents from 85 to 89 cents.
Last year, income totaled $18.4 million, or 75 cents per diluted share versus income of $3.7 million, or 15 cents, in the prior year. Excluding repositioning charges and reversals and the benefit of the extra week, EPS would have been 70 cents versus a prior-year mark of 57 cents.
Sales rose 5.7 percent, to $701.4 million from $663.9 million, and were up 4 percent on a comp basis.