SPORTS AUTHORITY NET SHOULD EXCEED PLAN
Byline: Vicki M. Young
NEW YORK — In a move that’s been exceedingly rare in retail circles recently, The Sports Authority Inc. Monday said it expects fourth-quarter and fiscal yearend results to exceed analysts’ consensus earnings estimates.
Marty Hanaka, chairman and chief executive officer, said, “At the beginning of the fiscal year we stated our goal of returning The Sports Authority to a moderate level of profitability. With only four weeks remaining in this fiscal year we continue to be right on target of reaching that goal.”
The company said it expects earnings per share from operations to exceed the First Call consensus estimate of 34 cents for the fourth quarter and 15 cents for the year ending on Feb. 3, 2001. Earnings per share from operations excludes the previously reported 57 cents per share net gain on early retirement of debt. Through the first nine months of the current fiscal year, losses from operations amounted to 18 cents a share.
Hanaka added that same-store sales — stores open for at least a year — for the current quarter have been “trending at levels approximately equal to last year’s and that the unused availability under the company’s long-term committed line of credit currently exceeds $100 million.”
Starved for pleasant surprises, investors drove the company’s stock up 30.4 percent in New York Stock Exchange trading Monday. Shares closed up 44 cents to $1.88.
Bob Carbonell, director of credit for Bernard Sands, a credit reporting firm, said Monday, “It’s been a reasonably good year for The Sports Authority. Like everybody, we’d like to see fourth-quarter numbers before deciding on our degree of support for anybody.”
He noted that the retailer has been focusing on the nuts and bolts by “controlling inventory so that it doesn’t have to give away the store in January.”
Yet, Carbonell also cautioned that the outlook for sporting goods in 2001 might prove tougher because of the economy. “Sporting goods is always a tough thing because a lot of what is spent [in the sector] is from disposable income.” He added that another problem is an increase in apparel in the merchandise mix, and that there are more competitors selling the same type of goods.
In the third quarter ended Oct. 28, the company had a net loss of $4.6 million, or 14 cents a share, compared with a $5.2 million loss, or 16 cents, in the comparable 1999 period. The 1999 quarter benefited from a $6.8 million income tax benefit as well as a $5.5 million extraordinary gain on a debt repurchase. Excluding the benefit and one-time gain, the loss was $17.5 million, or 55 cents. Sales in the quarter rose to $334.8 million from $327.3 million, while comps in the third quarter were up 5 percent.
For the nine months, the company, with an $18.6 million gain on the early retirement of debt, earned $12.5 million, or 39 cents a share, versus a loss of $4.4 million, or 14 cents, in the 1999 period, when the extraordinary gain was $5.5 million. Sales inched up 0.9 percent to $1.08 billion from $1.07 billion and were up 2.5 percent on a comp-store basis. In the 1999 period, the company reported an income tax benefit of $6.3 million.