The Sports Authority, Inc. third fiscal quarter diluted EPS was 13 cents compared to previous guidance of 9 cents and one penny for last year, excluding integration costs. Comparable store sales increase of 1.2%.
Merchandise inventories reduced $52.3 million (-8.3% on a per square foot basis) vs. third quarter last year. Long-term debt reduced $70.2 million vs. third quarter last year.
Net income for the third quarter was $3.5 million, or $0.13 per diluted share, compared with a net loss of $2.8 million, or $0.11 per diluted share, including merger integration costs, in the prior year's third quarter. Excluding the effect of after-tax merger integration costs of $2.9 million, or $0.11 per diluted share, net income for the prior year's third quarter was $0.2 million, or $0.01 per diluted share.
Total sales for the third quarter were $560.0 million compared with $545.0 million in the prior year's third quarter, an increase of $15.0 million, or 2.8%. Third quarter comparable store sales for the Company increased 1.2%.
Net income for the 39 weeks ended October 29, 2005 was $25.6 million, or $0.96 per diluted share, compared with net income of $8.2 million, or $0.31 per diluted share, including merger integration costs, in the prior year's comparable period. Excluding the effect of after-tax merger integration costs of $13.3 million, or $0.50 per diluted share, net income for the prior year's 39 weeks was $21.4 million, or $0.81 per diluted share.
Total sales for the 39 weeks ended October 29, 2005 were $1.77 billion compared with $1.72 billion in the prior year's comparable period, an increase of $46.0 million, or 2.7%. Comparable store sales for the 39 weeks ended October 29, 2005 increased 1.0%.
The Company opened five stores during the third quarter to arrive at a total number of stores in operation as of October 29, 2005 of 397 stores in 45 states.
Doug Morton, Chief Executive Officer commented, “Our ability to exceed earnings expectations for the third quarter was driven by significant improvements in merchandise gross margins along with well controlled expenses. Our top-line benefited from strong sales of active apparel, fitness, golf, ski apparel, and team sports. We are also pleased with our progress in reducing merchandise inventories and long-term debt.”
Mr. Morton concluded, “We continue to focus on the initiatives we implemented during the year including: re-branding the store base in several major markets, implementing new merchandising and supply chain initiatives, enhancing our marketing and advertising, reducing one-time promotional events and continuing our remodel program. As we enter the important holiday season, we remain committed to successfully executing our business plan and driving increased shareholder value.”
For the fourth quarter of fiscal 2005, the Company is forecasting comparable store sales of 1% to 2% and total sales of $730.0 to $740.0 million. The Company is comfortable with the current analyst consensus estimate of $1.07 per diluted share. The Company expects to open two new stores, relocate one store, and close two stores during the quarter.
For fiscal year 2005, the Company is forecasting comparable store sales to increase approximately 1% and diluted EPS of $2.03, based on an estimated 26.7 million diluted shares outstanding. The Company expects to open thirteen new stores, relocate four stores and close eight stores during the year.
The Sports Authority, Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
13 Weeks Ended 39 Weeks Ended
------------------------- -------------------------
October 29, October 30, October 29, October 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $ 559,977 $ 545,041 $ 1,768,242 $ 1,722,107
Cost of goods
sold, buying,
and occupancy 404,645 398,677 1,278,003 1,248,120
------------ ------------ ------------ ------------
Gross profit 155,332 146,364 490,239 473,987
Gross profit % 27.7% 26.9% 27.7% 27.5%
Operating expenses:
Selling,
general and
administrative
expenses 143,154 139,353 430,269 422,235
Selling,
general and
administrative
expenses % 25.6% 25.6% 24.3% 24.5%
Integration
costs - 4,774 - 21,750
Store pre-
opening
expenses 1,344 1,562 2,522 3,243
------------ ------------ ------------ ------------
Operating income 10,834 675 57,448 26,759
Non-operating
income (expense):
Interest (5,908) (5,522) (16,750) (14,648)
Other income 798 341 1,664 1,284
------------ ------------ ------------ ------------
Income (loss)
before income
taxes 5,724 (4,506) 42,362 13,395
Income tax
(expense)
benefit (2,261) 1,753 (16,733) (5,228)
------------ ------------ ------------ ------------
Net income (loss) $ 3,463 $ (2,753) $ 25,629 $ 8,167
============ ============ ============ ============
Earnings (loss)
per share:
Basic $ 0.13 $ (0.11) $ 0.98 $ 0.32
============ ============ ============ ============
Diluted $ 0.13 $ (0.11) $ 0.96 $ 0.31
============ ============ ============ ============
Basic weighted
average shares
outstanding 26,309,199 25,821,965 26,078,375 25,639,714
============ ============ ============ ============
Diluted weighted
average shares
outstanding 26,899,828 25,821,965 26,783,328 26,375,278
============ ============ ============ ============
