Sports Authority Q1 Net income Shrinks as Sales Dip 4.0%

The Sports Authority, Inc. reported net income of $0.5 million or $0.01 per diluted share for the first quarter ended May 3, 2003, versus $1.7 million or $0.05 per diluted share for the first quarter of the prior year.

However, on a comparable basis this year’s first quarter net income, excluding non-routine charges and the impact of EITF 02-16, “Accounting for Consideration received from Vendors,” amounted to $1.5 million or $0.04 per diluted share versus $1.0 million or $0.03 per diluted share on a pro forma tax-adjusted basis last year.

Last year’s first quarter income was not reduced by income tax expense whereas this year’s first quarter income was tax-effected by the Company’s estimated effective tax rate of 39%. This year’s first quarter net income also was reduced by after-tax charges of (1) $0.4 million due to the change in accounting under EITF 02-16, and (2) $0.6 million related to store restructuring and exit costs.

Sales for the first quarter were $339.1 million versus $353.5 million for the first quarter of the prior year. Comparable store sales decreased by 5.7% due to extreme weather patterns throughout the period, compounded by a soft economy and the effect of the war in Iraq.

Marty Hanaka, Chairman and Chief Executive Officer commented, “While the first quarter sales environment was extremely challenging, all other facets of our business were very well controlled. We maintained our gross profit margin as a percent of sales at last year’s 26.8% level and were able to reduce SG&A expenses by $3.8 million, thereby also maintaining last year’s expense ratio at 26.1% of sales. Furthermore, merchandise inventories year over year decreased $8.4 million or 4.9% on a square foot basis, while related accounts payable increased by $6.9 million or 5%. Total debt also decreased by over $39 million, ending the first quarter at 37% of capitalization. I believe this serves as a healthy and solid foundation for our pending merger with Gart Sports, which is expected to close during July.”

THE SPORTS AUTHORITY, INC.
CONSOLIDATED SELECTED FINANCIAL INFORMATION
(Unaudited, Dollars in thousands, except share data)


                                            13 Weeks Ended
                                          -------------------
                                           May 3,    May 4,
                                            2003      2002
                                          --------- ---------

Sales                                     $339,058  $353,478
  Comparable store sales % 
   increase (decrease)                        -5.7%      3.9%
Cost of merchandise sold,
 including buying and occupancy costs      248,202   258,663
                                          --------- ---------
Gross profit                                90,856    94,815
  % to sales                                  26.8%     26.8%
License fee income                           1,169     1,004
Selling, general and administrative 
 expenses                                   88,538    92,355
  % to sales                                  26.1%     26.1%
Pre-opening expense                            671       525
Store restructuring and exit costs             986         -
                                          --------- ---------

Operating income                             1,830     2,939
Interest, net                               (1,028)   (1,235)
                                          --------- ---------
Income before income taxes                     802     1,704
Income tax expense                            (313)        -
                                          --------- ---------
  Net income                                  $489    $1,704
                                          ========= =========

Basic and diluted earnings per share         $0.01     $0.05
                                          ========= =========

Reconciliation of Non-GAAP Information to GAAP basis - diluted:
---------------------------------------------------------------

In 2002, the Company had a nominal effective tax rate, excluding a
one-time benefit associated with reestablishing deferred tax assets on
the Company's balance sheet, as previously disclosed. The Company
estimates an annual effective tax rate for 2003 of 39% and recorded a
provision accordingly in the first quarter of 2003. To provide
comparability of results period to period, the following table
presents pro forma results for the first quarter of 2002 assuming
application of a 39% estimated effective tax rate.


                                                Pro Forma Tax-Adjusted
                                                ----------------------
                             13 Weeks Ended         13 Weeks Ended    
                              May 3, 2003            May 4, 2002      
                           -------------------     -------------------
                             Amount Per Share       Amount   Per Share
                           --------- ---------     --------- ---------

Net income, excluding 
 non-routine charges and 
 impact of accounting 
 change under EITF 02-16, 
 net of tax                 $1,486    $0.04         $1,039     $0.03
Impact of accounting 
 change under EITF 02-16, 
 net of tax                   (396)   (0.01)             -         -
Store restructuring and exit 
 costs, net of tax            (601)   (0.02)             -         -
                           --------- ---------     --------- ---------
                                
Net earnings                  $489    $0.01         $1,039     $0.03