The Forzani Group Ltd. reported retail system sales for the third quarter ended November 2, 2003 grew by 6.0% to $260.6 million from $245.9 million a year ago. Combined revenues, consisting of retail sales from corporate stores and wholesale sales to franchisees increased by 2.6% to $250.2 million.

All figures are expressed in Canadian dollars.

Comparable store sales from corporate locations were down 2.3%, driven largely by very soft October sales and by planned markdowns in clothing, as the Company significantly reduced its inventories in this category. Franchise comparable store sales were up 2.6% as a result of strong results in Quebec. On a combined basis, comparable store sales were down 0.9%. On a year-to-date basis, corporate comparable store sales are down 2.3% and franchise comparable store sales are up 5.5%. On a combined basis the comparable store sales for the year to date were up 0.3%.

Diluted earnings per share for the quarter were $0.23 versus $0.31 in the prior year. On a year-to-date basis diluted earnings per share stood at $0.39 versus $0.51 in the prior year.

Commenting on the results and the outlook for the balance of the year, Chief Executive Officer, Bob Sartor said, ” Our third quarter added to what has been a difficult year for the Company. Unusual weather patterns and other external factors such as SARS, blackouts in Ontario and forest fires in Alberta and B.C. have had an impact on our Company, as has been the case for many retailers. However, this quarter was principally impacted by two factors. First, October sales of winter product were slow due to warm weather. The second contributor was our decision to dramatically and rapidly adjust our product assortment to reduce our future dependence on casual clothing for sales growth, which resulted in a decline of our corporate comparable store sales and overall profit for the quarter and year-to-date. This decision, sparked by our belief that the casual clothing segment of retail will continue to experience intense pressure in the future, resulted in significant markdowns of our casual clothing that negatively affected both our corporate store sales and margins in each of the last two quarters. With our markdowns now behind us, and our inventories cleansed of their previous heavy emphasis on casual clothing, we are positioned for, and expect a stronger fourth quarter. And, for the fourth quarter to date, our results have been strong. Comparable store sales in our corporate stores have been up 3.9% and our corporate store margins have returned to their historical levels as we have successfully replaced our reduced casual clothing sales with sales of technical athletic clothing, footwear and equipment in our stores. Franchise comparable store sales were flat, as expected, as franchisees were up against strong comp sales last year.”

Despite this strong start to the fourth quarter, the Company does not believe that the upcoming quarter's performance will be sufficient to compensate for the performance of the first three quarters of this year. Therefore, earnings expectations have been reduced to a range from $1.01 to $1.05, depending upon the strength of the fourth quarter, down from the previous estimate of $1.35, diluted.

Mr. Sartor further commented, “While we are disappointed with the reduction in our earnings estimate, we recognize that it was a necessary result of our decision to reconfigure our assortment to strengthen our competitive position with a return to our core athletic roots in the clothing that we carried in our stores. And, we are encouraged by the fact that despite a very tough retail environment and a difficult product transition, we will still be able to increase our market share and deliver an increase in profit for our shareholders above the $0.96 recorded in the prior year.”

The Company's earnings for the quarter and on a year-to-date basis have been affected by the adoption of the CICA recommendation on stock based compensation and by the inclusion of a one-time gain on the sale of investment in the prior year. On a normalized basis, comparable earnings performance was as follows:

($ in thousands)      For the 13 weeks ended     For the 39 weeks ended
                    November 2,  October 27,   November 2,  October 27,
                           2003         2002          2003         2002

Pre-tax earnings
 as reported            $12,075      $16,524       $20,274      $26,865
Gain on sale of
 an investment                -       (1,454)            -       (1,454)
Stock based compensation    557          165         1,608          382
                         12,632       15,235        21,882       25,793
Taxes                    (4,800)      (6,018)       (8,315)     (10,188)

Normalized earnings      $7,832       $9,217       $13,567      $15,065

Normalized Diluted EPS    $0.24        $0.29         $0.42        $0.49

Consolidated Statements of Operations and Retained Earnings
(in thousands, except per share data)

                            For the thirteen        For the thirty-nine
                                 weeks ended                weeks ended
                    November 2,  October 27,   November 2,  October 27,
                           2003         2002          2003         2002
                                  (restated)                 (restated)
Corporate and Franchise
 Retail Sales         $ 260,623    $ 245,876     $ 745,001    $ 690,954

 Corporate              179,178      173,751       493,688      470,763
 Franchise               70,986       70,170       193,487      169,209
                        250,164      243,921       687,175      639,972
Cost of sales           166,206      162,329       462,036      423,733

Gross margin             83,958       81,592       225,139      216,239

Operating and
 administrative expenses
  Store operating        46,537       43,683       133,827      125,651
  General and
   administrative        15,759       14,028        42,249       40,627
   compensation (Note 2)    557          165         1,608          382
                         62,853       57,876       177,684      166,660

Operating earnings before
 undernoted items        21,105       23,716        47,455       49,579

Amortization              7,791        7,441        23,056       20,711
Interest                  1,239        1,205         4,125        3,457
Gain on sale of
 investments (Note 5)         -       (1,454)            -       (1,454)
                          9,030        7,192        27,181       22,714

Earnings before
 income taxes            12,075       16,524        20,274       26,865
Income tax expense
 Current                  6,406        9,060         9,960       13,476
 Future                  (1,818)      (2,534)       (2,257)      (2,870)
                          4,588        6,526         7,703       10,606
Net earnings for
 the period               7,487        9,998        12,571       16,259

Earnings per share     $   0.24     $   0.33      $   0.40     $   0.54
Diluted earnings
 per share             $   0.23     $   0.31      $   0.39     $   0.51