Canadas largest sporting goods retailer, had to rely on its franchise stores to provide positive comp store growth in its fiscal 2004 first quarter. The Forzani Group Ltd. said comps at franchise stores jumped 11.1% for the period, while the corporate-owned units saw same-store sales dip 1.6%. Overall comparable store sales were reported up 2.6% for the quarter.
Geography and weather were cited in the contrasting results, with most of the franchise units located in eastern Canada where spring weather was good in Q1.
Total FGL retail system sales for Q1 increased 18.2% to CN$237.2 million, compared to CN$200.0 million in the year-ago period. Corporate stores rose 7.6% to CN$147.8 million, while franchise stores jumping 23.9% to CN$73.5 million.
Net earnings fell 57% to $1.2 million, or $0.04 per diluted share, for the first quarter, compared to $2.7 million, or $0.09 per diluted share, for Q1 LY. The closure of the remaining small corporate stores this year impacted the EPS by two cents.
Forzani saw margins impacted by clearance of winter product overhang, with gross profit margins narrowing by 180 basis points to 30.5%, but the company feels the early moves to liquidate goods left the company in a very strong inventory position entering fiscal Q2 and should see improving margins through out the balance of the year. Inventory was down 13.1% on a per square foot basis versus the end of Q1 last year.
FGL said combined comparable store sales grew 4.9% in the first 3 weeks of fiscal Q2.
At the companys annual meeting on Wednesday, company founder and president John Forzani intimated he is eyeing a move to the south.
“The potential for acquisitions in Canada is limited,” said Forzani. “For now, we have some hopes for the Maritimes and Ontario. But after that, well have to look elsewhere, maybe the United States.”
Forzani maintains it has an 18% share Canadian market for sporting goods and clothing and expects that to grow to about 25% in two to three years.
