Meanwhile, north of the border, Canadas largest sporting goods retailer and franchisor saw the western provinces drag down sales results in the fiscal second quarter, with British Columbia and Alberta comping down “slightly over 5%” for the quarter compared to Ontario that saw comps rise around 3.0%.
Total company comparable store sales were up slightly at 0.1%, with franchise comps sales up 3.0% and corporate comparable store sales down 1.5% due to the western weakness.
The higher comps in the franchise operations are also reflective of regional differences, with 85% of franchise sales coming from the eastern province of Quebec.
On a category basis, Forzani saw Apparel and In-line comps down for the quarter while Footwear, Bikes and Golf were characterized as “strong”.
The increased competitive arena in apparel has led the company to focus on better, more exclusive product from its vendors while tapping a much bigger opportunity in close-outs. Management said there was 10% to “maybe 20%” more availability of apparel and footwear close-outs available this year due to fallout from the U.S. market.
Forzani said they wont play in the commodity end of the athletic apparel business anymore, quipping that kids are buying Ts from Old Navy now instead of from Nike or adidas. Instead, the retailer will focus on programs like the Nike Sphere product that Forzani has secured as an exclusive for national retailers in the country. They also cite an exclusive program with CCM for throwback hockey jerseys.
Private label is “just over 10%” of the mix, a number they would like to see in the 12% range by the end of the year. Footwear is about 20% to 25% of the business and apparel is “just over 20%”.
Management said people will see “a hell of a lot less” of the apparel that they used to feature in advertising and will focus instead on pushing close-outs. The company said they have completed “substantial” close-out buys that will fuel sales and margin growth through Q3 and Q4.
Forzani feels they are entering Q3 with clean floors to take advantage of the opportunity buys, with inventory down 13% on a square foot basis and down 20% on a comp store basis. They see comps up in the 2% to 3% range.
In their reporting Canadian currency, Forzani reported total retail system sales for the quarter grew 7.5% to C$262.7 million. Combined revenues from corporate and franchise divisions increased 8.2% or C$16.3 million to C$215.7 million. Net earnings increased 10.2% to C$3.9 million, or C$0.12 per diluted share versus C$0.11 last year. The 2003 Q2 EPS took a one penny hit due to the recently adopted practice of expensing stock options.
