Galyans got hurt on Wall Street last week after telling analysts that it expected difficult conditions to continue and it would no longer provide guidance on earnings and gross margins. Shares were down 13.7% for the week to close at $10.82 on Friday.
GLYN did cite poor weather in its excuse for posting a 7.7% comp store sales decline and a loss for the second quarter versus $3.9 million in profit a year ago. Still, the one penny loss bested average analyst estimate of a two cent loss and fell well within the retailers previous guidance.
Gross margins shrunk 290 basis points, due primarily from deeper promotional pricing to drive store traffic. Management said they had been successful “getting consumers into the stores and moving inventory”, but did so by “moving products at lower price points” hurting both sales and earnings.
Comp sales for the quarter were hurt by weather-related issues in Camping, Water Sports, Fishing, Casual Apparel and Swimwear. The bright spots included Outerwear, Hunting and Bicycles, which were “stronger than expectations” and driven by the launch of exclusive The North Face bikes.
Turnover was flat and per store inventory was down around 9% year-over-year.
It appears that it is the forward-looking statements from the company that are causing the most angst as GLYN coupled the “no comment” comment with expectations that Q3 and full year same-store sales should decline at low- to mid-single-digit percentage rates.
KEY METRICS:
- Transactions were up 17.8%
- Units per transaction were down 7.5%
- Average sale for Q2 was $58.13, down 2.7%
- Average unit retail was up 5.2% to $20.79
>>> It appears the company has put a stake in the ground, finally realizing that it is next to impossible to build long-term strategy for this model while forced to manage a business in ninety day intervals…
