Galyan's Trading reported a GAAP net loss
of ($3.6) million, or ($0.21) per share on a fully diluted basis, slightly better than analyst consensus, compared with a net loss of ($1.5) million, or ($0.09) per share on a fully diluted basis in the prior year's third quarter.
The Company's adoption of Emerging Issues Task Force Consensus No. 02-16 (EITF 02-16) at the beginning of fiscal 2003 reduced earnings in the 2003 third quarter by approximately ($0.02) per share.
The 2003 nine-month GAAP net loss was ($6.4) million, or ($0.37) per share
on a fully diluted basis, compared with net earnings of $2.0 million or $0.12
per share on a fully diluted basis, as reported for the same period last year.
The impact of EITF 02-16 reduced earnings for the first nine months of fiscal
2003 by approximately ($0.04) per share.
Gross margin decreased to 24.8 percent of net sales for the third quarter
of 2003 versus 27.7 percent in the 2002 third quarter. For the first nine
months of 2003, gross margin decreased to 26.0 percent of net sales compared
to 28.6 percent last year. For both the quarter and the nine-month period,
the change in gross margin was primarily the result of higher markdowns with a
focus on reducing inventory levels and higher store occupancy costs.
Selling, general and administrative expenses as a percent of net sales
decreased to 28.5 percent for the third quarter 2003 versus 29.2 percent in
the third quarter of 2002. The decrease was due primarily to lower payroll
costs, leveraging of corporate overhead and recognition of the final insurance
proceeds from last year's tornado loss at our prior Greenwood, Indiana store,
but was partially offset by increases in marketing and insurance costs. For
the first nine months of the year, selling, general and administrative
expenses were 28.0 percent of net sales compared to 27.4 percent of net sales
in the same period last year. The increase was due primarily to higher
marketing and insurance costs, and partially offset by lower payroll costs and
the insurance proceeds mentioned above.
As previously reported, net sales rose 13.8 percent to $147.7 million in
the 2003 third quarter, from the $129.8 million reported in the third quarter
of 2002. Sales trends for the months of August and September were
significantly better than our previous quarter, however October was impacted
by unexpectedly warm weather in most of our markets, which put pressure on
sales for the quarter.
Comparable store sales decreased 5.7 percent during the third quarter.
For the nine months ended November 1, 2003, net sales increased to $440.9
million, representing a 14.4 percent increase over the same period last year.
Comparable store sales decreased 6.6 percent for the year to date period.
New Stores
During the third quarter of fiscal 2003, the Company opened new stores in
Woodbridge, NJ, Richmond, VA, Glenview, IL, Garden City, NY and Lyndhurst, OH.
The addition of these five stores brings the total stores in operation to 43
versus 34 stores at this time last year, which completes the Company's planned
roll-out of new stores in fiscal 2003. Galyan's has signed leases for seven
of the nine stores it anticipates opening in fiscal 2004.
Outlook
For the fourth quarter of fiscal 2003, Galyan's expects comparable store
sales to be in the flat to low single digit negative range. Beginning in the
fourth quarter, the Company will release net sales and comparable store sales
in conjunction with its quarterly earnings results.
Robert B. Mang, Chief Executive Officer and Chairman of the Company,
commented, “Our stores are set for the holidays. We feel we are properly
positioned with our merchandise assortments, inventory in-stock and marketing
programs. Looking ahead to next year, initiatives underway at our stores
today will further strengthen our brand and reputation as a shopping
destination for the recreational, enthusiast and avid sports and outdoor
adventure customer.”
Galyan's Trading Company, Inc.
Consolidated Statements of Operations
For the Three and Nine Month Periods ended
November 1, 2003 and November 2, 2002
(dollars in thousands, except per share data)
Three Month Periods Ended Nine Month Periods Ended
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $ 147,716 $ 129,842 $ 440,942 $ 385,574
Cost of sales 111,132 93,901 326,267 275,311
----------- ----------- ----------- -----------
Gross profit 36,584 35,941 114,675 110,263
Selling, general
and administrative
expenses (1) 42,052 37,919 123,595 105,540
----------- ----------- ----------- -----------
Operating (loss)
income (5,468) (1,978) (8,920) 4,723
Interest expense 631 541 1,805 1,512
Interest income (17) (27) (57) (180)
----------- ----------- ----------- -----------
(Loss) income
before income tax
(benefit) provision (6,082) (2,492) (10,668) 3,391
Income tax (benefit)
provision (2,445) (1,022) (4,279) 1,390
----------- ----------- ----------- -----------
Net (loss) income $(3,637) $(1,470) $(6,389) $2,001
=========== =========== =========== ===========
Basic (loss)
earnings per
share $(0.21) $(0.09) $(0.37) $0.12
=========== =========== =========== ===========
Diluted (loss)
earnings per
share $(0.21) $(0.09) $(0.37) $0.12
