Gander Mountain Company reported sales for the first quarter ended April 30 increased 37% to $135.1 million. Comparable store sales decreased one percent after an increase of 8.7% in the first quarter of 2004. The net loss for the first quarter of fiscal 2005 was $17.6 million, compared to a $13.8 million restated loss for the first quarter of fiscal 2004.
“First quarter results keep us on track to meet our 2005 financial plan,” said Mark Baker, President and CEO. “We are satisfied with our results for this quarter, which accounts for only about 15 percent of sales due to seasonality. We saw solid comparable store sales gains in hunting, our largest product category, and in marine accessories.”
In the first quarter of fiscal 2005, the company opened six new stores, including one relocated store, bringing the total store count to 87 at the end of the quarter. Three of the new stores expand the company's presence in markets where the Gander Mountain brand was introduced in 2004, namely, Texas and Colorado. The other new stores extend the company's reach into Minnesota, New York and Indiana. Since the end of the quarter, we have opened two additional stores, including a fourth Texas store in Beaumont and a new store in Dayton, Ohio. In fiscal 2005, the company anticipates opening a total of 18 to 20 stores, including three or four store relocations or consolidations. New store growth will reinforce current markets as well as extend the company's brand into new markets.
“Our new-store teams have worked hard and opened every store on budget and on time, if not early,” continued Baker. “We have continued to refine our store-opening process, so on average our new stores this spring opened with lower pre-opening expense, reduced investment and less inventory than the average store opened last year.”
Results for the first quarter of 2005 include a $2.5 million payment received in connection with the termination of our co-branded credit card arrangement. This payment has been reflected as a reduction of general and administrative expenses in the accompanying condensed statements of operations.
On a GAAP basis, basic and diluted loss per share for the first quarter of fiscal 2005 were $1.23, compared with basic and diluted loss per share for the first quarter of fiscal 2004 of $10.65.
On April 26, 2004, Gander Mountain closed its initial public offering of 6,583,750 shares of its common stock and converted existing preferred stock to common stock. Giving effect to the conversion of preferred shares and the application of the net proceeds of the offering as of the beginning of each period presented, pro-forma basic and diluted loss per share for the first quarter of fiscal 2005 were $1.23, compared with pro forma basic and diluted loss per share for the first quarter of fiscal 2004 of $.90.
Fiscal 2005 Outlook
The company reaffirmed its outlook for fiscal 2005. The company's outlook is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. The company's current outlook for the full year of fiscal 2005 is as follows:
- Sales are expected to exceed $850 million, an increase of at least 32% over fiscal 2004.
- Comparable store sales are expected to increase at least 2%.
- Income before income taxes is expected to be more than $16 million, compared with $1.6 million in fiscal 2004.
- The company expects to open 18 to 20 stores during the year, including three or four store relocations and consolidations.
Gander Mountain Company Condensed Statements of Operations - Unaudited (In thousands, except per share data) 13 Weeks Ended May 1, April 30, 2004 2005 (Restated) Sales $135,128 $98,719 Cost of goods sold 109,949 79,326 Gross profit 25,179 19,393 Operating expenses: Store operating expenses 32,570 23,826 General and administrative expenses 5,753 6,498 Pre-opening expenses 2,759 1,372 Loss from operations (15,903) (12,303) Interest expense, net 1,665 1,502 Loss before income taxes (17,568) (13,805) Income tax provision - - Net loss (17,568) (13,805) Less preferred stock dividends - 4,305 Loss applicable to common shareholders $(17,568) $(18,110) Basic and diluted loss applicable to common shareholders per share $(1.23) $(10.65)