Gander Mountain fourth quarter sales increased 30.3% to $237.2 million, an increase of $55.2 million over the fourth quarter of fiscal 2003. Comparable store sales declined 5.4% after an increase of 12.2% in the fourth quarter of 2003 and 12.0% in the fourth quarter of 2002. Net income for the fourth quarter of fiscal 2004 was $17.6 million, an increase of 42.0% over the $12.4 million reported for the fourth quarter of fiscal 2003.
Total sales for fiscal 2004 were $642.1 million compared to $489.4 million in fiscal 2003, an increase of 31.2%. Comparable store sales decreased 2.5%, after an 11.5% increase in fiscal 2003. The company reported net income for the year of $0.8 million, compared with net income of $0.7 million in fiscal 2003. The company opened 19 stores in fiscal 2004 versus 10 in fiscal 2003, incurring pre-opening expenses of $9.1 million in fiscal 2004 compared to $5.7 million in fiscal 2003.
Excluding the impact of lease related accounting adjustments described below, the company reported net income for the year of $2.5 million, compared with net income of $1.5 million in fiscal 2003. The net expenses related to lease accounting issues totaled $1.7 million in 2004 and $0.8 million in 2003, substantially all of which related to pre-opening rent expense for the construction and store set-up periods prior to the lease commencement date.
As stated in a press release issued by the company on March 9, 2005, as a result of a clarification issued by the SEC on February 7, 2005, regarding lease accounting, the company has adjusted its method of accounting for leases and will restate its historical financial statements. The fiscal 2003 and 2004 results discussed in this press release and reported in the attached financial statements reflect the lease accounting adjustments, unless specifically identified otherwise.
“We certainly are not satisfied with our bottom-line results in 2004. However, we remain confident in our ability to grow this business profitably in 2005 and beyond,” said Mark Baker, President and CEO. “We continue to be excited about Gander Mountain's customer focused culture that is fostered by our more than 5,000 great associates every day.”
In fiscal 2004, the company opened 19 new stores, including two relocated stores, bringing the total store count to 82 at the end of the year. The company entered five new states in 2004 and now operates stores in 14 states. In fiscal 2005, the company anticipates opening 18 to 20 stores, including store relocations and consolidations. New store growth will reinforce current markets, including markets the company entered in 2004, such as Texas and Colorado, as well as extend the company's brand into new markets. The company plans to expand its assortment in marine accessories and boating categories, as well as expand its services with Outdoor Expeditions, offering hunting and fishing vacation packages in the U.S. and Canada.
“Our product line extensions and new market pioneering efforts will enhance top line growth and, equally important, increase sales and margin opportunities in the first half of our year,” continued Baker. “We are confident in our ability to drive market share gains and profitable growth because we are confident in our associates' commitment to the company's culture and success.”
Earnings per Share Calculation
On a GAAP basis, basic and diluted net income per share for the fourth quarter of fiscal 2004 were $1.24 and $1.21, respectively, compared with basic and diluted net income per share for the fourth quarter of fiscal 2003 of $8.48. For the twelve months ended January 29, 2005, on a GAAP basis, basic and diluted net loss per share were $0.32 and $0.30, respectively, compared with basic and diluted net loss per share of $16.24 a year ago.
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 net income per share for the fourth quarter of fiscal 2004 were $1.24 and $1.21, respectively, compared with basic and diluted net income per share for the fourth quarter of fiscal 2003 of $0.91. For the twelve months ended January 29, 2005, pro-forma basic and diluted net income per share were $0.12 and $0.11 compared with pro-forma basic and diluted net income per share of $0.26 a year ago.
Fiscal 2005 Outlook
Fiscal Year 2005 —
- 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 $0.8 million in fiscal 2004. - The company expects to open 18 to 20 stores, including three or four
store relocations and consolidations during the year.
Gander Mountain Company
Condensed Statements of Operations - Unaudited
(In thousands, except per share data)
13 Weeks Ended 52 Weeks Ended
January January January January
29, 31, 29, 31,
2005 2004 2005 2004
(Restated) (Restated)
Sales $237,180 $181,977 $642,140 $489,430
Cost of goods sold 174,121 134,511 479,662 370,535
Gross profit 63,059 47,466 162,478 118,895
Operating expenses:
Store operating expenses 37,224 27,680 121,461 86,084
General and administrative
expenses 6,456 5,474 26,002 21,618
Pre-opening expenses - rent -- 282 1,780 1,024
Pre-opening expenses - other 277 312 7,340 4,696
Income from operations 19,102 13,718 5,895 5,473
Interest expense, net 1,522 1,337 5,137 4,760
Income before income taxes 17,580 12,381 758 713
Income tax provision (benefit) -- -- -- --
Net income 17,580 12,381 758 713
Less preferred stock dividends -- 4,131 4,305 16,523
Income (loss) applicable to common
shareholders $17,580 $8,250 $(3,547) $(15,810)
Income (loss) per common share:
Basic $1.24 $8.48 $(0.32) $(16.24)
Diluted $1.21 $8.48 $(0.30) $(16.24)
Weighted average common shares
outstanding:
Basic 14,222 973 11,092 973
Diluted 14,482 973 11,655 973
