Gart Sports Company now expects to report first quarter fiscal 2003 net sales of approximately $228 million, compared to $245 million for the same period last year, and a same store sales decline of 8.8% for the quarter, compared to a 5.5% increase for the same quarter last year.
The Company also stated that it expects to report fully diluted earnings per share of $0.31 to $0.34, including a net gain of approximately $0.16 associated with non-recurring events and a related tax benefit. Excluding these items, the Company expects to report first quarter fully diluted earnings per share of $0.15 to $0.18, compared to $0.22 for the corresponding period a year ago. Tables reconciling pro forma net earnings per share calculations for the first quarter of 2003 to net earnings per share calculated in accordance with generally accepted accounting principles appear at the end of this release. Gart Sports Company plans to report actual first quarter results on or about May 22, 2003.
The non-recurring events in the first quarter include an expected settlement with the Company’s former parent (Thrifty Payless Holdings, Inc.) regarding an IRS examination of its 1992 and 1993 consolidated federal income tax returns and related interest thereon as well as the expected tax benefit related to this settlement. Also included is an expected settlement of the Company’s wage and hour class action lawsuits pending in California.
Doug Morton, Chairman, President and Chief Executive Officer commented, “We knew the first quarter would be a challenge for us since we were up against a 5.5% comparable store sales increase in first quarter last year. Our sales results in February were negatively impacted by the comparison to last year’s Winter Olympics business while March’s sales were affected by the Rocky Mountain’s largest snow storm in over 90 years, which coincided with the company’s seasonal transition to our spring merchandise assortment. Like many other retailers we were expecting a strong April given the Easter holiday shift, but sales came in below expectations for the month. While our recent sales trends are improving, we believe it is prudent to adopt a more conservative outlook for the second quarter. Consequently, we now expect same store sales and earnings per share in the second quarter to be flat compared to the prior year. As year-over-year comparisons become easier in the second half of this year, we would expect the range for 2003’s standalone fully diluted earnings per share to be $1.92 to $1.95, excluding the first quarter’s net one time gain and related tax benefit.”
Mr. Morton continued, “Despite the challenging retail environment, we remain very confident about our merger with The Sports Authority and given the recent FTC clearance we expect the deal to close late in the second quarter. This transaction will allow us to recognize significant operating synergies and provide us with compelling merchandising and growth opportunities. We are dedicated to further leveraging our position in the market as we create the nation’s preeminent sporting goods retailer.”
