Gart Sports Company announced first quarter net income increased to $4.2 million, or $0.34 per fully diluted share, including a net gain of approximately $0.16 associated with non-recurring events and a related tax benefit. Excluding these items, first quarter fully diluted earnings per share was $0.18 compared with $2.6 million, or $0.22 per fully diluted share, in the prior year’s first quarter.
Total sales for the 13 weeks ended May 3, 2003, were $228.4 million compared with $245.0 million in the prior year’s first quarter, a decrease of 6.8%. First quarter comparable store sales decreased 8.8% from last year.
The non-recurring events in the first quarter include a 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, “While our first quarter results were not as strong as we would have liked, we were able to improve margins and minimize the expense impact from the same store sales decline. As we begin the second quarter, we are encouraged by recent trends in both comp store sales and margins. Additionally, our inventory mix is well positioned and we continue to maintain a tight control over expenses.”
Mr. Morton continued, “With our pending merger with the Sports Authority, we remain committed to becoming the nation’s preeminent sporting goods retailer. The underlying fundamentals of our business are sound, our financial position is strong and we are dedicated to executing on a strategy that will result in long-term growth and increased shareholder value.”
Gart Sports Company
Condensed Consolidated Statements of Operations
(Dollars in thousands, except share and per share data)
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13 Weeks Ended
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May 3, 2003 May 4, 2002
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Net sales $228,432 $244,976
Cost of goods sold, buying, and occupancy 170,851 183,523
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Gross profit 57,581 61,453
Gross profit % 25.2% 25.1%
Operating expenses:
Selling, general and administrative expenses 51,922 54,585
Selling, general and administrative expenses % 22.7% 22.3%
Store pre-opening expenses 96 181
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Operating income 5,563 6,687
Non-operating income (expense):
Interest expense (2,015) (2,760)
Other income 541 284
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Income before income taxes 4,089 4,211
Income tax (expense) benefit 100 (1,621)
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Net income $4,189 $2,590
Pro-forma FY2003 results excluding the
effect of non- recurring settlements,
the associated tax benefit and
utilizing statutory tax rates:
Income before income taxes, as reported $4,089
Expected non-recurring
settlements included in other income (373)
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Pro-forma Income before income taxes 3,716
Income tax expense
utilizing statutory tax rates (1,431)
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Pro-forma net income $2,285
