At first glance it would appear that retailers tracked in The B.O.S.S Report quarterly analysis had a tough first quarter on the profit line as the sector as a whole fell to a loss versus a profit in the year-ago period. The impact of acquisitions was less pronounced than in quarters past. TSA is in anniversary mode as a combined entity with Gart and Dick’s is providing good pro forma numbers from their Galyans deal that enables the market to assess real metrics for the retailer. Dick’s Sporting Goods, though, did see integration costs impact their numbers for the quarter.

A closer look at the numbers, one with the Dick’s/Galyans merger integration expenses excluded, reveals a pretty healthy bottom line for the retail sector for the period. Excluding those merger integration costs, DKS net income would have increased roughly 142% to $12.2 million and total sector profits would have actually soared more than 415% for the period despite the mounting losses at Gander Mountain and the hit Forzani took in their repositioning efforts (BOSS_0524).

While some of the retailers showed improved results, far too many have obvious issues with profitability, with more than half posting losses for the most recent quarter.

The sales line got a slight boost for the period from a couple of newcomers to the report this year, as The Walking Company and Zumiez provided some lift for the sales line. Excluding the two retailers, the sales increase would have still been roughly 11.0% for the period.

Zumiez is certainly a welcome addition to the team this year. The Seattle-based action sports retailer pulled the IPO trigger in February and to say the retailer’s foray into the public market was a success would be an understatement. ZUMZ shares closed up more than 38% over the $18 offering price the first day of trading in early May. The momentum hasn’t stalled either, with ZUMZ shares closing the week last Friday at $30.25, up 68% from the offering price.

Sales in the Hunt/Fish/Camp segment outpaced the retail group as a whole, growing 20.3% for the quarter, but continued losses at Gander Mountain kept H/F/C guys in the red for the period as the total net loss for the group declined 13.4% to $7.7 million.

Excluding the H/F/C group from the total number, net income for the total retail sector would have risen 80% and the remaining retailers would have realized a 1.2% Return on Sales for the period. The sales increase for the sector would have been 9.3% without the Hunt/Fish/Camp retailers.

Every retailer in the chart below, with the exception of Zumiez, saw a decline in margins for the period. Excluding ZUMZ, sector margins would have fallen a full percentage point. The Gander Mountain negative effect on total sector margins was more pronounced for the period, accounting for roughly 50 basis points of negative impact on the Gross Margin number and about 10 basis points of the decline for the quarter.


>>> Makes you wonder about the continued expansion of the big-box Outdoor guys…