The Sports Authority sales for the second quarter were $617.0 million compared with $605.0 million in the prior year's second quarter, an increase of $12.0 million, or 2.0%. Comparable store sales increased 0.2% and Diluted EPS was 53 cents, above previous guidance of 47 – 49 cents. TSA raised full year diluted EPS guidance from $1.90 – $1.97 to $1.96 – $2.01.
Net income for the second quarter was $14.2 million, or $0.53 per diluted share, compared with net income of $6.8 million, or $0.26 per diluted share, including merger integration costs, in the prior year's second quarter. Excluding the effect of after-tax merger integration costs of $5.1 million, or $0.19 per diluted share, net income for the prior year's second quarter was $11.9 million, or $0.45 per diluted share.
Total sales for the second quarter were $617.0 million compared with $605.0 million in the prior year's second quarter, an increase of $12.0 million, or 2.0%. Second quarter comparable store sales for the Company increased 0.2%.
Net income for the 26 weeks ended July 30, 2005 was $22.2 million, or $0.83 per diluted share, compared with net income of $10.9 million, or $0.41 per diluted share, including merger integration costs, in the prior year's comparable period. Excluding the effect of after-tax merger integration costs of $10.4 million, or $0.39 per diluted share, net income for the prior year's 26 weeks was $21.3 million, or $0.80 per diluted share.
Total sales for the 26 weeks ended July 30, 2005 were $1.21 billion compared with $1.18 billion in the prior year's comparable period, an increase of $31.2 million, or 2.7%. Comparable store sales for the 26 weeks ended July 30, 2005 increased 1.0%.
The Company opened one store and closed two stores during the second quarter to arrive at a total number of stores in operation as of July 30, 2005 of 392 stores in 45 states.
Doug Morton, Chief Executive Officer commented, “We exceeded earnings expectations for the second quarter driven by improvements in gross margin and effective management of our operating expenses. We were pleased with the sales performance of several key categories including active apparel and fitness, however, the impact on our top line performance was greater than expected due to our decision not to repeat certain promotional events. This decision also resulted in an improved gross margin rate and higher gross margin dollars, which contributed to the favorable EPS performance. In addition, we reduced quarter end debt by $45 million compared to second quarter last year, and reduced inventory by $33 million, or 6.6% on a per square foot basis, over the comparable period last year.”
For the third quarter of fiscal 2005, the Company is forecasting a comparable store sales increase of approximately 1% to 2%, total sales of approximately $565.0 million and diluted EPS of $0.09, based on 26.8 million diluted shares outstanding in the quarter. The Company expects to open five new stores and relocate two stores during the third fiscal quarter.
For fiscal year 2005, the Company is forecasting comparable store sales to increase approximately 1.5%. The Company also stated that it is raising its fiscal year 2005 diluted EPS guidance to $1.96 to $2.01, based on an estimated 26.7 million diluted shares outstanding, compared to its previous guidance of $1.90 to $1.97. The Company expects to open approximately thirteen new stores, relocate four stores and close seven stores during the year.
The Sports Authority, Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
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13 Weeks Ended 26 Weeks Ended
----------------------- -----------------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $617,034 $605,025 $1,208,265 $1,177,065
Cost of goods sold,
buying, and occupancy 442,985 436,707 873,358 849,442
----------- ----------- ----------- -----------
Gross profit 174,049 168,318 334,907 327,623
Gross profit % 28.2% 27.8% 27.7% 27.8%
Operating expenses:
Selling, general
and
administrative
expenses 144,952 143,636 287,115 282,881
Selling, general
and
administrative
expenses % 23.5% 23.7% 23.8% 24.0%
Integration costs - 8,419 - 16,977
Store pre-opening
expenses 471 758 1,178 1,681
----------- ----------- ----------- -----------
Operating income 28,626 15,505 46,614 26,084
Non-operating income
(expense):
Interest (5,345) (4,838) (10,841) (9,126)
Other income 215 423 865 944
----------- ----------- ----------- -----------
Income before income
taxes 23,496 11,090 36,638 17,902
Income tax expense (9,281) (4,325) (14,472) (6,982)
----------- ----------- ----------- -----------
Net income $14,215 $6,765 $22,166 $10,920
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Earnings per share:
Basic $0.55 $0.26 $0.85 $0.43
=========== =========== =========== ===========
Diluted $0.53 $0.26 $0.83 $0.41
=========== =========== =========== ===========
Basic weighted average
shares outstanding 26,050,048 25,696,137 25,962,964 25,548,588
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 26,774,677 26,469,345 26,682,016 26,435,375
=========== =========== =========== ===========
