The confluence of a seemingly rough retail environment due to unseasonal weather patterns, pending Q4 earnings reports, and a number of investor conferences led to a number of earnings warnings, affirmations, and even some upward guidance last week. In contrast to Hibbetts strong holiday sales report the prior week, this last week gave little reason for joy in the market.
The report from The Sports Authority that they would miss guidance and post a comp store sales loss for Q4 was the first salvo at mid-week, prompting others to release guidance that would distance them from the bad news or use the TSA announcement as cover to deliver bad news of their own.
TSAs negative report led them to cancel their scheduled presentation at the ICR Xchange investor conference in LaJolla last week. The company simply said that all information was in their release. At least one analyst tried to find a silver lining in the TSA report, stating that the forecast was both in line with her views and better than the “whisper” numbers that had EPS in the mid-70 cent range and a same-store sales decline in the high-single-digits.
TSA has issued a warning that it now expects EPS between 90 cents and 95 cents per share in Q4, down from earlier estimates for $1.08 per share. Comps are now seen in negative territory, down 2% for the quarter, versus a prior forecast of flat comps for the period. The retailer cited issues with winter goods, hunting and camping product, and holiday categories like table games and scooters.
The street, encouraged by news that TSA experienced “improved sales in the winter product categories” as colder temperatures returned and snowfall occurred post-Christmas, sent TSA shares up more than 9%.
Perhaps responding to the TSA report on hunting and camping softness, Cabelas came out the next day stating that is was “comfortable with the range of analysts revenue and earnings per share estimates” for the fiscal 2004 fourth quarter and year.
Cabela’s president and CEO said that early indications pointed to results that will be closer to the high end of analysts estimates for both earnings and revenues. Comparable same-store sales for Q4 are expected to be slightly negative, although much improved over comparable same-store sales results for the third quarter.
Gander Mountain, on the other hand, lowered its outlook for pre-tax income for fiscal 2004 to a range of $2.0 million to $4.0 million, compared with the company’s prior guidance of $8 million to $13 million. GMTN also said that comp store sales for the current fiscal year will be down 2% to 3% versus an 11.5% comp store sales increase last year. Total revenue for 2004 should be in the $640 million to $645 million range, an increase of approximately 31% over revenue of $489 million last year.
For Q4, Gander now sees total revenue increasing approximately 31% to between $236 million and $241 million, which reflects a comp store sales decrease of approximately 6% for the period versus a 12% gain in the year-ago quarter. Pre-tax income is expected to reach a range of $17.2 million to $19.2 million in Q4, or an increase of 34% to 50% from Q4 last year.
Earlier in the week, Big 5 Sporting Goods reported that net sales for the fourth quarter ended January 2 increased 13.4% to $217.6 million from $191.8 million in the year-ago period, which had one less week of sales. On an apples-to-apples basis, net sales increased 6.0% and comp store sales increased 2.6%. Excluding the effect of a sales return allowance, same-store sales increased 3.1% versus Q4 last year.
At the ICR event BGFV offered some additional color, reporting that 5% of sales were from private label. Roughly half of sales were opportunistic or SMU. BGFV said they were not seeing reduced availability of opportunistic buys. The SoCal retailer is benefitting from the recent rains that piled tons of snow on the local mountains, indicating that winter goods have picked up while golf and other spring categories were softer.
