The Sports Authority announced Net income for the first quarter was $4.1 million, or $0.15 per diluted share, including the effect of after-tax merger integration costs of $5.2 million, or $0.20 per diluted share. Excluding merger integration costs, net income for the first quarter was $9.3 million, or $0.35 per diluted share, compared with $0.34 per diluted share in the prior year's quarter, which included a net gain of approximately $0.16 per diluted share associated with non-recurring events and a related income tax benefit, as reported by the former Gart Sports Company on a stand-alone basis. Excluding these items, the prior year's first quarter earnings were $0.18 per diluted share. Pro-forma combined earnings for the prior year's quarter were $0.12 per diluted share.
Total sales for the 13 weeks ended May 1, 2004 were $572.0 million compared with $228.4 million in the prior year's first quarter as reported by the former Gart Sports Company on a stand-alone basis. First quarter comparable store sales for the combined company increased 0.3% from last year's combined company results.
The Company opened seven stores and closed five former TSA and one former Gart Sports store during the quarter to arrive at a total number of stores in operation as of May 1, 2004 of 385 stores in 45 states.
Doug Morton, Vice Chairman and Chief Executive Officer of the Sports Authority, stated, “We are pleased with our first quarter results given the on-going efforts to integrate the two companies. We were particularly pleased with the strong gross margin performance delivered in the quarter combined with our ability to reduce inventories, on a per square foot basis, by approximately one percent versus the prior year. We are also pleased with the sales results delivered from the initial remodels performed on the former Sports Authority stores. We are committed to providing an improved shopping experience for all of our customers.”
The Company is forecasting sales in the second quarter of fiscal 2004 to be approximately $630 million and comparable store sales to be flat compared to the same quarter last year. The Company expects to report net income of approximately $18.6 million, and diluted EPS of $0.70, based on 26.6 million diluted shares outstanding in the quarter. All earnings estimates are exclusive of merger integration costs. The Company expects to open 2 new stores during the quarter.
For fiscal year 2004, the Company expects sales to be approximately $2.5 billion. The Company expects to report net income in the range of $68.8 to $70.1 million, and diluted EPS between $2.59 to $2.65, based on an estimated 26.6 million diluted shares outstanding. All earnings estimates are exclusive of merger integration costs. The Company expects to open 23 new stores during the year and expects to close up to a total of 15 stores. The number of stores in operation at the end of fiscal 2004 is expected to be 392.
The Sports Authority, Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands, except share and per share data)13 Weeks Ended
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May 1, 2004 May 3, 2003
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Net sales $ 572,041 $ 228,432
Cost of goods sold, buying, and occupancy 413,060 170,851
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Gross profit 158,981 57,581
Gross profit % 27.8% 25.2%
Operating expenses:
Selling, general and administrative
expenses 139,237 53,422
Selling, general and administrative
expenses % 24.3% 23.4%
Merger integration costs 8,558 -
Store pre-opening expenses 750 96
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Operating income 10,436 4,063
Non-operating income (expense):
Interest expense (4,287) (2,015)
Other income 520 2,041
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Income before income taxes 6,669 4,089
Income tax (expense) benefit (2,601) 100
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Net income $ 4,068 $ 4,189
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Earnings per share:
Basic $ 0.16 $ 0.35
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Diluted $ 0.15 $ 0.34
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Basic weighted average shares outstanding 25,417,187 11,870,335
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Diluted weighted average shares
outstanding 26,395,651 12,428,405
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