JUNE 08, 2005 -- Forzani Has Bad 1Q But Sees Strong 2H
The Forzani Group's CEO Bob Sartor opened the conference call by saying 1Q was "painful, but we have looked beyond 1Q, and we like what we see." The company is implementing a major overhaul of its Sport Check and Coast Mountain banners. Both operate within a single unit and represent more than half of the company's revenues. Management has revisited all aspects of the operation, including assortments, presentation, marketing and operations. Changes in assortments, presentations, marketing and operations are being implemented which the company hopes will turn things around in the 2H.
Revenue, consisting of corporate store sales, wholesale sales, service income, equipment rentals, franchise fees and franchise royalties, was $238.2 million, a $9.6 million, or 4.2% increase over the 13-week period last year due, primarily, to the acquisition of National Gym Clothing Limited on January 31, 2005. Combined gross margin for the 13 weeks ended May 1, 2005 was down 170 basis points to 29.0% of revenue, from 30.7% in the prior year. This was due to a combination of factors, including various initiatives to ensure appropriate inventory positions as a weak winter season was exited, and the liquidation and subsequent closure of a competitor in the Ontario market during the quarter, and its effect on regional margins. These factors are more fully described below. In absolute dollars, the combined gross margin decreased $1.1 million to $69.1 million from $70.2 million in the 13-week period last year.
Comp-store sales from corporate locations were down 4.3%, a result, largely, of soft sales in inline skates, ski and snowboard, and licensed hockey products. Comp-corporate clothing sales, exclusive of winter categories and licensed products were down 1.7%. Footwear sales were strong, up 5.6%. Franchise comp-store sales were up 9.4% on the strength of athletic clothing and footwear. On a combined basis, comp-store sales were up 0.3%.
Gander Mountain Signs 11 New Leases
Gander Mountain signed leases for 11 new outdoor lifestyle specialty stores to open in the summer and fall 2005, including one replacement store, in line with the company's announced plans to open a total of 18 to 20 new stores in 2005. The company has already opened eight new stores in 2005, including the replacement of its store in Duluth, MN.
Most of the new stores are 60,000 to 65,000 square feet, plus outside selling space, and all will include ATV sales and service, an in-store professional gunsmith, a full-service archery shop with shooting lanes and a Gander Lodge meeting space available to local organizations free of charge.
"We are looking forward to introducing the Gander Mountain brand in four new states this year, Arkansas, Kansas, North Carolina and Maryland, all of which are home to many outdoor enthusiasts," said Mark Baker, president and CEO. "Entering these new markets furthers our goal of diversifying our store base geographically. We look forward to building on the enthusiastic customer response to our grand openings this year."
The new stores, scheduled to open in between June and October, will be located in the following markets: Baxter, MN; Sherman, TX; Greensboro, NC; Sherwood, AR; Greenwood, IN; Texarkana, TX; Johnstown, PA; Wichita, KS; Joliet, IL; Woodbury, MN (replacement); and Salisbury, MD.
Italian customs police have uncovered EUR 1.8 million worth of fake-branded athletic shoes imported from China. The 35,000 pairs of shoes were labeled as Nike, Adidas and Puma, and were seized from five cargo containers discovered at La Spezia, on Italy's west coast.
Brean Murray initiated coverage of Oakley with a buy. Oakley just opened a flagship O Store located in the Covent Garden area of London. This latest addition to the company's expanding domestic and international retail presence will be owned and operated by Oakley's wholly owned subsidiary, Oakley U.K. Ltd.…Bear Stearns initiated coverage of GSI Commerce with a peer perform rating.
