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Today's news...8/16/05

AUGUST 16, 2005 -- Dick's Results Hurt By Galyan's Performance

Dick's reported 2Q net income, excluding merger integration and store closing costs (MISCC) and gain on sale of investment, of $24.2 million, or 45¢ per share, excluding MISCC. This compares to GAAP net income and earnings per share of $17.9 million and 34¢, respectively, and proforma, combined company net income and EPS of $11.0 million and 21¢, respectively, in 2Q04.

Including after-tax MISCC of $3.2 million, or 6¢ per share, and after-tax gain on sale of investment of $1.1 million, or 2¢ per share, Dick's reported 2Q net income of $22.1 million, or 41¢ per share as

The company said that it had overestimated the potential results of re-branded and re-merchandised Galyan's locations. While their footwear and golf sales improved following the transition sales id not meet plan. The company blamed itself for not giving the converted stores the needed ad support, a decision that will be rectified in 2H.

Total sales for the quarter increased 50% over last year to $622.0 million due to a comp-store sales increase of 0.5%, the opening of new stores, and the inclusion of the former Galyan's operations in this year's quarterly results for the full 13 weeks. The former Galyan's stores will be included in the comp-store base beginning in 2Q06.

During 2Q, the 2Q include: Toledo, OH, Greenville, SC and Pittsburgh, PA. One of the three new stores was the two- level prototype (Toledo, OH). The relocated store was in Dayton, OH. As of July 30, the company operated 239 stores, with approximately 13.8 million square feet, in 34 states.


Sport Supply Sales, Net Fall

Sport Supply Group reported 1Q revenues of $23.2 million and net income of $621,000. These results of operations compare to revenues of $25.1 million and net income of $1.3 million in 1Q04.

Terry Babilla, president/COO, explained, "Although we are pleased to report another profitable quarter, we are disappointed with the decline in revenues. Approximately $1 million of the decline in revenues was because SSG had three more shipping days in the quarter ended June 30, '04 as compared to the quarter ended June 30, '05. These additional shipping days resulted from SSG changing its fiscal year-end last year from a 52/53-week fiscal year ending on the last Friday in March of each year to March 31. Consequently, the quarter ending June 30, '04 included a transition period from March 27, '04 through March 31, '04. These additional shipping days resulted from SSG changing its fiscal year-end last year from a 52/53 week fiscal year ending on the last Friday in March of each year to March 31. Consequently, the quarter ending June 30, '04 included a transition period from March 27, '04 through March 31, '04. In addition, during the quarter ended June 30, '04, SSG shipped orders for the US government totaling approximately $825,000 that did not recur in 1Q05.


SAAMI Granted UN Consultative Status

The firearm and ammunition industry now has a seat at the world table of the United Nations. The 191-country, international relations body has granted official consultative status to the Sporting Arms and Ammunition Manufacturers Institute.

SAAMI, founded in '26, publishes voluntary industry quality and safety standards, coordinates technical manufacturing data, and promotes safe and responsible firearms use. With its new UN designation, SAAMI is now a global resource for scientific facts on guns and ammunition.

In securing the official designation, SAAMI managing director Rick Patterson delivered a presentation to the UN Committee on Non-Governmental Organizations, then for nearly an hour answered questions and responded to concerns regarding firearm industry involvement in UN issues. Final approval was handed down last month.

SAAMI becomes only the fourth firearms-related, non-government organization to be officially recognized by the UN. "The UN creates treaties and model regulations. It's important for our industry to have a voice in both of these arenas," said Patterson. "First, international treaties are critical because a treaty actually supersedes the US Constitution, so SAAMI can now speak up during deliberations over any treaties that could ultimately render America's 2nd Amendment null and void.

"Second, the United Nations is very active in developing international regulations. There are thousands upon thousands of model regulations for countries to adopt, and SAAMI now has an official opportunity to provide input in the creation of these models. We can't prevent politicians from deliberately making bad decisions, but we can make sure they don't unintentionally make bad decisions from a lack of knowledge," said Patterson.


Patagonia Inaugurates Baselayer Recycling Program

Patagonia, in partnership with Teijin, a fabric manufacturer in Japan, launched of the Common Threads Recycling Program. This program asks Patagonia customers to return their worn-out Capilene baselayers to Patagonia to be recycled into new garments.

Worn-out Capilene baselayers will feed Patagonia's own supply chain to make new Capilene in future seasons. With the launch of this recycling program, Patagonia becomes one of the first global companies in the world to launch a garment take-back recycling program.

Research shows that the environmental impact of using worn-out Capilene baselayers to make new polyester fiber is significantly lower than making that same fiber from virgin materials. Via the Common Threads Recycling Program, worn-out garments are diverted from trash incinerators. Making new polyester fiber from used garments that have been mailed from customers to Patagonia results in an energy savings of 76% and a CO2 emissions (greenhouse gasses) reduction of 71%, versus creating that fiber from new raw material.

"Our goal is to take responsibility for every product we make. This includes responsibility for the fibers a garment is made of, as well as what happens to a product at the end of its useful life. Garment recycling is simply our first step towards a truly environmentally sound process," explained Michael Crooke, president and CEO of Patagonia.

"We recognize that everything we make pollutes - and most of it eventually ends up in landfills. Moving forward, with our customers' help, the 1.3 million Capilene pieces we sell each year will potentially live on in perpetuity."

Effective September 12, customers may return used Capilene baselayers to Patagonia, via mail or at any of the 20 Patagonia retail stores nationwide. These worn-out baselayers will then be transported via container ships (which usually travel back to Asia empty) to Teijin's recycling facilities in Japan. There they will be broken down and made into new Capilene garments using Teijin's EcoCircle fiber-to-fiber recycling system. With EcoCircle, worn-out polyester garments are recycled into virgin-quality fibers by breaking down the fabric to the molecular level and creating new polyester raw material. Beginning in Spring '07, Patagonia's Capilene baselayers will be made with more than 50% recycled content, using garments collected from customers.


Rawlings Moving To New Headquarters

Rawlings Sporting Goods will move its world headquarters from Fenton, MO, back to St. Louis, effective December. The new Rawlings headquarters will be located at 500-510 Maryville University Drive in the Maryville Centre business complex. "Maryville Centre offers many benefits in addition to space and amenities; the most important of which is the ability to build into the facility a team sports atmosphere and image. Our new building will embody the rich heritage of our brands while portraying our emphasis on technology and innovation," said Robert Parish, president.

The new location also opens the door to a new strategic partnership with neighboring Maryville University. "We are in the process of exploring a multitude of opportunities with Maryville University," said Parish. "The business complex and university were big draws for us to relocate to West County."


Big 5 Will Be Late With Filings Again

Big 5 Sporting Goods submitted a request to the Nasdaq Listing Qualifications Panel for an additional extension of the deadline for the company to file its Form 10-K for FY04 and its 10-Q for 1Q05. The panel had previously agreed to continue the listing of the company's securities on the Nasdaq National Market provided that the Company filed its 10-K and its 10-Q on or before August 12. The company notified the panel that it would be unable to meet the August 12 deadline and requested a further extension.


Norma Kamali and Everlast women's apparel licensee Jacques Moret, Inc. entered into an agreement to design and manufacture a contemporary sportswear/lifestyle collection under the Norma Kamali and Everlast brands. The collection will debut at the Coterie Show and will be sold to better department and specialty stores commencing in the Spring '06 season.


GSI Commerce named Patrick Vogt EVP. Vogt will head the company's general and specialty organization, which includes all of the company's non-sporting goods partners, and will report to president Robert Blyskal.


Louisiana will put up $10.5 million in tax increment funding to help pay for roads and infrastructure a new Cabela's store in Gonzales, under a financing arrangement by a legislative budget panel…The Plainfield Town Council recently granted a 10-year tax abatement to Dick's Sporting Goods for 37 acres adjacent to Dick's current warehouse near Perry and Stafford roads. Dick's will use the land for a 360,000-square-foot expansion of its distribution center.


SnowSports Industries America will be launching a pilot education seminar series entitled "Capitalizing on Today's Business Environment" in September. Spearheaded by Mary Jo Tarallo, SIA's director of education, the seminars will offer workshops on sales, marketing NH on September 20 with a repeat line-up in Burlington, VT on September 21. Separate tracks are targeted to suppliers, retailers and reps.


Genfoot formed a partnership with specialty snowboard brand Section. The footwear company will align with Section to produce snowboarding apparel, a first for the 100-year-old footwear company.


Bridgedale, a division of Garmont North America, makers of performance socks, has partnered with the Breast Cancer Fund to donate 10% of proceeds from its newest women's performance socks.


Webush Morgan upgraded Skechers to buy from hold… Investec cut JJB FY '05 pretax profit forecast to 49 million pounds from 52 million, and '06/'07 forecast to 57 million pounds from 62 million. Analyst Matthew McEachran points to "dire performance" in retail division caused by weather, weak consumer backdrop, poor replica clothing sales and intense competition. Investec is also disappointed at lack of formal cost-cutting program.


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