Category: Uncategorized
- Published: 29 November -0001
News Release: Second Quarter net income increases 43%
The Forzani Group Ltd. (TSX:FGL) today announced its second quarter, fiscal 2003 results, with net earnings for the quarter of $3.6 million.
Retail system sales for the quarter grew by 25% to $244.3 million, compared to $195.2 million for the same period of the previous year. Combined revenues from corporate and franchise divisions increased by 31% to $199.4 million. Net income for the second quarter grew to $3.6 million compared to $2.5 million the prior year. Basic earnings per share increased to $0.12, versus $0.09 in the previous year, while fully diluted earnings per share increased to $0.11, versus $0.09 in the prior year. EBITDA increased 35% to $13.9 million and as a percent of revenue, increased 20 basis points to 7.0% compared to 6.8% for the same period last year.
Commenting on the results, Chairman and CEO John Forzani stated, "In stark contrast to the general retail landscape, FGL has posted exemplary results in both same store sales and gross margins. Our results have continually improved over the past 5 years as the Company has continued to focus on and strengthen its customer service, training and merchandising strategies. We are very pleased with our performance."
During the second quarter, comparable store sales from corporate locations were up 7%, while comparable franchise store sales were up 3.4%. The healthy comparable store sales performance is especially significant due to the unseasonable weather experienced during the early part of the quarter.
During the second quarter, the Company opened 6 corporate stores and closed 1 smaller corporate store. In the franchise division, the Company opened 2 stores, expanded and renovated 2 stores and closed 2 locations. This expansion added approximately 131,400 square feet of retail space, an increase of 3.6% over the previous quarter.
For the first four weeks of Q3, fiscal 2003, comparable store sales from corporate stores grew by another 5.9% and franchise comparable store sales increased 4.0%.
The Forzani Group is Canada's largest retailer of sporting goods, offering a comprehensive assortment of brand name and private-label products, operating stores from coast to coast, under five corporate banners: Sport Chek, Forzani's, Sports Experts, Coast Mountain Sports and Sport Mart. The Forzani Group is also a franchisor under the banners: Sports Experts, Intersport, Atmosphere, RnR and Econosports.
The foregoing information may contain forward-looking statements relating to the future performance of The Forzani Group Ltd. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. The Company, with the appropriate securities commissions, details these risks and uncertainties from time to time.
THE FORZANI GROUP LTD.
Consolidated Balance Sheets
(in thousands)
(unaudited)
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As at July 28, January 27, July 29,
2002 2002 2001
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ASSETS
Current
Cash $ 494 $ 494 $ 293
Accounts receivable 46,938 35,988 38,863
Inventory 269,821 229,270 195,753
Prepaid expenses 5,038 4,481 4,888
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322,291 270,233 239,797
Capital assets 124,841 120,525 102,480
Goodwill and other intangibles 37,394 37,394 2,260
Other assets 7,282 8,112 8,938
Future income tax asset - - 4,013
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$491,808 $436,264 $357,488
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LIABILITIES
Current
Indebtedness under revolving
credit facility $ 44,365 $ 17,094 $ 36,309
Accounts payable and
accrued liabilities 174,102 188,995 137,247
Current portion of
long-term debt 9,309 14,032 448
--------------------------------
227,776 220,121 174,004
Long-term debt 35,198 35,454 30,011
Deferred lease inducements 49,397 46,623 39,168
Future income tax liability 1,039 2,021 -
--------------------------------
313,410 304,219 243,183
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SHAREHOLDERS' EQUITY
Share capital 123,680 83,719 82,521
Retained earnings 54,718 48,326 31,784
--------------------------------
178,398 132,045 114,305
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$491,808 $436,264 $357,488
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THE FORZANI GROUP LTD.
Consolidated Statements of Operations and Retained Earnings
(in thousands, except per share data)
(unaudited)
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For the For the
thirteen week twenty-six week
period ended period ended
July 28, July 29, July 28, July 29,
2002 2001 2002 2001
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Corporate and Franchise
Retail Sales $ 244,298 $ 195,217 $ 445,078 $ 348,954
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Revenue
Corporate $ 159,604 $ 117,351 $ 297,012 $ 212,661
Franchise 39,770 35,026 99,039 91,748
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199,374 152,377 396,051 304,409
Cost of sales 128,266 100,125 261,404 205,980
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Gross margin 71,108 52,252 134,647 98,429
Operating and
administrative expenses
Store operating 42,438 30,319 81,968 57,968
General and administrative 14,750 11,621 26,599 22,092
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57,188 41,940 108,567 80,060
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Operating earnings before
undernoted items 13,920 10,312 26,080 18,369
Amortization 6,684 5,037 13,270 9,556
Interest 1,229 999 2,252 1,906
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7,913 6,036 15,522 11,462
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Earnings before income taxes 6,007 4,276 10,558 6,907
Income tax expense (recovery)
Current 2,493 - 4,416 -
Future (125) 1,736 (250) 2,820
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2,368 1,736 4,166 2,820
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Net earnings for the period 3,639 2,540 6,392 4,087
Retained earnings,
beginning of period 51,079 29,244 48,326 27,697
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Retained earnings,
end of period $ 54,718 $ 31,784 $ 54,718
