Fitness financials: Dick's comp store sales up 1.1 percent, plus Nautilus, TSI, Saucony/Hind, Gaiam, Foot Locker, Finish Line, Amer Group, Costco, Wal-Mart, Sears

Dick’s reports 4Q, FY04 earnings
Dick’s Sporting Goods (NYSE: DKS) saw its fourth quarter net income shoot up to $43.4 million, or $0.81 per share, from $26 million, or $0.50 per share, in the 2003 fourth quarter. Results include the operating results for the recently purchased Galyan’s for the third and fourth quarters of 2004, but not for 2003 as Galyan’s was acquired in July 2004. After taxes and charges, Dick’s net income for the quarter was $39.9 million, or 75 cents a share.
 
Total sales for the quarter increased 66 percent over last year to $788.0 million due to a comparable store sales increase of 1.1 percent, the opening of new stores and the inclusion of Galyan’s operations in this year’s quarterly results. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the second quarter of 2005.

During the fourth quarter, the company opened five stores and closed four stores (one Dick’s store and three Galyan’s stores) bringing the total stores opened for the year to 29 and the total stores closed for the year to six (three Dick’s stores and three Galyan’s stores).

FY 2004 net income, excluding merger integration and store closing costs, gain on sale of investment, and a lease accounting charge, was $75.1 million, or $1.42 per share. After taxes and charges, net income was $66.9 million, or $1.26 per share, compared to 2003’s net income and earnings per share, excluding gain on sale of investment, was $50.7 million, or $1.01 per share. Total sales for the year increased 43 percent to $2,109.4 million. Comparable store sales increased 2.6 percent. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the first half of 2005.

Chairman and CEO Edward Stack said in a statement that in regards to the Galyan’s conversion, it has switched the point-of-sale systems in the stores, re-signed the stores, converted the warehouse management system in the former Galyan’s distribution center, closed the corporate office and converted all activity onto Dick’s systems. “We have also made progress on re-merchandising stores to place more of an emphasis on sporting goods,” Stack added.

As of Jan. 29, 2005, Dick’s operated 234 stores with approximately 13.5 million square feet, in 33 states.

Nautilus to present at retailing conference
Nautilus (NYSE: NLS) announced that Bill Meadowcroft, the company’s incoming CFO, and Ron Arp, senior vice president of corporate communications, will present at the Stephens Inc. Specialty Retailing Conference on March 15. The presentation will be at 8:30 a.m. EST at the Waldorf-Astoria Hotel in New York. It will be live on the Internet at www.nautilus.com/ir/events.asp under the “Investor Relations/Events and Webcasts.”

Town Sports Int’l reports 4Q net loss of $3 million
Town Sports International (TSI) reported a 7.5 percent increase in fourth-quarter revenues of $88.7 million compared to last year’s $82.5 million. Clubs that were in operation for 24 months or more had a 3.8 percent increase in revenue for the quarter, and revenues for clubs open one year increased 4.5 percent as well. Eleven new clubs contributed $2.8 million to the quarter’s revenues. Operating income for the fourth quarter was $8.4 million compared to $6.1 million. The company had a $3 million net loss compared to a net income of $375,000 last year. Net interest expenses went up $3.4 million to $9.9 million as a result of a senior discount note offering. Further exacerbating TSI’s decrease in net income in the quarter was a $1.9 million tax charge. For FY 2004, consolidated revenues increased 3.5 percent to $353 million compared to $341.2 million in 2003. 2004 revenue for clubs open 24 months was up 2.1 percent, while revenues for those open 12 months increased 2.5 percent. Operating income for the year was $34.3 million compared to $42.6 million in 2003. TSI had a net loss for the year of $3.9 million compared to net income of $7.4 million in the prior year. The company opened eight clubs in 2004, bringing its total to 135. Total membership grew 12 percent year-over-year. TSI operates under the New York Sports Club, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs brands.

Saucony hit with environmental penalty in 4Q
For the fourth quarter, Saucony (NasdaqNM: SCNYA and SCNYB), owner of Saucony running shoes and Hind performance apparel, was hit with a loss after a charge of $2.3 million to address previously unknown environmental conditions at its East Brookfield, Mass., distribution facility.

The quarterly loss was $316,000, or 5 cents per class A and class B share, below earnings of $1.5 million, or 21 cents per class A share and 24 cents per class B share, last year. In addition to the $2.3 million hit, it also had a charge of $344,000 associated with Sarbanes-Oxley Act compliance and $292,000 of legal and other fees. Excluding the environmental charge and the related tax effect, earnings were 14 cents per class A share and 15 cents per class B share in the latest period. Net sales for the fourth quarter increased 8 percent, to $32.9 million, compared to $30.5 million in 2003.

For FY 2004, net income increased 23 percent to $10.4 million, compared to $8.5 million in fiscal 2003, representing a record for net income by Saucony in a fiscal year. Diluted earnings per share increased to $1.38 per Class A share and $1.52 per Class B share for 2004, compared to diluted earnings per share of $1.26 per Class A share and $1.38 per Class B share for 2003. Net sales increased 22 percent to $166.2 million, compared to $136.1 million in 2003 — another record for the company.

Saucony’s backlog of open orders scheduled for delivery from Jan. 1, 2005, to May 27, 2005, increased 1 percent to $54.1 million, compared to $53.6 million last year. On Dec. 31, 2004, the open order backlog for delivery in the next 12 months increased 2 percent to $61.3 million, from $59.9 million last year.

John Fisher, Saucony’s president and CEO, said, “Our increase in open orders scheduled for delivery over the next five months is due primarily to the growth in our technical running footwear category in both our international and domestic markets, increased demand for our Hind apparel and to the impact of a weaker U.S. dollar.”

Gaiam reports lower 4Q and FY 2004 revenue
Gaiam Inc. (Nasdaq: GAIA) fourth-quarter revenue was down slightly to $34.8 million compared to $35.1 million in the same period of last year as it completes its transition from VHS to DVD. Gaiam’s direct-to-consumer segment grew to 54 percent of total revenue and delivered solid internal growth of 14 percent. Revenue generated by Gaiam’s business segment, which distributes media and other proprietary products to retailers, was $1.6 million lower in the fourth quarter of 2004 than in the comparable 2003 period, as a result of declining VHS sales and returns of VHS products. Gaiam’s international businesses posted internal growth of 34 percent. The quarter’s revenues were also affected by Gaiam’s decision to discontinue a small unprofitable catalog title in early 2004, which had produced approximately $1 million in revenue in the fourth quarter of 2003.

For FY 2004, Gaiam reported revenue of $96.7 million compared to $102 million in 2003, and a net loss of $4.6 million, or $0.32 per share, compared to a net loss of $972,000, or $0.07 per share in 2003. During 2004, Gaiam generated $3.1 million from its operations and increased its cash position to $10.4 million, up from $8.4 million in 2003.

Foot Locker’s 4Q beats analyst expectations
Foot Locker (NYSE: FL) beat analyst expectations and posted a 25-percent rise in fourth-quarter profit, due to strong overall sales, better margins and lower taxes. Fourth-quarter earnings were $89 million, or 57 cents a share, compared with $71 million, or 47 cents a share, a year ago. Revenue rose 15 percent to $1.54 billion from $1.33 billion a year earlier. Analysts had estimated earnings of 54 cents a share on revenue of $1.53 billion. Same-store sales rose 2.5 percent for the quarter.

Finish Line posts higher-than-expected 4Q same-store sales
With its fourth-quarter same-store sales up 8 percent, Finish Line (NasdaqNM: FINL) is raising its profit outlook. Internet sales increased results by 1 percent. Total sales were also up 18 percent to $361.4 million from $305.3 million in the fourth quarter of 2003. For the year, same-store sales increased 9 percent and total sales rose 18 percent to $1.17 billion. Based on the results, Finish Line said it now expects to earn 54 cents to 56 cents per share for the quarter, up from previous guidance of 52 cents to 54 cents. For 2005, the company predicted profit of $1.22 to $1.24 per share, higher than its earlier forecast of $1.20 to $1.22 per share. Analysts currently expect fourth-quarter and 2005 profit at the high end of previous guidance with forecasts of 54 cents and $1.22 per share.

Amer Group publishes 2004 report
Amer Group’s annual 2004 report is available now in English and Finnish. To download the PDF, visit the company’s website, www.amersports.com, or click here.

Costco 2005 2Q sales benefit from tax credit
Costco’s (NasdaqNM: COST) net income for its 2005 second quarter rose to $305.5 million, or 62 cents a share, from $226.8 million, or 48 cents a share, in the year-earlier quarter — up 35 percent from a tax benefit and higher same-store sales. Quarterly revenue jumped 9.6 percent to $12.66 billion from $11.55 billion. Excluding the tax benefit, Costco would have earned $263.3 million, or 54 cents a share, in the second quarter. February same-store sales rose 7 percent, while net sales, which excludes membership fees, for the four weeks ended Feb. 27, rose 9.2 percent to $3.78 billion from $3.46 billion last February.

Wal-Mart and Sears report February store sales
Wal-Mart Stores (NYSE: WMT) reported total February net sales of $22.3 billion, up 10.9 percent from 2003’s $20.1 billion. Net sales for the Wal-Mart division were $15.1 billion, up 11.1 percent from $13.6 billion last year. February same-store sales for the Wal-Mart division were 4.1 percent compared to 6 percent in 2003.

February same-store sales for Sears, Roebuck and Co. (NYSE: S) rose 1.3 percent. Total sales were $1.78 billion, up 2.2 percent from $1.74 billion.

Sears’ 425 filing answers merger questions
A recent 425 filing by Sears, Roebuck & Co. (NYSE: S) with the SEC offered Q&A’s for its upcoming merger with Kmart Holding Corp. The two companies will continue to operate separately under their respective brand names after completion of the merger. The new field structure will include eight regions and 110 districts, each made up of approximately six to nine stores. Each district will be managed by a director of stores, reporting to a region vice president. The company said a number of key decisions have been reached, including detailed plans for an initial 25 Kmart stores that will convert to “Sears Essentials” stores; systems infrastructure and application integration and migration to common platforms; and supply chain design. Completing all initiatives is expected to take up to 24 months. The merger vote is scheduled for March 24 at Sears’ Hoffman Estates, Ill., headquarters, which will serve as the headquarters of the combined company, Sears Holding Corp. Sears is a New York corporation, and New York law requires a “yes” vote from two-thirds of Sears’ outstanding shares to approve the merger. A non-vote is considered a no-vote. Kmart is a Delaware company, and Delaware law requires a “yes” from a simple majority of outstanding shares to approve the merger. To read the full filing, click here or go to www.sears.com.

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