Analysts grill Dick’s about Galyan’s buyout during Q2
With just three days of full ownership of Galyan’s, Dick’s Sporting Goods (NYSE: DKS) reported its second-quarter results and fielded numerous questions about the integration of Galyan’s during its earnings conference call.
Net income for the quarter ended July 31, 2004, increased 16 percent to $17.9 million from 2003’s $15.5 million, operating income increased 23 percent to $30.8 million from 2003’s $25.1 million, and earnings per share increased 10 percent to $0.34 per diluted share as compared to 2003’s $0.31 per diluted share. Total sales for the quarter increased 18 percent to $416.1 million. Comparable store sales increased 2.9 percent.
The second quarter 2004 results included $1.2 million of pre-tax store relocation expense, while the prior year’s second quarter included a $1.2 million pre-tax gain on sale of investment. Adjusting for these two items, earnings per share increased 21 percent, from $0.29 per diluted share to $0.35 per diluted share.
Dick’s CEO Ed Stack said Dick’s management has visited every Galyan’s store and plans to finish re-branding and re-merchandising them by early 2005. Analysts listening to the conference call were curious about the direction Dick’s would take, but management was purposefully vague because of the recent completion of the acquisition. A few tidbits of information pried by analysts were:
>> Dick’s sees opportunities in certain categories for expansion, such as golf and team sports.
>> Inventory control is important and it hopes to get Galyan’s former stores turning quicker.
>> It will continue to service Galyan’s stores with its Indianapolis distribution center for the rest of the year.
>> Galyan’s private label had been cut back since the sale announcement and Dick’s expects the inventory to run out by October.
When asked about Galyan’s liquidation, Stack said, “We don’t feel we need to liquidate aggressively. Galyan’s merchandising group had been doing a good job reducing receipt of goods we wouldn’t feature. The goal is to synchronize merchandising assortments.”
Stack also said Dick’s is putting together an outdoor strategy and the company is pleased with the results and optimistic about the third and fourth quarters. Also, the retailer is still looking at the ski category and will sell it this fall and winter because the merchandise is already ordered. Its fate will be decided in the middle of December or January.
During the second quarter, the Company opened four new stores and relocated three. The four stores had previously been expected to open at the beginning of the third quarter.
Gander reports 2Q financials
Total sales for the second quarter of fiscal 2004 for Gander Mountain Company (Nasdaq: GMTN) increased 35 percent, or $33.3 million, to $128.1 million. Comparable store sales increased 1.8 percent on top of a 15.5 percent increase in the second quarter of fiscal 2003. The net loss for the quarter was $3.7 million compared with a net loss of $4.4 million in the second quarter of fiscal 2003.
“Our industry leading 35 percent sales growth this quarter reflects our focus on both comparable store performance and new store development,” said Mark Baker, president and CEO. “We are on track to meet our overall financial plan for 2004 as we move into the higher volume third and fourth quarters.”
During the second quarter of fiscal 2004, Gander opened stores in Fredricksburg, Va., Indianapolis, Ind., and Coldwater, Mich., bringing total square footage to 2.9 million, an increase of 34 percent over the prior year. It operates 70 stores in 10 states and expects to open 19 new stores, including two relocations, during the year.
Deckers’ executives arrange quarterly stock sale, hire licensing VP
Deckers Outdoor Corp. (Nasdaq: DECK) reported on Aug. 20 that certain executive officers, including CEO Doug Otto, have established plans under Rule 10b5-1 of the SEC to provide for pre-arranged sales of Deckers common stock by them on a quarterly basis. The plans are effective for an initial term of 23 months from the date they were established in August 2004. Stock transactions under the plans are expected to start in October 2004 and end in June 2006. At Deckers’ current trading price, the maximum number of shares that may be sold under these plans in any quarter is approximately 250,000 shares and, at Deckers’ current trading price, the maximum number of shares that may be sold during the 23-month terms of the plans is approximately 1,000,000 shares.
In other company news, Tracey Nelson has been appointed to the newly created position of vice president of corporate licensing. She’ll handle the licensing of Deckers’ Teva, Ugg and Simple brands to complementary products outside of footwear and look for additional licensing opportunities in the United States and abroad. Previously, Nelson has worked for Fila/Sports Brands International, Nine West Group, Polo/Ralph Lauren and Echo Design Group.
New CEO for Nautica
Nautica founder David Chu is leaving the company to pursue other interests and Denise Seegal is being named CEO and president. Seegal, presently CEO of Sweetface Fashion Co., will take over the VF Corp.-owned company in mid-October. Seegal has served in a variety of executive positions at Liz Claiborne, Calvin Klein, Donna Karan International and Polo Ralph Lauren. She will report to Eric Wiseman, vice president and chairman of VF’s outdoor and sportswear coalitions.
Wellman announces price increase
Wellman (NYSE: WLM) is increasing the price of all polyester staple fiber products for the apparel, home furnishings, nonwovens, industrial and fiberfill markets by 3 cents per pound, starting with Sept. 1 shipments. “This pricing initiative is necessary to offset the prolonged increase of petroleum and recycled based feedstock prices, resulting from global tightness in both the paraxylene and ethylene glycol markets and unprecedented high oil prices,â€ Joe Tucker, vice president of the fibers and recycled products group, said in a statement. â€œAs such, we hope that our customers understand the need for this price increase.â€
Cabela’s plans Utah store
Cabela’s (NYSE:CAB) is in negotiations to build a 150,000-square-foot store near Lehi, Utah, and plans to have it open for business by late 2005. Construction is scheduled to begin in the summer of 2004. The store, to be built on a 50-acre site on Interstate 15 at the SR92 Alpine Highland Highway interchange in the Traverse Mountain Development near Thanksgiving Point, would be its 13th retail outlet. CEO Dennis Highby said, “As we previously stated, we have accelerated our retail store opening plan for fiscal 2005. This store represents another important step in our ongoing strategy to increase our retail presence across the country. When combined with our two Texas stores that are also scheduled to open next year, Utah will enable us to increase our retail square footage by 43 percent, bringing total square footage to 1,880,709 in 10 states.” Cabela’s expects to employ as many as 400 people to operate the Lehi store. It added that its plans also call for the building of complementary businesses, such as motels, restaurants and other travel-related services, in conjunction with the new store. The newest Cabela’s store, a 175,000-square-foot facility in Wheeling, W.Va., just opened Aug. 12.
Back-to-school sales brighten July numbers
Consumer may have been a bit shy in June, but they hit stores in July with retail sales up 7.2 percent over last year and up 0.8 percent compared to June. “The strength of July sales demonstrates that June’s weakness was simply a blip on the radar,” said Rosalind Wells, chief economist for the National Retail Federation, of the sales in the GAFS category (general merchandise stores, clothing and clothing accessories stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores). “July’s sales indicate that retailers are clearly poised to benefit from healthy back-to-school sales.” An unusual combination of retailers saw gains in July, including sporting goods, book, hobby and music stores which saw strength in July with sales up 1.3 percent adjusted for the month and 5.4 percent unadjusted over last July. Despite gains in many sectors, clothing and clothing accessories stores saw a slight dip in July sales with a decrease of 0.1 percent over June despite a 5.6 percent increase over last year at this time. “Not only is July a transitional month, it is a clearance month,” said NRF President and CEO Tracy Mullin. “Apparel has been so strong this year that, by July, there was not much merchandise for clothing stores to mark down.”
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