Galyan's Trading Company announced financial results for its second quarter and six months ended August 4, 2001, and reaffirmed its fully diluted pro forma earnings per share estimate of $0.88 for fiscal year 2001.

Net sales for the second quarter ended August 4, 2001 grew 16.2 per cent to $115m from $99m in the same quarter last year. Comparable store sales for the quarter increased 2.1 per cent. The increase in comparable store sales was driven by increases in footwear, casual, athletic and outdoor apparel and athletic sporting goods, which were slightly offset by declines in big ticket items and licensed apparel.

On a pro forma basis, fiscal second quarter 2001 net earnings were $3m, or $0.17 per share on a fully diluted basis, in line with expectations. The pro forma adjustments assume the IPO occurred at the beginning of the year and include adjustments for interest expense and shares outstanding, as well as excluding the extraordinary loss on debt extinguishment. Including the impact of the extraordinary loss on debt extinguishment, net earnings were a loss of $3.6m, or ($0.27) per share on a fully diluted basis.

Gross profit for the second quarter increased 17.6 per cent to $33.9m from $28.8m in the same period last year. Gross profit as a percentage of sales increased by approximately 30 basis points over the same period last year, driven by improved merchandise margins and the merchandise mix of the business.

Selling, general and administrative expenses for the second quarter increased as a percentage of sales to 24.7 per cent from 23.5 per cent in the same period last year. The increase was due primarily to hiring additional senior level managers in support of our growth plans, increases in marketing and higher costs for the company's insurance programs.

Net sales for the six months ended August 4, 2001 grew 16.1 per cent to $202.9m from $174.7m in the same period last year. Comparable store sales for the six months increased 2.6 per cent. Merchandise category results were consistent with second quarter results.

Net earnings for the six months ended August 4, 2001, on a pro forma basis, were $2.3m, or $0.13 per share on a fully diluted basis. Net earnings, including the impact of the extraordinary loss on debt extinguishment, was a loss of $8m, or ($0.67) per share on a fully diluted basis.

Gross profit for the six months increased 19.3 per cent to $57.7m from $48.3m in the same period last year. Gross profit as a percentage of sales increased approximately 70 basis points over the same period last year, due primarily to improved merchandise margins.

Selling, general and administrative expenses for the six months increased as a percentage of sales to 26 per cent from 25.2 per cent in the same period last year. SG&A increases were consistent with second quarter results.

Robert B. Mang, CEO and chairman, commenting on second quarter results said: "This has been an extremely exciting quarter for Galyan's. As a result of our recent IPO the company is virtually debt free and positioned to execute its future growth plans, which includes doubling our current store base over the next three years. I am pleased to report that we are as excited about the future prospects at Galyan's today, as we were when we became a public company in late June."

"Galyan's had a solid performance this quarter with total company sales increasing 16.2 per cent, comparable store sales increasing 2.1 per cent, and pro forma EPS on a fully diluted basis of $0.17 per share, despite a challenging retail environment."

"The company reaffirms its previously stated expectations of earnings per share on a fully diluted basis of $0.88 for fiscal year 2001."

The company reported the opening of its newest store in Rochester, New York during the second quarter, bringing the total stores open to 23. This is the second of the five projected new store openings for fiscal 2001.

The remaining three stores are on schedule to open this fall. The company's total gross square feet increased to 1,985,665 at the end of the second quarter.

The company also announced the signing of four new store leases for store openings in fiscal 2002. The stores will be located in Arlington, Texas, Denver, Colorado, and two additional stores in the Chicago, Illinois market. This represents four of the seven projected openings for fiscal 2002.


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