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Sports Authority warns
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March 28, 2001: 2:31 p.m. ET
Sporting goods retailer beats 4Q estimates, but warns of flat 1st half
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NEW YORK (CNNfn) - The Sports Authority Inc. said Wednesday that falling sales fueled by a slowing economy would mean a flat profit performance for the first half of 2001, much worse than forecasts on Wall Street.
The nation's biggest sporting goods retailer also reported a higher fourth-quarter profit that edged past analysts' forecasts, compared with a loss a year earlier.
Fort Lauderdale, Fla.-based Sports Authority also said it cut 44 jobs so far in the first quarter as sales fell at stores open at least a year, a closely watched figure known as same-store sales.
Sports Authority (TSA: Research, Estimates) stock got hammered in early afternoon trading Wednesday, dropping 56 cents, or nearly 18 percent, to $2.59.
 Fourth-quarter earnings excluding one-time items were $12.9 million, or 38 cents a share, compared with a loss of $2.2 million, or 6 cents a share, a year earlier. Analysts had forecast profit of 37 cents a share on average, according to First Call, which tracks Wall Street's estimates.
Total sales fell to $420 million from $423.5 million.
The company also said it sees profitability in the first half of 2001 "similar" to the comparable year-ago period. Wall Street analysts were forecasting profits of 12 cents a share for the first half versus a loss of 24 cents a share in last year's first half, according to First Call.
The retailer also said it has adopted a "conservative" business plan for the first half, saying it expects a slight improvement in gross margins, and that it would not open any new stores during the first half of 2001.
Sports Authority also plans to adjust inventory levels to sales trends and has budgeted $10 million in capital spending for the first half. The company also said it would continue to closely monitor the macroeconomic climate and consumer sentiment before providing guidance on the second half of the year.
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Ulysses Yannas, an analyst with Buckman, Buckman & Reid, said the company's gross margins have improved from a year ago, particularly with regard to footwear sales, which make up 32 percent of the chain's sales. He said Sports Authority came under pricing pressure last year as several competitors went out of business and held big clearance sales with deeply discounted prices. 
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