Global Sports Reports Record Fourth Quarter & Year-End Results
KING OF PRUSSIA, PENNSYLVANIA, February 14, 2001 GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading developer and operator of e-commerce sporting goods businesses, today announced operating results from continuing operations for the fourth quarter and fiscal year ended December 30, 2000.
Fourth Quarter Fiscal 2000 Financial Results
Revenues were $20.3 million for the fourth quarter of fiscal 2000 which represents a 269% increase compared to revenues of $5.5 million for the fourth quarter of fiscal 1999. Pro forma net loss from continuing operations was $6.9 million for the fourth quarter of fiscal 2000, which represents a 54% improvement compared to pro forma net loss from continuing operations of $14.9 million for the fourth quarter of fiscal 1999, and was substantially less than the average of analysts’ expectations of $9.9 million. Pro forma net loss per share was $0.26 for the fourth quarter of fiscal 2000 compared with a pro forma net loss per share of $0.81 for the fourth quarter of fiscal 1999. Pro-forma net loss and pro-forma net loss per share exclude all non-cash charges, including stock-based compensation and depreciation and amortization expenses. Results for the fourth quarter of fiscal 1999 represent sales from the company’s initial Web sites, which were launched in late October 1999.
Gross profit was $6.5 million and gross margin was 32.0% for the fourth quarter of fiscal 2000 compared to gross profit of $1.7 million and gross margin of 30.7% for the fourth quarter of fiscal 1999. Operating expenses excluding non-cash charges were $13.9 million for the fourth quarter of fiscal 2000 compared to $16.9 million for the fourth quarter of fiscal 1999, a decrease of 17.8%. Operating expenses excluding non-cash charges for the fourth quarter of fiscal 2000 primarily consisted of sales and marketing costs of $9.8 million, product development costs of $1.9 million, and general and administrative expenses of $2.3 million. This compares to sales and marketing costs of $9.7 million, product development costs of $3.5 million, and general and administrative costs of $3.6 million for the fourth quarter of fiscal 1999. Sales and marketing expenses include general distribution facility costs, promotional shipping, payroll and related expenses for personnel engaged in merchandising, buying, marketing, client services, fulfillment and customer service, credit card fees, partner revenue share, as well as advertising and media spending. Non-cash charges for the fourth quarter of fiscal 2000 totaled $3.3 million and included primarily stock-based compensation and depreciation and amortization expenses.
Year-End Fiscal 2000 Financial Results
Revenues were $42.8 million for fiscal year 2000, which represents a 678% increase compared to revenues of $5.5 million for fiscal year 1999. Pro forma net loss from continuing operations was $39.1 million for fiscal year 2000, which represents a 69% increase compared to pro forma net loss from continuing operations of $23.1 million for fiscal year 1999. Pro forma net loss per share was $1.78 for fiscal year 2000 compared with a pro forma net loss per share of $1.55 for fiscal year 1999. Pro-forma net loss declined sequentially every quarter during fiscal year 2000. Pro-forma net loss and pro-forma net loss per share exclude all non-cash charges, including stock-based compensation and depreciation and amortization expenses. Results for fiscal year 1999 represent sales from the companys initial Web sites, which were launched in late October 1999.
Gross profit was $13.2 million and gross margin was 30.9% for fiscal 2000 compared to gross profit of $1.7 million and gross margin of 30.7% for fiscal year 1999. Operating expenses excluding non-cash charges were $53.8 million for fiscal year 2000 compared to $27.5 million for fiscal year 1999, an increase of 96%. Operating expenses excluding non-cash charges for fiscal year 2000 primarily consisted of sales and marketing costs of $37.7 million, product development costs of $7.3 million, and general and administrative expenses of $8.7 million. This compares to sales and marketing costs of $11.6 million, product development costs of $6.9 million, and general and administrative costs of $8.9 million for fiscal year 1999. Non-cash charges for fiscal year 2000 totaled $13.1 million and included primarily stock-based compensation and depreciation and amortization expenses.
Fiscal Year and First Quarter 2001 Outlook
The following forward-looking statements reflect Global Sports expectations as of February 14, 2001. Given the potential changes in general economic conditions and consumer spending, the emerging nature of online retail, and various other risk factors discussed below, actual results may differ materially. The Company intends to continue its practice of not updating forward-looking statements until its next quarter results announcement, other than in publicly available statements.
Fiscal 2001 Expectations
- Net sales are expected to be approximately $100 million.
- Gross margin is expected to be between 31% and 32%.
- Cash operating expenses are expected to be approximately $55 million.
- Interest income is expected to be approximately $2 million.
- Pro forma net loss is expected to be between $20 million and $22 million.
- Pro forma earnings per share are expected to be between $(0.63) and $(0.69).
- The Company expects pro forma operating profitability in the fourth quarter of fiscal 2001
First Quarter 2001 Expectations
- Net sales are expected to be between $14.5 million and $15.5 million.
- Gross margin is expected to be between 30% and 32%.
- Cash operating expenses are expected to be between $12.5 million and $13.5 million.
- Interest income is expected to be approximately $600,000.
- Pro forma net loss is expected to be between $7 million and $8 million.
- Pro forma earnings per share are expected to be between $(0.22) and $(0.25).
Michael G. Rubin, Chairman and CEO of Global Sports, commented on the Company’s financial results, saying, Global Sports finished 2000 as the leader in sporting goods e-commerce. Our strategy of partnering with established brand name companies while simultaneously developing a centralized infrastructure is working. We generated substantial revenue growth during the fourth quarter while reducing our expenses, expanding our margins and increasing our inventory turnover. Our infrastructure, including our new fulfillment center, is performing well, providing increased operating efficiencies and enhancing our ability to serve our customers. Our financial position is strong, with over $93 million in cash at year-end. Most importantly, we are excited about our outlook for 2001 and beyond as we capitalize on an expanded partner base, a consolidated competitive environment and solid underlying trends in the sporting goods industry, and I am pleased that the guidance we provided today is better than the current average of analysts’ expectations.
Global Sports achieved many important milestones since September 30, 2000. Highlights of these achievements include:
Partnerships and Alliances
- On November 21, 2000, Global Sports announced the launch of the new Ready Set Sports store on the iQVC site, www.iqvc.com. iQVC is the online retailing division of QVC, Inc.
- On November 14, 2000, the Company announced an agreement with Bally Total Fitness, the nation’s leading fitness chain, to develop and operate a comprehensive e-commerce sports and fitness store for Ballys four million members. The new online sports and fitness store, www.ballystore.com, launched in the first quarter of 2001.
- On October 24, 2000, Global Sports announced that it entered into a definitive agreement to acquire all of the outstanding shares of Fogdog, Inc., an online sporting goods store. The transaction closed on December 28, 2000.
Marketing Agreements
- On October 31, 2000, the Company announced that it signed a marketing agreement with Excite@Home. As part of the agreement, sporting goods retailers for which Global Sports develops and operates e-commerce businesses, are featured tenants within the Sports & Fitness shopping area of Excite.com.
- On October 20, 2000, Global Sports announced that it signed an agreement with America Online, Inc., the worlds leading interactive services company, for seven placements within the Sports & Outdoors area of the Shop@AOL online shopping destinations as well as integration into the Shop@AOL shopping search engine.
- On October 19, 2000, the Company announced that it signed a marketing agreement with the MSN. network of Internet services to add two of the retailers for which Global Sports develops and operates e-commerce sporting goods Web sites to the MSN eShop.
About Global Sports
Global Sports, Inc. (NASDAQ: GSPT) (www.globalsports.com) is a leading developer and operator of e-commerce businesses. Global Sports develops and operates the e-commerce sporting goods businesses of specialty retailers, general merchandisers, Internet companies, and media companies under exclusive long-term agreements.
Forward-Looking Statements
All statements in this release, other than statements of historical fact, are forward-looking statements, including the statements regarding the fiscal year and first quarter 2001 outlook expectations and results of Global Sports. These forward-looking statements are based on current expectations, beliefs, assumptions, estimates and forecasts about the business of Global Sports and the industry and markets in which the company operates. The statements in this release are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Factors which may affect Global Sports’ business, financial condition and operating results include the effects of changes in the economy, the stock market and the sporting goods industry generally, changes affecting the Internet and e-commerce, the ability of the company to maintain relationships with strategic partners and suppliers, the ability of the company to timely and successfully develop, maintain and protect its technology and product and service offerings and execute operationally, the ability of the company to attract and retain qualified personnel and the ability of the company to successfully integrate its recent acquisition of Fogdog, Inc. More information about potential factors that could affect Global Sports can be found in its most recent Form 10-Q, Form 10-K and Form S-4 and other reports and statements filed by Global Sports with the Securities and Exchange Commission. Global Sports expressly disclaims any intent or obligation to update these forward-looking statements.
Contact:
Investor Contact:
Jordan M. Copland
Executive Vice President and Chief Financial Officer
Global Sports, Inc.
(610) 491-7000
coplandj@globalsports.com
Media Contact:
Dana Stein Grosser
Director of Corporate Communications
Global Sports, Inc.
(610) 491-7000
grosserd@globalsports.com
