Global Sports Achieves Both GAAP and Pro Forma Profitability/assets/docs/pdf/generic/4Q01.pdf
KING OF PRUSSIA, PENNSYLVANIA, February 6, 2002 – GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading outsource solution provider for e-commerce, today announced operating results for the fourth quarter and fiscal year ended December 29, 2001.
Fourth Quarter Fiscal 2001 Financial Results
Net revenues were $51.4 million for the fourth quarter of fiscal 2001, which represents a 153% increase compared to net revenues of $20.3 million for the fourth quarter of fiscal 2000. Net income was $0.3 million for the fourth quarter of fiscal 2001 or $0.01 per share on a fully diluted basis compared to a net loss of $11.0 million or $0.41 per share on a fully diluted basis in the fourth quarter of fiscal 2000. Pro forma income from continuing operations was $2.7 million in the fourth quarter of 2001 or $0.06 per share on a fully diluted basis compared to a pro forma loss from continuing operations of $6.8 million or $0.26 per share on a fully diluted basis in the fourth quarter of 2000. Pro forma results exclude stock-based compensation expenses, depreciation and amortization expenses, and loss on disposition of discontinued operations which total $2.4 million in the fourth quarter of fiscal 2001 and $4.2 million in the fourth quarter of fiscal 2000. These expenses and loss are included in determining net income in accordance with accounting principles generally accepted in the United States. Excluding the impact of scooter sales, comparable store sales increased approximately 15%. Total comparable store sales increased by approximately 3%. Comparable store sales are calculated based on e-commerce businesses that Global Sports has developed and operated for its partners for the entire periods for which the comparisons are made.
Gross profit was $18.6 million and gross margin was 36.1% for the fourth quarter of fiscal 2001 compared to gross profit of $6.5 million and gross margin of 32.0% for the fourth quarter of fiscal 2000. Operating expenses excluding stock-based compensation and depreciation and amortization expenses were $16.4 million for the fourth quarter of fiscal 2001 compared to $13.9 million for the fourth quarter of fiscal 2000, an increase of 17.6% on a 153% increase in sales. Operating expenses excluding stock-based compensation and depreciation and amortization expenses for the fourth quarter of fiscal 2001 consisted of sales and marketing expenses of $11.1 million, product development expenses of $2.0 million, and general and administrative expenses of $3.3 million. This compares to sales and marketing expenses of $9.8 million, product development expenses of $1.9 million, and general and administrative expenses of $2.3 million for the fourth quarter of fiscal 2000. Sales and marketing expenses include 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. For the fourth quarters of fiscal 2001 and 2000, stock-based compensation expenses, depreciation and amortization expenses, and loss on disposition of discontinued operations were $2.4 million and $4.2 million, respectively, and interest and other income were $0.5 million and $0.6 million, respectively.
Year-End Fiscal 2001 Financial Results
Net revenues were $102.6 million for fiscal year 2001, which represents a 140% increase compared to net revenues of $42.8 million for fiscal year 2000. Net loss was $30.6 million and net loss per share was $0.90 on a fully diluted basis for fiscal year 2001 compared to net loss of $58.0 million and net loss per share of $2.64 on a fully diluted basis for fiscal year 2000. Pro forma loss from continuing operations was $14.2 million and pro forma loss from continuing operations per share was $0.42 on a fully diluted basis in fiscal 2001 compared to pro forma loss from continuing operations of $39.1 million and pro forma loss from continuing operations per share of $1.78 on a fully diluted basis for fiscal year 2000, a $24.9 million improvement in pro forma operating results. Pro forma results exclude stock-based compensation expenses, depreciation and amortization expenses, and loss on disposition of discontinued operations which total $16.4 million for fiscal year 2001 and $18.9 million for fiscal year 2000.
Gross profit was $35.0 million and gross margin was 34.1% for fiscal 2001 compared to gross profit of $13.2 million and gross margin of 30.9% for fiscal year 2000. Operating expenses excluding stock-based compensation and depreciation and amortization expenses were $52.2 million for fiscal year 2001 compared to $53.8 million for fiscal year 2000, a decrease of 2.9% on a 140% increase in sales. Operating expenses excluding stock-based compensation and depreciation and amortization expenses for fiscal year 2001 consisted of sales and marketing expenses of $32.7 million, product development expenses of $8.7 million, and general and administrative expenses of $10.8 million. This compares to sales and marketing expenses of $37.7 million, product development expenses of $7.3 million, and general and administrative expenses of $8.7 million for fiscal year 2000. For fiscal years 2001 and 2000, stock-based compensation expenses, depreciation and amortization expenses, and loss on disposition of discontinued operations were $16.4 million and 18.9 million, respectively, and interest and other income were $2.9 million and $1.4 million, respectively.
Fiscal Year and First Quarter 2002 Outlook
The following forward-looking statements reflect Global Sports’ expectations as of February 6, 2002. Given the potential changes in general economic conditions and consumer spending, the emerging nature of e-commerce, 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 quarterly results announcement.
Fiscal 2002 Expectations
- Net sales are expected to be approximately $200.0 million.
- Pro forma net income is expected to be approximately $11.0 million.
First Quarter Fiscal 2002 Expectations
- Net sales are expected to be between $29.0 million and $31.0 million.
- Pro forma net loss is expected to be between $2.9 million and $3.1 million.
Michael G. Rubin, Chairman and CEO of Global Sports, commented, “We are pleased not only to reach our goal of pro forma income from continuing operations in the fourth quarter of 2001 but also to achieve GAAP profitability in the same period. Global Sports also accomplished many business milestones in 2001, including more than doubling our sales while significantly improving our bottom line results, the addition of three more major full-line sporting goods retailers to our platform, and our expansion beyond the sporting goods category into jewelry and luxury goods through the pending acquisition of Ashford.com and the launch of our first general merchandise retailer, Bluelight.com. We believe that we are well positioned for growth in 2002 and that we are quickly becoming the partner of choice for companies looking to outsource their e-commerce operations.”
Global Sports achieved many important milestones since September 29, 2001. Highlights of these achievements include:
Partnerships and Alliances
· On October 2, 2001, the Company announced an agreement with City Sports, a leading sporting goods retailer in the Northeast, to develop and operate the new e-commerce store at www.citysports.com. The store launched in the fourth quarter of 2001.
· On October 18, 2001, the Company announced an agreement with Pro Golf International, Inc./ ProGolf.com, a subsidiary of Ajay Sports, Inc. (OTC Bulletin Board: AJAY), and the online distribution channel for Pro Golf of America, Inc., to develop and operate an e-commerce store at www.progolf.com. The store launched in the first quarter of 2002.
About Global Sports
Global Sports is a leading outsource solution provider for e-commerce. The company develops and operates e-commerce businesses for retailers, media companies, and professional sports organizations. The Global Sports’ platform includes Web site design and development, e-commerce technology, customer service, fulfillment, merchandising, content development and management, and online and database marketing.
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 2002 expectations and results of Global Sports. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “will”, “would”, “should”, “guidance”, “potential”, “continue”, “project”, “forecast”, and similar expressions typically are used to identify forward-looking statements. 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 industries in which Global Sports operates 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 acquisitions of other businesses. 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.
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Click here for Fourth Quarter 2001 and Full Fiscal Year 2001 Financial Statements (.pdf)
Contact:
Jordan M. Copland
Executive Vice President and Chief Financial Officer
Global Sports, Inc.
(610) 491-7000
coplandj@globalsports.com
Patricia Henderson
Corporate Communications
Global Sports, Inc.
(610) 491-7013
hendersonp@globalsports.com
