Global Sports, Inc. Reports Record Second Quarter Fiscal 2000 Results
KING OF PRUSSIA, PENNSYLVANIA, May 4, 2000 GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading developer and operator of e-commerce sporting goods businesses, announced today record operating results from continuing operations for the first quarter ended April 1, 2000. Global Sports achieved sequential revenue growth in a historically weak quarter for the industry. In addition, recent cash injections and the sale of its discontinued operations will contribute over $43.5 million in new capital during the second quarter. Global Sports pointed to the recent addition of three new meaningful partners, Oshman’s Sporting Goods, Bluelight.com, and Broadband Sports, and enhancements to the management team as substantially strengthening the Company’s position as a leader in the e-commerce sporting goods industry.
First Quarter Financial Results
Revenues from continuing operations for the first quarter ended April 1, 2000 were $5.7 million compared to no revenues from continuing operations for the same period in 1999 and revenues in the fourth quarter of fiscal 1999 of $5.5 million. The Company did not launch its e-commerce sporting goods business until the fourth quarter of fiscal 1999. The Company’s financial statements for the first quarter of fiscal 1999 reflect the Company’s historical businesses, which have been accounted for as discontinued operations. On a pro-forma basis, loss from continuing operations for the quarter was $11.3 million, a 25% improvement from the fourth quarter of fiscal 1999. On a pro-forma basis, the net loss for the quarter was ($0.61) per share, compared with a pro-forma loss of ($0.82) per share for the fourth quarter of fiscal 1999. Pro-forma net loss and pro-forma net loss per share excludes all non-cash charges including amortization of stock-based compensation and related expenses and depreciation and amortization related expenses.
Gross profit for the first quarter of fiscal 2000 was $1.8 million and gross margin for the same time period was 30.9%, 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 for the first quarter of fiscal 2000 were $13.3 million versus $16.7 million for the fourth quarter of fiscal 1999. Operating expenses excluding non-cash charges for the first quarter primarily consisted of sales and marketing costs of $9.8 million, product development costs of $1.6 million, and general and administrative expenses of $1.9 million. This compares to $9.7 million, $3.5 million, and $3.4 million for sales and marketing, product development, and general and administrative expenses for the fourth quarter of fiscal 1999, respectively. 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. Non-cash charges for the quarter totaled $2.7 million.
Michael G. Rubin, Chairman and CEO of Global Sports, commented on the Company’s financial results, stating, I am proud of our accomplishments this past quarter. Global Sports achieved sequential quarterly revenue growth and strong gross margins while simultaneously reducing our overall expenses. This quarter was also highlighted by the addition of new partners, enhancements to our existing e-commerce sporting goods businesses, and the strengthening of our management team and Board of Directors. Mr. Rubin continued, I am confident that the strength of our business, demonstrated by our first quarter results, as well as the addition of meaningful partnerships, validate the power of our model.
Global Sports achieved many significant milestones since January 1, 2000. Highlights of these achievements include:
Strategic Financing
- On April 27, 2000, Global Sports announced that TMCT Ventures, SOFTBANK Capital Partners, and SOFTBANK Capital Advisors Fund agreed to acquire common stock of Global Sports for a total of $25 million in cash at $8 per common share. In addition, these investors have the right to acquire up to an additional $15.6 million of common stock at $10 per common share.
- Combining this cash injection with the expected proceeds of the sale of the Company’s Off-Price and Action Sports Division scheduled for late May and a $5.3 million mortgage financing completed in late April, Global Sports will have secured $43.5 million in additional cash proceeds during the second quarter of fiscal 2000.
Partnerships and Alliances
- On January 3, 2000, the Company announced that it had formed an exclusive long-term alliance with Oshman’s Sporting Goods to develop and operate the www.oshmans.com online sporting goods superstore.
- On March 8, 2000, Global Sports announced that it formed an exclusive multi-year alliance with BlueLight.com to power the sporting goods department for Kmart’s online business.
- On April 4, 2000, the Company announced that it formed a strategic relationship with Broadband Sports in which Global Sports will become the exclusive e-commerce sporting goods provider for all of Broadband Sports properties. Broadband Sports will also provide unique athlete and team sports collectibles and memorabilia for distribution on Global Sports partners Web sites. In addition, Broadband Sports will utilize its extensive roster of over 250 athletes to create first-person content for Global Sports partners Web sites.
Expanded Management Team and Board of Directors
- On January 11, 2000, Global Sports announced that it had hired Steven Davis as Senior Vice President of Marketing. Mr. Davis has held a number of management positions with increasing responsibility at Just for Feet, Dell Computer, and Anheuser Busch Theme Parks, Inc.
- On February 9, 2000, the Company announced that it had hired Jordan M. Copland as Executive Vice President and Chief Financial Officer. Mr. Copland has held financial management posts at the Virgin Entertainment Group and with The Walt Disney Company.
- On March 31, 2000, Global Sports announced that Ronald D. Fisher had been named to its Board of Directors. Mr. Fisher currently serves as Chief Executive Officer of SOFTBANK Global Ventures and Managing Partner of SOFTBANK Capital Partners.
- On April 28, 2000, the Company announced that Mark Menell had been named to its Board of Directors. Mr. Menell currently serves as a partner of TMCT Ventures.
Enhanced Web Sites
The Company has also launched enhanced versions of www.theathletesfoot.com and www.sportchalet.com. Both Web sites were enhanced with many different types of offerings, including:
- improved search capability;
- faster site speed;
- enlarged product assortment and selection across a wider variety of sports;
- the addition of specialty stores that feature exclusive content in apparel, footwear, and equipment; and
- user-friendly navigation which allows consumers to quickly and easily shop by brand, by gender or through a large and diverse listing of sports.
Global Sports, Inc. (NASDAQ: GSPT) (http://www.globalsports.com) is a leading developer and operator of e-commerce sporting goods businesses. Global Sports develops and operates the e-commerce sporting goods businesses of sporting goods retailers, general merchandisers, Internet companies and media companies under exclusive long-term agreements. The Companys current partners include BlueLight.com (http://www.bluelight.com) the exclusive e-commerce partner for Kmart (NYSE: KM), Broadband Sports (http://www.broadbandsports.com) and its AthletesDirect subsidiary (http://www.athletesdirect.com), Dunhams Sports (http://www.dunhamssports.com), Healtheon/WebMD (http://store.webmd.com), MC Sports (http://www.mcsports.com), Oshmans Sporting Goods (http://www.oshmans.com), Sport Chalet (http://www.sportchalet.com), The Athlete’s Foot (http://www.theathletesfoot.com), and The Sports Authority (http://www.thesportsauthority.com).
Contact:
Media Contact:
Dana Stein Grosser
Director of Corporate Communications
Global Sports, Inc.
(610) 491-7000
grosserd@globalsports.com
Investor Contact:
Jordan M. Copland
Executive Vice President and Chief Financial Officer
Global Sports, Inc.
(610) 491-7000
coplandj@globalsports.com
