Global Sports Reports First Quarter Fiscal 2002 Results
GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading outsource solution provider for e-commerce, today announced operating results for the first quarter ended March 30, 2002.
First Quarter Fiscal 2002 Financial Results
Net revenue was $31.9 million for the first quarter of fiscal 2002, which represents a 97% increase compared to net revenue of $16.2 million for the first quarter of fiscal 2001. Comparable store sales increased approximately 9% from the first quarter of fiscal 2001 to the first quarter of fiscal 2002. Comparable stores sales are calculated based on Web sites that Global Sports has developed and operated for its partners for the entire periods for which the comparisons are made. Pro forma loss was $2.9 million for the first quarter of fiscal 2002, which represents a 53% improvement compared to a pro forma loss of $6.3 million for the first quarter of fiscal 2001. Pro forma loss per share was $0.08 for the first quarter of fiscal 2002 compared with a pro forma loss per share of $0.20 for the first quarter of fiscal 2001. Pro forma loss and pro forma loss per share exclude all non-cash charges, including stock-based compensation and depreciation and amortization expenses. Net loss was $5.3 million for the first quarter of fiscal 2002 or $0.14 per share on a fully diluted basis compared to a net loss of $8.4 million or $0.26 per share on a fully diluted basis in the first quarter of fiscal 2001.
Gross profit was $11.6 million and gross margin was 36.2% for the first quarter of fiscal 2002 compared to gross profit of $5.1 million and gross margin of 31.2% for the first quarter of fiscal 2001. Operating expenses excluding non-cash charges were $14.8 million for the first quarter of fiscal 2002 compared to $12.4 million for the first quarter of fiscal 2001, an increase of 20% on an almost two-fold increase in sales. Operating expenses excluding non-cash charges for the first quarter of fiscal 2002 primarily consisted of sales and marketing expenses of $9.2 million, product development expenses of $2.3 million, and general and administrative expenses of $3.3 million. This compares to sales and marketing expenses of $7.4 million, product development expenses of $2.4 million, and general and administrative expenses of $2.5 million for the first quarter of fiscal 2001. Sales and marketing expenses primarily include general distribution facility expenses, 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 first quarter of fiscal 2002 totaled $2.4 million compared to $2.1 million for the first quarter of fiscal 2001. These expenses included primarily stock-based compensation and depreciation and amortization expenses.
Full Year 2002 and Second Quarter 2002 Outlook
The following forward-looking statements reflect Global Sports’ expectations as of May 1, 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.
Second Quarter 2002 Expectations
· Net revenue is expected to be between $32.0 million and $34.0 million.
· Pro forma net loss is expected to be between $2.4 million and $2.7 million.
Michael G. Rubin, Chairman and CEO of Global Sports, commented on the company’s first quarter results, saying, “We are very pleased with our first quarter results and our strong performance on the key operating metrics of sales growth, gross margin expansion, and expense control which resulted in meaningful bottom line improvement. We are highly confident that we remain the partner of choice for outsourcing e-commerce, and we are excited about our growth prospects.”
Global Sports achieved many important milestones since December 29, 2001. Highlights of these achievements include:
Acquisitions
· On March 14, 2002, the Company completed its acquisition of Ashford.com, Inc., following approval of the transaction by Ashford.com shareholders. Under the terms of the transaction, Ashford.com shareholders received 0.0076 of a share of Global Sports common stock and $0.125 cash for each share of Ashford.com common stock.
Name Change
· On February 25, 2002, the Company announced its intention to change its corporate name to GSI Commerce, Inc. effective in May 2002, pending shareholder approval at its annual meeting.
Partnerships and Alliances
· On February 25, 2002, the Company announced the formation of a new division, Global-QVC Solutions, which provides direct response campaigns and complete e-commerce solutions for television networks and cable channels.
· On February 25, the Company announced an agreement with Comedy Central, the nation’s only all-comedy network, to develop and operate a new direct response program and e-commerce store located on www.comedycentral.com.
· On February 25, the Company announced an alliance with PAX TV, the nation’s number one family-friendly broadcast television network, to develop and operate a new direct response program and e-commerce store at www.pax.tv.
· On February 25, the Company announced an agreement with The Golf Channel, the nation’s only golf cable network, to develop and operate a new direct response program and e-commerce store located on www.thegolfchannel.com.
· On February 25, the Company announced an alliance with TV Land, cable’s only 24-hour classic TV network, to develop and operate a new direct response program and e-commerce store located at www.tvland.com.
· On April 4, the Company announced an alliance with Nickelodeon, the number one entertainment brand for kids, to develop and operate a new e-commerce store for Nickelodeon Online. The Nickelodeon Shop will launch this spring at www.nick.com and www.nickjr.com.
· On April 10, the Company announced an agreement with Shoe Carnival, a leading retailer of value-priced footwear and accessories, to develop and operate the www.shoecarnival.com e-commerce site.
First Quarter Conference Call
A conference call to discuss Global Sports’ first quarter 2002 financial results will be held at 4:45 p.m. EST on May 1, 2002. For access to the conference call, call 1-888-928-9510 by 4:30 p.m. EST. The password is “Global” and the leader’s name is “Michael Rubin.” A tape recording of the conference call will be available, starting one hour after completion of the call, until the end of business May 10, 2002. To access the recording, call 1-888-484-8239.
A live Webcast of the conference call will also be available at www.globalsports.com or www.streetevents.com. A replay of the Webcast will be available for a limited time.
About Global Sports
Global Sports is a leading outsource solution provider for e-commerce. The company develops and operates e-commerce businesses for retailers, manufacturers, media companies and professional sports organizations. The Global Sports’ platform includes Web site design and development, e-commerce technology, customer service, fulfillment, buying and merchandising, content development and management, online and database marketing and product development and sourcing.
Forward-Looking Statements
All statements made in this release and to be made in Global’s first quarter 2002 conference call, including those in the recordings and live audio of the call, other than statements of historical fact, will be forward-looking statements. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “will”, “would”, “should”, “guidance”, “potential”, “continue”, “confident”, “prospects”, and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business of Global Sports and the industry and markets in which the company operates. Those statements 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 those forward-looking statements. Factors which may affect Global Sports’ business, financial condition and operating results include the effects of changes in the economy, consumer spending, 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 its acquisitions of other businesses, including its recent acquisition of Ashford.com. More information about potential factors that could affect Global Sports can be found in its most recent Form 10-K, Form 10-Q 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 those forward-looking statements, except as otherwise specifically stated by Global Sports.
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Click here for First Quarter 2002 Financial Statements (.pdf)
Contact:
Investor Contact:
Jordan Copland
Executive Vice President and Chief Financial Officer
(610) 491-7013
coplandj@globalsports.com
Media Contact:
Patricia Henderson
Corporate Communications
(610) 491-7000
hendersonp@globalsports.com
