Global Sports Reports Third Quarter Fiscal 2001 Results/assets/docs/pdf/generic/3Q01.pdf
Net Revenue Increased 100%; Pro Forma Loss Reduced by 46%
Comp Store Sales Increased Approximately 57%
Company Reiterates Guidance of Pro Forma Fourth Quarter 2001 Profit
GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading outsource solution provider for e-commerce, today announced operating results for the third quarter ended September 29, 2001.
Third Quarter Fiscal 2001 Financial Results
Net revenue was $18.1 million for the third quarter of fiscal 2001, which represents a 100% increase compared to net revenue of $9.0 million for the third quarter of fiscal 2000. Comparable store sales increased by approximately 57% from the third quarter of fiscal 2000 to the third quarter of fiscal 2001. Comparable stores sales are calculated based on Web sites that Global Sports has developed and operated for the entire periods for which the comparisons are made. Pro forma loss from continuing operations was $5.3 million for the third quarter of fiscal 2001, which represents a 46% improvement compared to a pro forma loss from continuing operations of $9.7 million for the third quarter of fiscal 2000. Pro forma loss from continuing operations per share was $0.15 for the third quarter of fiscal 2001 compared with a pro forma loss from continuing operations per share of $0.45 for the third quarter of fiscal 2000. Pro forma loss from continuing operations and pro forma loss from continuing operations per share exclude all non-cash charges, including stock-based compensation and depreciation and amortization expenses. The company reported cash, cash equivalents, and short-term investments of $93.1 million and shareholders’ equity of $142.5 million at the end of the third quarter of fiscal 2001.
Gross profit was $6.2 million and gross margin was 34.1% for the third quarter of fiscal 2001 compared to gross profit of $2.7 million and gross margin of 30.3% for the third quarter of fiscal 2000. Operating expenses excluding non-cash charges were $12.0 million for the third quarter of fiscal 2001 compared to $12.8 million for the third quarter of fiscal 2000, a decrease of approximately 6% on a two-fold increase in sales. Operating expenses excluding non-cash charges for the third quarter of fiscal 2001 primarily consisted of sales and marketing expenses of $7.4 million, product development expenses of $2.3 million, and general and administrative expenses of $2.4 million. This compares to sales and marketing expenses of $8.6 million, product development expenses of $1.9 million, and general and administrative expenses of $2.2 million for the third quarter of fiscal 2000. 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 third quarter of fiscal 2001 totaled $9.4 million compared to $2.6 million for the third quarter of fiscal 2000. These expenses included primarily stock-based compensation and depreciation and amortization expenses.
Full Year 2001 and Fourth Quarter 2001 Outlook
The following forward-looking statements reflect Global Sports’ expectations as of October 24, 2001. 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.
Full Year 2001 Expectations
· Net revenue is expected to exceed $100.0 million.
· Gross margin is expected to be between 33.0% and 33.5%.
· Cash operating expenses are expected to be between $51.0 and $52.0 million.
· Net interest and other income is expected to be approximately $2.8 million.
· Pro forma loss from continuing operations is expected to be less than $15.0 million.
· Pro forma loss from continuing operations per share is expected to be $0.47 or less.
· Cash, cash equivalents, and short-term investments are expected to exceed $100.0 million at December 29, 2001.
Fourth Quarter 2001 Expectations
· Net revenue is expected to exceed $50.0 million.
· Gross margin is expected to be between 34.0% and 35.0%.
· Cash operating expenses are expected to be between $15.5 million and $16.0 million.
· Net interest and other income is expected to be between $400,000 and $500,000.
· Pro forma profit from continuing operations is expected to exceed $2.0 million.
· Pro forma profit from continuing operations per share is expected to be between $0.04 and $0.05.
Michael G. Rubin, Chairman and CEO of Global Sports, commented on the company’s third quarter results, saying, “Global Sports demonstrated continued operating momentum in the third quarter of 2001. Once again, we doubled our top-line results driven by significant partner expansion and strong same-store sales growth, while we reduced our cash operating expenses in absolute dollars on a year-over-year basis. We also achieved meaningful gross margin expansion in the period and finished the quarter with a very strong financial position that included more than $93 million in cash, cash equivalents and short-term investments.”
Mr. Rubin continued, “The third quarter of 2001 was also a notable period from a strategic perspective for Global Sports, highlighted by our expansion beyond the sporting goods category which I anticipate will provide our company with a substantially larger long-term growth opportunity. As part of this initiative we announced our first non-sporting goods deals, which included being selected to manage certain aspects of Kmart Corporation’s overall e-commerce business and entering into a definitive agreement to acquire Ashford.com, which we expect will serve as a foundation for extending our outsourcing solution to the jewelry and luxury goods categories. The combination of a strong operating momentum, an excellent financial position and an outstanding growth platform leads us to be confident about our prospects for the fourth quarter of 2001 and beyond.”
Global Sports achieved many important milestones since June 30, 2001. Highlights of these achievements include:
Strategic Investment
· On August 24, 2001, the Company announced the close of a strategic investment in Global Sports by a joint venture of Comcast Corporation and QVC, Inc.
Strategic Acquisition
· On September 15, 2001, the Company announced that it entered into a definitive agreement to acquire all of the outstanding shares of Ashford.com, a leading e-commerce luxury goods and corporate gifts company. The transaction is expected to close in late 2001 or early 2002.
Partnerships and Alliances
· On July 3, 2001, the Company announced an agreement with BLADES Board & Skate, a leading action sports enthusiast retail chain, to develop and operate www.blades.com.
· On July 10, the Company announced an agreement with Olympia Sports, a leading regional sporting goods retailer, to develop and operate its e-commerce store.
· On July 16, the Company announced the enhancement and extension of their existing e-commerce agreement with The Sports Authority as well as the expansion of their relationship to include catalogue and kiosk related services.
· On August 1, the Company announced an agreement with the Denver Broncos to develop and operate the official online store located at store.denverbroncos.com.
· On August 21, the Company announced an agreement with Kmart Corporation’s Bluelight.com to manage certain aspects of Kmart’s overall e-commerce business, including fulfillment, technology and customer service.
· On August 27, the Company announced an agreement with Modell’s Sporting Goods, a leading sporting goods retailer, to develop and operate www.modells.com.
· On September 5, the Company announced an agreement with the San Diego Chargers to develop and operate a new and expanded e-commerce store located at store.chargers.com.
· On September 25, the Company announced an agreement with the Ladies Professional Golf Association (LPGA) to develop and operate the new e-commerce Pro Shop for www.lpga.com, the LPGA’s official Web site.
· On October 2, the Company announced an agreement with City Sports, a leading sporting goods retailer in the Northeast, to develop and operate www.citysports.com.
· On October 18, the company announced an agreement with Pro Golf International, Inc./Pro Golf.com to develop and operate the e-commerce store at www.progolf.com.
Third Quarter Conference Call
A conference call to discuss Global Sports’ third quarter 2001 financial results will be held at 4:45 p.m. EDT on Wednesday, October 24, 2001. For access to the conference call, call 1-888-928-9510 by 4:30 p.m. EDT. 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 November 2, 2001. To access the recording, call 1-888-473-0145.
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, 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 made in this release and to be made in Global’s third quarter 2001 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 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 acquisitions of other businesses, including its proposed 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.
# # #
Click here for Third Quarter 2001 Financial Statements (.pdf)
Contact:
Investor Contact:
Jordan Copland
Executive Vice President and Chief Financial Officer
Global Sports, Inc.
(610) 491-7000
coplandj@globalsports.com
Media Contact:
Patricia Henderson
Global Sports, Inc.
(610) 491-7000
hendersonp@globalsports.com
