Global Sports to Expand Beyond Sporting Goods
GLOBAL SPORTS, INC. (NASDAQ: GSPT), a leading developer and operator of e-commerce businesses, announced today an expansion of its business to include developing and operating e-commerce businesses beyond the sporting goods merchandise category. Concurrent with this announcement and detailed in a separate release, Kmart Corporation, the 2nd largest discount retailer in the United States, and Bluelight.com, the wholly owned e-commerce subsidiary of Kmart, today announced that they have selected Global Sports to operate certain aspects of their overall e-commerce business, including fulfillment, technology and customer service. Under the agreement, Kmart will select the merchandise to be sold on the site, own the inventory and compensate Global Sports for its services through a combination of fixed fees and a percentage of sales. This agreement will extend Global Sports into several new merchandise categories.
In 1999, Global Sports developed a flexible e-commerce platform that today operates 21 e-commerce sporting goods businesses for leading retailers, media companies and professional sports teams, including The Sports Authority, The Athlete’s Foot, QVC, Dick’s Sporting Goods and Gart Sports. Global Sports’ strategy has been to become the clear market leader in sporting goods e-commerce and then explore opportunities to expand its platform into new vertical markets. With today’s announcement about Kmart Corporation and Bluelight.com, Global Sports has begun the second leg of this expansion strategy. In addition to the agreement with Kmart Corporation and BlueLight.com, Global Sports intends to selectively pursue additional opportunities outside of sporting goods, while continuing to grow its existing sporting goods business.
Global Sports also announced today guidance for the fourth quarter of 2001 and for the full year 2002 that is significantly better than the current average of analysts’ expectations for those periods due to the expected positive impact from the company’s expanded growth strategy and enhanced operating efficiencies in its existing sporting goods business. The company also remains comfortable with its previously issued guidance for the third quarter of 2001.
Fourth Quarter 2001 Expectations
· Net revenue is expected to exceed $50.0 million, compared to the average of analysts’ expectations of $49.3 million.
· Pro forma operating profit is expected to exceed $2.0 million versus the average of analysts’ expectations of $0.6 million.
Fiscal 2002 Expectations
· Net revenue is expected to exceed $185.0 million, compared to the average of analysts’ expectations of $177.5 million.
· Pro forma operating profit is expected to exceed $10.0 million versus the average of analysts’ expectations of $2.5 million.
Pro forma operating profit excludes all non-cash charges, including stock-based compensation and depreciation and amortization expenses.
Commenting on today’s announcement, Michael G. Rubin, Chairman and Chief Executive Officer of Global Sports, said, “Sporting goods is the foundation of Global Sports and remains a significant growth opportunity for our company. We have spent nearly three years building and operating an e-commerce platform that is well suited to handle merchandise categories beyond sporting goods and an infrastructure that has the capacity to accommodate a significant expansion of our business. With our current business enjoying sustained momentum, we believe that the timing is right to embark on additional growth initiatives. We have evaluated opportunities to expand into new merchandise categories, with our principal criteria being that any new opportunity must be incrementally profitable to our existing financial model. We are excited to announce our first major agreement outside of sporting goods and to provide significantly improved financial guidance. Being selected by one of the largest retailers in the country as their e-commerce partner, after they conducted an extensive analysis of available options, is a great validation of our overall business.”
About Global Sports
Global Sports, Inc. (NASDAQ: GSPT) (www.globalsports.com) is a leading developer and operator of e-commerce businesses.
Forward-Looking Statements
All statements made in this release, other than statements of historical fact, are forward-looking statements. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “guidance”, 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 recent acquisition of Fogdog, Inc. 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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Contact:
Global Sports Contact:
Patricia Henderson
(610) 491-7013
hendersonp@globalsports.com
