April 8, 2009 / 11:25 AM / in 9 years

Forzani pushes new store openings despite downturn

TORONTO (Reuters) - Forzani Group FGL.TO plans to open more than 25 new stores this year as the country’s biggest sporting goods retailer takes advantage of a weak economy and an increase in available property.

Calgary-based Forzani, whose banners include Sport Chek, Sports Experts and Coast Mountain Sports, said on Wednesday it had earmarked about C$30 million to C$35 million for capital expenditures in its 2010 fiscal year, mostly for the store openings.

The plans call for at least 14 new corporate stores, resulting in upward of 4.8 million additional square feet, with another 12 stores, or 1.9 million square feet, planned for its franchise stores, with a push into the big-box format.

“I’m surprised they are opening as many,” said Robert Gibson, an analyst at Octagon Capital. “Every other retailer is pulling in their horns, but they are being very aggressive.”

The company has about 550 corporate and franchise stores across the country.

Forzani’s growth plans come as a number of retailers, including sportswear chain Lululemon Athletica LLL.TO, have said they would slow expansion plans in the years ahead in an effort to ink long-term lease agreements at more attractive prices.

But the company’s chief executive said the time was right to push the number of store openings.

“We’re being judicious with our capex and keeping an open mind to great real estate opportunities that only come along at times like this,” Robert Sartor, Forzani’s chief executive, said on a conference call with analysts.

The company’s shares were up 3.9 percent at C$9.65 on the Toronto Stock Exchange at noon.

Earlier in the day, Forzani said it earned C$24.1 million ($19.5 million), or 79 Canadian cents a share, in the fourth quarter, ended February 1, down from C$28.7 million, or 85 Canadian cents a share, for the same period last year, which included an additional week of results.

Revenue fell 7.3 percent to C$380.8 million in the period, as consumers cut back discretionary spending due to the downturn in the global economy.

Analysts had expected average earnings of 77 Canadian cents a share before items and revenue of C$404.6 million, according to Reuters Estimates.

Sales at stores open at least one year fell 3.5 percent at corporate stores and rose 5.9 percent in franchise locations.

Quarterly gross margin was almost flat at 39.8 percent of revenue, compared with 40 percent a year earlier.

“Given the economy, the numbers were great,” said Gibson. “Their gross margin was basically flat, which in this economy is awesome.”

($1=$1.24 Canadian)

Reporting by Scott Anderson; editing by Rob Wilson

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