June 10, 2009 / 11:32 AM / 8 years ago

UPDATE 3-Shareholders approve Forzani board, as loss narrows

*Shareholders approve board of directors

*Share loss C$0.04 vs consensus loss C$0.11

*Corporate same store sales rise 1 percent

*Shares up 2.3 percent at C$15.22 (Recasts. Adds shareholder comments)

TORONTO, June 10 (Reuters) - Forzani Group Ltd's FGL.TO shareholders overwhelmingly approved the company's slate of directors on Wednesday, defeating a bid by a major shareholder to install its own members on the board of Canada's biggest sporting goods retailer.

At a meeting in Calgary, investors voted 99 percent in favor of the company's slate of nominees to the board.

New York-based hedge fund Crescendo Partners, which owns about 5 percent of Forzani's outstanding shares, nominated two directors to speed the pace of change and "bring a sense of urgency" to the company, known for such retail chains as Sport Chek, Sports Experts and Coast Mountain Sports.

But the hedge fund had said it was not seeking any major strategic changes, and it also supported the current management.

Forzani called on its shareholders to reject the bid, arguing that Crescendo failed to provide a compelling argument to support its position and hadn't identified any particular business initiatives.

Neither Crescendo nominee David Sgro nor the other dissident choice, Barry Erdos, garnered enough votes.

Before the vote, Sgro told shareholders that, regardless of the outcome, Crescendo's move served to "remind this board that they are accountable to all shareholders and that long-term, underperformance is unacceptable."

Earlier in the day, Forzani it lost C$1.1 million ($990,000), or 4 Canadian cents a share, for its first quarter, ended May 3. That compares with a loss of C$2.8 million, or 9 Canadian cents a share, for the same period last year.

The first quarter is usually considered the weakest quarter of the year for retailers.

Forzani's revenue was flat at C$307.7 million, compared with C$307.5 million in the year-before quarter.

Analysts had expected, on average, a loss of 11 Canadian cents a share before items and revenue of C$311 million, according to Reuters Estimates.

Candice Williams, an analyst at Genuity Capital Markets in Vancouver, British Columbia, said the results were as good as could be expected given the tough economic climate.

The analyst noted that Forzani, which has more than 550 stores across the country, managed to offset the lack of top-line growth by focusing on controlling expenses.

"They are holding their own in a tough environment," she said.

Sales at stores open at least one year rose 1 percent at corporate stores, but fell 2.8 percent at franchise locations.

Quarterly gross margin was 33.7 percent of revenue, compared with 34.3 percent a year earlier.

Forzani's shares, which have doubled since the start of the year, were up 2.3 percent at C$15.22 on the Toronto Stock Exchange on Wednesday.

At the meeting, the company also reiterated its plans to boost sales by 10 percent a year and earnings per share by 20 percent a year over the next five years as it reduces the number of retail chains it operates. ($1=$1.11 Canadian) (Reporting by Scott Anderson)

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