December 15, 2008 / 3:47 PM / 10 years ago

UPDATE 2-Forzani to keep inventories lean, rein in capex

* Forzani to rein in 2009 capital expenditures

* Will keep inventories lean as it assesses economy

* Shares down 0.25 percent (Adds details)

TORONTO, Dec 15 (Reuters) - Sporting goods retailer Forzani Group Ltd FGL.TO said on Monday it would keep its inventories lean, and rein in its 2009 capital expenditures as it gauges the full effects of the economic downturn.

But Forzani, whose banners include Sport Chek, Sports Experts and Coast Mountain Sports, said it is in good shape to “ride out” the economic storm.

“We will continue to keep our inventories very lean as we are quite wary about the depth and the extent of this recession and its impact on consumer spending,” Robert Sartor, Forzani’s chief executive, told a conference call.

“We think it is a prudent thing to do because we are not sure that we have seen the low of the lows from the Canadian consumer.”

The company, which reported a 33 percent drop in its third-quarter profit late on Friday, also said its board was reviewing all options regarding its excess cash position, but offered few details. It said it would not make any decisions until it determined the full impact of the economic downturn in the new year.

“Our board reviewed all the potential options and our view is until such time that we have a real good handle for how deep this recession is, and how skittish the consumer may get in 2009, we will keep our powder dry at least for this quarter.”

Sartor said the company would focus on maintaining lean inventories and dedicate its energy to new store openings.

“This is definitely cautious. While they are listening to what consumers are doing, they are also listening to investors,” said Sheila Broughton, an analyst at PI Financial, in Vancouver, British Columbia.

“It makes sense that they are being prudent, managing their debt and seeing how long and deep the recession will be.”

Shares of Calgary, Alberta-based Forzani were down 0.25 percent at C$8.33 on the Toronto Stock Exchange on Monday afternoon. ($1=$1.24 Canadian) (Reporting by Scott Anderson; editing by Peter Galloway)

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