April 28, 2009 / 2:09 PM / in 9 years

UPDATE 2-Forzani sees higher sales and EPS, to drop banners

* Sees 2014 EPS in the range of between C$2.25 and C$2.35

* Sees 2014 sales at about C$2.6 billion

* May cut number of banners to nine from 16

* Shares rise 0.9 percent (Adds background and analyst comments)

By Scott Anderson

TORONTO, April 28 (Reuters) - Forzani Group FGL.TO, the Canadian sporting goods retailer, 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 but boosts the size of individual stores.

Forzani forecast during an investor day on Tuesday that its earnings per share will be between C$2.25 and C$2.35 by 2014, up from 93 Canadian cents in 2008, and its sales will be about C$2.6 billion ($2.1 billion), up from C$1.6 billion last year.

The company, which boasts more than 560 stores, currently operates 16 chains under such banners as Sport Chek and Coast Mountain Sports. It said it will gradually cut this to as few as nine chains, focusing on more profitable operations such as Sport Chek and Sport Mart.

The company also said it would gradually buy back shares and return the capital to investors through dividends at a payout rate of about 20 to 25 percent of EPS.

“On a top line (revenue basis) they should be able to do it. They should be able to do 10 percent given what they are planning,” said Robert Gibson, an analyst at Octagon Capital Corp.

“The rest of the stuff is more aggressive than that. It will be interesting. If they can do it will be amazing.”

Forzani shares, which have dropped more than 40 percent in the past year, were up 0.9 percent at C$12.17 on the Toronto Stock Exchange on Tuesday morning.

The company said its major initiatives include increasing by 5,000 square feet the average size of its outlets. At Sport Chek, the company’s biggest chain with 128 stores, it plans to add specialty shops, including 21 Nevada Bob’s Golf boutiques this year.

$1=$1.22 Canadian Reporting by Scott Anderson; editing by Peter Galloway

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