Sometimes the market seems to make no sense. Yesterday, Galyan's Trading
I know, I know. Galyan's release was allegedly good news because the firm's negative $0.26 per share beat estimates by a penny, if you wish away the nickel per share that the company attributes to costs for retiring the former CEO and chairman. But there's not much else to inspire confidence here, and it gives me no great thrill to have to say that because I'm a fan of the stores.
Sales increased 22% to $158 million, but given last quarter's hot retail climate, there's little excuse for the 1.4% drop in comparable-store sales. I harp on the need for comps increases because Galyan's simply can't afford to keep juicing revenues the new-fashioned way, by rapid expansion.
Looking for a silver lining, we might be tempted to applaud the apparent improvement in gross margin, until we read that the 1.3% progress was primarily "due to a higher adjustment for EITF 02-16." In other words, it's an accounting change, and without seeing more details, we have to conclude that this may or may not reflect a favorable shift in operations. SG&A expenses ballooned 2.5% as a portion of sales.
Management has said that this is a transition year, but investors would do well to take a hard look to see if the company is moving ahead. The stock remains in a pretty steep swoon, and it's easy to understand why.
In addition to Dick's, there's competition from Sports Authority
Join other sporty Fools in our Health & Fitness discussion boards.