Fitness financials: Analysts downgrade Forzani after disappointing sales period, plus Dick's Sporting Goods

Analysts downgrade Forzani after disappointing sales period. Dick's Sporting Goods taps new president.
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Analysts downgrade Forzani after disappointing sales period

Following the report of disappointing same-store sales and a weak economic environment, analysts lowered the stock price target of Forzani Group (TSX: FGL) and cut its earnings-per-share estimates.

For the seven-week period, the Canadian sporting goods retailer, owner of specialty retailer Fitness Source, said corporate same-store sales were down 2 percent during the back-to-school period versus a year ago with sales flat in Western Canada, while sales in the east, particularly Ontario, slipped 3.2 percent. Franchise store sales, predominantly in Quebec, increased 3.5 percent for the seven-week period.

Analysts said this period is traditionally one of the strongest sales periods for a retailer and a gauge of the sentiment of shoppers going forward.

"Same-store sales for the seven-week period were relatively flat as the positive impact of a strong Labor Day and back-to-school sales were offset by unfavorable consumer spending patterns," Raymond James Ltd. analyst Andy Nasr wrote in a note to investors.

The analyst dropped the company's stock price target 25 percent to CDN $15 (USD $14.27) a share from CDN $20 (USD $19.03). Nasr also lowered his 2009 earnings-per-share target to CDN $1.18 (USD $1.12) from CDN $1.28 (USD $1.21), and his 2010 figure to CDN $1.42 (USD $1.35) from CDN $1.59 (USD $1.51), citing macroeconomic headwinds and lower-than-anticipated same-store sales.

BMO Capital Markets analyst Adam Clark also lowered his share price target to CDN $11.50 (USD $10.94) from CDN $15 (USD $14.27), while maintaining a "market perform" rating. Genuity Capital Market's analyst cut its target 13.6 percent to CDN $17.50 (USD $16.65) a share.

"We are not compelled to move to an 'outperform' rating at this point given the increased potential for EPS risk from macro headwinds and general market turbulence as it sorts out the credit crisis," Clark wrote in a research note.

Earlier this month, Forzani reported a 72-percent drop in second-quarter profit as cool and wet summer weather, a tough economy and store renovations hurt results.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Oct. 1.)



Dick's Sporting Goods names new president


Dick's Sporting Goods (NYSE: DKS) said Joseph M. Schmidt, who has been executive vice president of operations and chief operating officer since February, will become president and COO in February 2009. Before becoming chief operating officer, he had been vice president of store operations.

Edward W. Stack, the company's longtime chairman and CEO, will relinquish the title of president that he picked up in February when William J. Colombo moved on to become vice chairman of the company's board.


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