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THUMBS DOWN
The Sports Authority (NYSE: TSA - Quotes, News, Boards)
The Sports Authority, based in Fort Lauderdale, Florida, is a sporting goods retail chain. The company has about 200 stores in 32 states and in Japan and Canada.
Regular readers of this column know what I think about this company. For you newcomers, let me bring you up to speed. This is a retailer heading for the dumper, with no hope of survival. I have been telling readers to sell this stock for three years, and even with its 90% decline over that time I am still recommending that investors run away from this stock. And I mean run.
It has had management shakeups and closed stores as it attempts to overcome over-expansion and an industrywide slide. The retailer is trying to appeal more to women and children and freshen up its stores' ambience and merchandise. Nothing can help it. Not even the $60 million credit line it just received two weeks ago.
The company already has $100 in long-term debt and $566 million in total liabilities, so getting more credit is just adding another straw to the pile, which will eventually crush the company and force it into bankruptcy. By the way, how does a company with a market cap of $65 million and over $500 million in debt get another line of credit that equals the entire size of the company? Where can I sign up for some of that money?
Analysts are expecting a profit $0.19 per share this quarter. I don't know what planet these two analysts are on, but it's not Earth. The company does not have a chance to make $0.19 per share. It will be lucky to make half that. The Sports Authority had an operating loss of $4 million last quarter. In order to make $0.19 per share, it would have to post an operating profit of over $6 million. That would be some turnaround in three months! |
