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Non-Tech : Just For Feet (FEET) -- Ignore unavailable to you. Want to Upgrade?

To: lanac who wrote (425)	10/31/1997 8:08:00 PM
From: Petz	Read Replies (2) \| Respond to of 750

I'm definitely not a retail sales analysis, but here's my take on how much sales have to increase to meet the 0.18 earnings expectation this quarter. 0.024 = desired increase in Net Income * 31.5 million shares (assume an increase) = 0.800M increase in net =1.31M increase in net income before tax. With gross margin (100 - cost of sales percentage) of 42% This means sales have to increase 1/.42 times 1.31M, or 3.12M to get the extra 2.4 cents of EPS. All of this assumes that "Operating Expenses" are constant, which is only approximately true for existing stores. Last quarter, "Operating Expenses" went up 8.21M as seven new stores were opened. From this I calculate that operating expenses will grow 1.2M per store. However, last quarter we can assume that these 7 stores only contributed revenue for half of the quarter, so there should be a doubling of revenue this quarter from those 7 stores. Sales per superstore is about 1.4M, so these 7 stores should add 5M in revenue for this quarter. Does anybody know how many new stores were opened by today? Basically, what I come up with, is that sales have to increase by 3.12M - 5M plus 1.2M for each new store opened in this quarter. If we assume that each new superstore contributes 0.7M of revenue (half the average revenue per superstore), then the existing stores have to increase their revenue by -1.88M plus 0.5M*n, where n is the number of new superstores. The surprising result (due to the large number of stores opened last quarter) is that if 3 or fewer superstores were opened this quarter, existing store sales do not have to increase at all quarter over quarter! Existing superstore sales have been up about 1% a quarter, or 1M. This means that if n (# of new superstores) is less than or equal to 5 and a 1% increase in existing store sales is met, the earnings expectation of 0.18/share will be met, assuming that the mall store business is unchanged. Any improvement in mall store profitability, fewer than 5 new superstores or better than 1% comp store sales increase (4% annual rate), and there could be an upside surprise. Petz