CONFERENCE CALL – THE FORZANI GROUP LTD.
AUGUST 26, 2003
THE FORZANI GROUP LTD. CONFERENCE CALL
OPERATOR: Good afternoon ladies and gentlemen, and thank you for
standing by. Welcome to the Forzani Group Limited second quarter
fiscal 2004 conference call. At this time all participants are in a listen-
only mode. Following the presentation, we will conduct a question and
answer session. Instructions will be provided at that time for you to
queue up for questions. If anyone has any difficulties hearing the
conference, please press the *, followed by the 0 for operator
assistance at any time.
I would like to remind everyone that this conference call is being
recorded, and I would now like to turn the conference over to Mr. Bob
Sartor, Chief Executive Officer.
Please go ahead sir.
ROBERT SARTOR (Chief Executive Officer): Thank you very much,
and good day ladies and gentlemen. This is the Q2 Forzani
conference call. Here with me today is Bill Gregson, our President and
Chief Operating Officer.
We had what we think was a pretty solid quarter overall, and we think
we managed a pretty challenging retail environment, particularly in
Western Canada. I’m sure Bill will talk to that later on. We’re very
pleased that we were able to drive our total system sales up by 7.5
percent to approximately 263 million dollars.
Our consolidated gross margins, as we had signaled, were down.
They were at 34.2 percent, down approximately 150 basis points, and
that really was partly due to two things; first, obviously, the proportion
of franchise business, and overall mix increased cause our franchise
business had a stronger quarter because it’s predominantly Eastern
based, and as our corporate stores in Eastern Canada also had a
strong sales quarter; and also because of the fact that we did have
some softness in our corporate margins, particularly in clothing, and
that’s going to be discussed by Bill later on.
Our expense management, we think, was