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Forzani staves off Crescendo challenge Add to ...



A New York shareholder activist who yesterday lost a boardroom fight at Forzani Group Ltd. FGL-T vows to continue to push for change at what he calls an underperforming retailer.

"We have many different options at our disposal to fulfill our goal to create shareholder value," Eric Rosenfeld, the brash and outspoken founder of Crescendo Partners LP, said in an interview, without elaborating.

He was unsuccessful at Forzani's annual meeting in Calgary in getting two of eight nominees on the board of directors in his bid to shake up Canada's largest sporting goods retailer. "One way or another, we have always gotten on any board of directors that we've tried to get on," he said in an earlier interview last week. "We are incredibly persistent. We don't give up and we don't go away."

Crescendo, which holds 5.1 per cent of the retailer's shares, got support from about 38 per cent of Forzani's shareholders represented at the meeting and "that can't be ignored," he added yesterday.

He has argued that Forzani has failed to deliver on a goal set out in 2003 to reach $1.8-billion of sales by 2008, instead generating $1.3-billion.

Yesterday, Forzani reported that it had narrowed its first-quarter loss by about 60 per cent to $1.1-million or 4 cents a share, from $2.8-million or 9 cents a year earlier. Revenue rose to $307.7-million from $307.5-million, while same-store sales slipped 0.4 per cent.

But company executives said they weren't satisfied with the results and had expected a return to profitability in the quarter. They noted that the business was pinched more by unseasonable weather than by the recession, with disappointing sales of bikes and in-line skates, for example.

They also said they were making headway on their latest strategic plan, unveiled in April and aimed at closing the productivity gap between the retailer's small franchise-store operation in Quebec, Sports Experts, and its dominant company-owned chains elsewhere, led by Sport Chek.

The franchise stores ring up more than 40-per-cent more sales per square foot than the corporate-owned stores. However, that's better than last year, when Sports Experts' productivity was 58 per cent ahead of that of Sport Chek.

And in another encouraging sign, first-quarter same-store sales rose 1 per cent in corporate stores and dropped 2.8 per cent in franchise outlets.

"Management did a solid job controlling what it can control," Tal Woolley, an analyst at RBC Capital Markets, said. "Investors should be able to take some comfort in these results: In our opinion, the wheels remain affixed to [Forzani's]wagon."

Still, Mr. Rosenfeld said fresh blood is needed on the board to speed up the pace of change. But he isn't looking for significant overhaul of the company's direction or management - making his proxy battle different from others in which dissidents often look for both strategic and management changes.

FORZANI GROUP (FGL-T)

Close: $14.84, down 4 cents

Report on Business Company Snapshot is available for: FORZANI GROUP LTD. (THE)

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