Now Lipton is high on and has accumulated shares in Galyan's Trading (GLYN), a Plainfield (Ind.) retailer of sporting goods and apparel, with 28 stores in 14 states. The outlets are huge, each about 100,000 square feet, and generate, on average, annual sales of $22 million sales per store, vs. $7 million for Sports Authority, which operates 200 stores. Galyan's plans to open nine more stores this year.
Galyan's is a "category-killer, growing 25% a year in per-share earnings," notes Lipton. Galyan's went public at 19 on June 26, 2001, when The Limited spun off 60% of its stake. By Sept. 21, the stock had dropped to 8. It has since snapped back to 18.85, helped by The Limited's repurchase of some shares.
Lipton says that, based on 20 times estimated earnings of $1.50 for the year ending Jan. 30, 2004, the stock is worth 30. Earnings in fiscal 2003 are expected to come in at $1.15 to $1.20 a share, vs. 89 cents in 2002. One of Galyan's strengths is its "classy operations," says Lipton. "It's like stepping into a Bergdorf Goodman for sportswear." Lipton expects the stock to attract more big investors as they search for "profitable, conservatively run but fast-growing companies." By Gene G. Marcial