The Sports Authority ( TSA) reported a decrease in first-quarter profits, but earnings fell less than expected and beat analysts' predictions. The company cited expense controls and decreased inventories.

Including charges, the company earned $489,000, or a penny a share, in the quarter ended May 3, compared with $1.7 million, or 5 cents a share, in the prior-year quarter. A charge of $396,000 was due to a change in the way Sports Authority accounts for cash collected from vendors. Other charges resulted from restructuring.

Excluding the charges, first-quarter earnings totaled $1.5 million, or 4 cents a share, compared with $1 million, or 3 cents a share, in the year-ago period. Analysts were expecting a loss of a penny a share.

Earnings fell less than expected because, on March 12, the company had predicted it would break even in the quarter as a result of weakened consumer spending and colder winter weather. In the quarter, the company said expenses were reduced by $3.8 million and merchandise inventories fell 4.9%. Total debt decreased by $39 million.

Shares of the company were rising nearly 8% in afternoon trading to $9.41 on the New York Stock Exchange.

Total sales fell to $339.1 million, down from last year's $353.5 million. Comparable-store sales fell 5.7%. The company cited bad weather, the war in Iraq and the weak economy.

The Sports Authority also said it expects to close on its merger with rival Gart Sports ( GRTS) in July.

Separately, the company said it expects second-quarter earnings to be 25 cents to 27 cents a share with same-store sales rising 1%. Analysts expect 25 cents a share. Sports Authority also reaffirmed its expected full-year 2003 earnings of 70 cents to 72 cents. Analysts expect 69 cents a share. Comparable-store sales are seen climbing 1% to 2%.

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