Big 5 Sporting Goods Corporation (NASDAQ:BGFV) (the “Company”), a
leading sporting goods retailer, today reported financial results
for the fiscal 2017 second quarter ended July 2, 2017.
For the fiscal 2017 second quarter, net sales
were $243.7 million compared to net sales of $241.4 million for the
second quarter of fiscal 2016. Same store sales increased
0.8% for the second quarter of fiscal 2017, reflecting continued
market share gains resulting from the closure of certain major
competitors last year, but also lower demand for certain hardgoods
product categories, primarily related to firearms, camping and
water sports. As anticipated, sales comparisons to the prior
year were negatively affected by calendar shifts related to the
Easter and Fourth of July holidays.
Gross profit for the fiscal 2017 second quarter
was $79.3 million, compared to $76.3 million in the second quarter
of the prior year. The Company’s gross profit margin was
32.5% in the fiscal 2017 second quarter versus 31.6% in the second
quarter of the prior year, reflecting an increase in merchandise
margins of 37 basis points and a decrease in distribution expense
resulting from higher costs capitalized into inventory.
Selling and administrative expense as a
percentage of net sales was 30.4% in the fiscal 2017 second quarter
versus 29.9% in the second quarter of the prior year. Overall
selling and administrative expense for the quarter increased by
$1.9 million from the prior year primarily due to higher employee
labor expense and expenses related to information technology
systems and services.
Net income for the second quarter of fiscal 2017
was $2.8 million, or $0.13 per diluted share, compared to net
income for the second quarter of fiscal 2016 of $2.1 million, or
$0.10 per diluted share. Results for the second quarter of
fiscal 2016 included a charge of $0.01 per diluted share for the
write-off of deferred tax assets related to share-based
compensation.
For the 26-week period ended July 2, 2017, net
sales were $496.3 million compared to net sales of $475.9 million
in the first 26 weeks of last year. Same store sales
increased 4.3% in the first 26 weeks of fiscal 2017 versus the
comparable period last year. Net income for the first 26
weeks of fiscal 2017 was $8.1 million, or $0.37 per diluted share,
compared to net income for the first 26 weeks of fiscal 2016 of
$1.0 million, or $0.05 per diluted share, including $0.04 per
diluted share of charges for the write-off of deferred tax assets
related to share-based compensation.
“After a solid start to the period, sales for
our second quarter came in below expectations,” said Steven G.
Miller, the Company’s Chairman, President and Chief Executive
Officer. “Same store sales increased in the low
mid-single-digit range for each of our April and May periods, but
decreased in the low single-digit range for June as we experienced
weakness in certain outdoor product categories related to firearms,
camping and water sports, and also began to cycle some of the
benefit from the competitor store closures that occurred last
year. As a result of the weakness in June, same store sales
in our hardgoods category decreased in the low single-digit range
for the quarter. Our apparel category continued to perform
exceptionally well throughout the quarter, with same store sales
increasing in the high single-digit range, and same store sales in
our footwear category increased in the low single-digit range for
the period.”
“During the third quarter, we expect sales
comparisons to be pressured as we continue to cycle the lift in
sales that we experienced last year as a result of the competitor
store closures, while also operating in a challenging retail
environment. Our efforts are focused on retaining the market
share gains that we have produced over the past year, and we
believe that our inventories are well positioned for the remainder
of the summer and the back to school season.”
Quarterly Cash Dividend The
Company's Board of Directors has declared a quarterly cash dividend
of $0.15 per share of outstanding common stock, which will be paid
on September 15, 2017 to stockholders of record as of September 1,
2017.
Share Repurchases During the
fiscal 2017 second quarter, pursuant to its share repurchase
program, the Company repurchased 6,400 shares of its common stock
for a total expenditure of $0.1 million. During the fiscal
2017 third quarter through July 31, 2017, the Company has
repurchased 373,847 shares of its common stock for a total
expenditure of $4.3 million. As of July 31, 2017, the Company
had $19.0 million available for future repurchases under its $25.0
million share repurchase program.
GuidanceFor the fiscal 2017 third quarter, the
Company expects same store sales to be in the negative low
single-digit range and earnings per diluted share to be in the
range of $0.22 to $0.32, compared to a same store sales increase of
6.8% and earnings per diluted share of $0.38, including $0.03 per
diluted share for store closing costs, in the third quarter of
fiscal 2016. Fiscal 2017 third quarter guidance reflects a
small benefit as a result of the calendar shift related to the
Fourth of July holiday.
Store OpeningsDuring the second
quarter of fiscal 2017, the Company opened two stores, ending the
quarter with 433 stores in operation. The Company anticipates
closing one store in the third quarter. For the fiscal 2017
full year, the Company currently anticipates opening approximately
six new stores and closing approximately three stores.
Conference Call InformationThe
Company will host a conference call and audio webcast today, August
1, 2017, at 2:00 p.m. Pacific (5:00 p.m. EDT), to discuss financial
results for the second quarter of fiscal 2017. To access the
conference call, participants in North America should dial (888)
487-0355, and international participants should dial (719)
325-2157. Participants are encouraged to dial in to the
conference call ten minutes prior to the scheduled start
time. The call will also be broadcast live over the Internet
and accessible through the Investor Relations section of the
Company’s website at www.big5sportinggoods.com. Visitors to
the website should select the “Investor Relations” link to access
the webcast. The webcast will be archived and accessible on
the same website for 30 days following the call. A telephone
replay will be available through August 8, 2017 by calling (844)
512-2921 to access the playback; passcode is 8127399.
About Big 5 Sporting Goods CorporationBig 5 is
a leading sporting goods retailer in the western United States,
operating 433 stores under the “Big 5 Sporting Goods” name as of
the fiscal quarter ended July 2, 2017. Big 5 provides a
full-line product offering in a traditional sporting goods store
format that averages 11,000 square feet. Big 5’s product mix
includes athletic shoes, apparel and accessories, as well as a
broad selection of outdoor and athletic equipment for team sports,
fitness, camping, hunting, fishing, tennis, golf, winter and summer
recreation and roller sports.
Except for historical information contained
herein, the statements in this release are forward-looking and made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties and other factors that
may cause Big 5’s actual results in current or future periods to
differ materially from forecasted results. Those risks and
uncertainties include, among other things, continued or worsening
weakness in the consumer spending environment and the U.S.
financial and credit markets, fluctuations in consumer holiday
spending patterns, breach of data security or other unauthorized
disclosure of sensitive personal or confidential information, the
competitive environment in the sporting goods industry in general
and in Big 5’s specific market areas, inflation, product
availability and growth opportunities, changes in the current
market for (or regulation of) firearm-related products, seasonal
fluctuations, weather conditions, changes in cost of goods,
operating expense fluctuations, changes in laws or regulations,
including those related to tariffs and duties, lower than expected
profitability of Big 5’s e-commerce platform or cannibalization of
sales from Big 5’s existing store base which could occur as a
result of operating the e-commerce platform, litigation risks,
stockholder campaigns and proxy contests, disruption in product
flow, changes in interest rates, credit availability, higher
expense associated with sources of credit resulting from
uncertainty in financial markets and economic conditions in
general. Those and other risks and uncertainties are more fully
described in Big 5’s filings with the Securities and Exchange
Commission, including its Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q. Big 5 conducts its business in a highly
competitive and rapidly changing environment. Accordingly, new risk
factors may arise. It is not possible for management to predict all
such risk factors, nor to assess the impact of all such risk
factors on Big 5’s business or the extent to which any individual
risk factor, or combination of factors, may cause results to differ
materially from those contained in any forward-looking statement.
Big 5 undertakes no obligation to revise or update any
forward-looking statement that may be made from time to time by it
or on its behalf.
FINANCIAL TABLES FOLLOW
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BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(In thousands, except share amounts) |
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July 2,
2017 |
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January 1, 2017 |
ASSETS |
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Current assets: |
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Cash |
|
$ |
6,628 |
|
|
$ |
7,895 |
|
Accounts
receivable, net of allowances of $40 and $42, respectively |
|
|
12,125 |
|
|
|
12,200 |
|
Merchandise
inventories, net |
|
|
328,716 |
|
|
|
294,319 |
|
Prepaid
expenses |
|
|
11,531 |
|
|
|
10,085 |
|
Total current assets |
|
|
359,000 |
|
|
|
324,499 |
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
77,438 |
|
|
|
78,420 |
|
Deferred income
taxes |
|
|
21,640 |
|
|
|
23,699 |
|
Other assets, net of
accumulated amortization of $1,508 and $1,420, respectively |
|
|
2,656 |
|
|
|
2,528 |
|
Goodwill |
|
|
4,433 |
|
|
|
4,433 |
|
Total assets |
|
$ |
465,167 |
|
|
$ |
433,579 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current
liabilities: |
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Accounts
payable |
|
$ |
116,433 |
|
|
$ |
109,314 |
|
Accrued
expenses |
|
|
61,847 |
|
|
|
76,887 |
|
Current portion
of capital lease obligations |
|
|
1,698 |
|
|
|
1,326 |
|
Total current liabilities |
|
|
179,978 |
|
|
|
187,527 |
|
|
|
|
|
|
|
|
Deferred rent, less
current portion |
|
|
16,096 |
|
|
|
17,028 |
|
Capital lease
obligations, less current portion |
|
|
2,890 |
|
|
|
1,999 |
|
Long-term debt |
|
|
47,920 |
|
|
|
10,000 |
|
Other long-term
liabilities |
|
|
11,501 |
|
|
|
11,988 |
|
Total liabilities |
|
|
258,385 |
|
|
|
228,542 |
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Commitments and
contingencies |
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Stockholders'
equity: |
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Common stock,
$0.01 par value, authorized 50,000,000 shares; issued 24,921,672
and |
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24,784,367 shares, respectively; outstanding 22,139,456
and 22,012,651 shares, respectively |
249 |
|
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|
248 |
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Additional
paid-in capital |
|
|
115,189 |
|
|
|
114,797 |
|
Retained
earnings |
|
|
125,851 |
|
|
|
124,363 |
|
Less:
Treasury stock, at cost; 2,782,216 and 2,771,716 shares,
respectively |
|
|
(34,507 |
) |
|
|
(34,371 |
) |
Total stockholders' equity |
|
|
206,782 |
|
|
|
205,037 |
|
Total liabilities and stockholders' equity |
|
$ |
465,167 |
|
|
$ |
433,579 |
|
|
|
|
|
|
|
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BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(In thousands, except per share data) |
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13 Weeks Ended |
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26 Weeks Ended |
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July 2, 2017 |
|
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July 3, 2016 |
|
|
July 2, 2017 |
|
|
July 3, 2016 |
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Net sales |
|
$ |
243,671 |
|
$ |
241,409 |
|
$ |
496,275 |
|
$ |
475,937 |
|
|
|
|
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|
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|
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Cost of sales |
|
|
164,363 |
|
|
165,152 |
|
|
333,345 |
|
|
328,715 |
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|
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Gross profit |
|
|
79,308 |
|
|
76,257 |
|
|
162,930 |
|
|
147,222 |
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|
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Selling
and administrative expense |
|
|
74,188 |
|
|
72,259 |
|
|
148,832 |
|
|
143,478 |
|
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|
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|
|
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Operating income |
|
|
5,120 |
|
|
3,998 |
|
|
14,098 |
|
|
3,744 |
|
|
|
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|
|
|
|
|
|
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Interest expense |
|
|
380 |
|
|
429 |
|
|
648 |
|
|
881 |
|
|
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|
|
|
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|
Income before income taxes |
|
|
4,740 |
|
|
3,569 |
|
|
13,450 |
|
|
2,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes (1) |
|
|
1,962 |
|
|
1,445 |
|
|
5,346 |
|
|
1,858 |
|
|
|
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|
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Net income (1) |
|
$ |
2,778 |
|
$ |
2,124 |
|
$ |
8,104 |
|
$ |
1,005 |
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Earnings per
share: |
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Basic |
|
$ |
0.13 |
|
$ |
0.10 |
|
$ |
0.37 |
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$ |
0.05 |
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Diluted (1) |
|
$ |
0.13 |
|
$ |
0.10 |
|
$ |
0.37 |
|
$ |
0.05 |
|
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Dividends per
share |
|
$ |
0.15 |
|
$ |
0.125 |
|
$ |
0.30 |
|
$ |
0.25 |
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Weighted-average shares
of common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
21,746 |
|
|
21,646 |
|
|
21,715 |
|
|
21,614 |
|
|
|
|
|
|
|
|
|
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|
Diluted |
|
|
21,871 |
|
|
21,740 |
|
|
21,923 |
|
|
21,784 |
|
|
|
|
|
|
|
|
|
|
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|
(1) In the second quarter and first half of fiscal 2016, the
Company recorded charges of $0.2 million and $0.8 million,
respectively, to write off deferred tax assets related to
share-based compensation. These charges reduced net income per
diluted share by $0.01 and $0.04, respectively. |
|
Contact:
Big 5 Sporting Goods Corporation
Barry Emerson
Sr. Vice President and Chief Financial Officer
(310) 536-0611
ICR, Inc.
John Mills
Partner
(646) 277-1254
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