Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company”), a
leading sporting goods retailer, today reported financial results
for the fiscal 2019 fourth quarter and full year ended December 29,
2019.
For the fiscal 2019 full year, as previously
reported, net sales were $996.5 million, compared to net sales of
$987.6 million for the fiscal 2018 full year. Same store
sales increased 1.2% in fiscal 2019 versus the prior year.
Net income for fiscal 2019 was $8.4 million, or $0.40 per diluted
share. Net loss for fiscal 2018 was $3.5 million, or $0.17
per basic share, including charges of $0.09 per basic share as
previously reported.
As previously reported, net sales for the fiscal
2019 fourth quarter were $244.1 million compared to net sales of
$247.1 million for the fourth quarter of fiscal 2018. Same
store sales decreased 0.6% for the fourth quarter of fiscal
2019.
Gross profit for the fiscal 2019 fourth quarter
increased 9.4% to $77.0 million, compared to $70.4 million in the
fourth quarter of the prior year. The Company’s gross profit
margin was 31.6% in the fiscal 2019 fourth quarter versus 28.5% in
the fourth quarter of the prior year. The increase in gross
profit margin largely reflects an increase in merchandise margins
of 239 basis points and higher distribution costs capitalized into
inventory for the quarter.
Selling and administrative expense as a
percentage of net sales was flat versus the prior year at 30.9% in
the fiscal 2019 fourth quarter. Overall selling and
administrative expense for the quarter decreased $0.7 million from
the prior year primarily due to lower print advertising expense in
the quarter and contract termination charges in the prior
year. This was partially offset by higher employee labor and
benefit-related expenses during the quarter.
Net income for the fourth quarter of fiscal 2019
was $0.4 million, or $0.02 per diluted share, which includes an
after-tax charge of $0.3 million, or $0.02 per diluted share, for
asset impairment. Excluding this charge, fourth quarter
earnings were $0.04 per diluted share, at the high-end of the
Company’s previously issued guidance range of $0.02 to $0.04 per
diluted share. Net loss for the fourth quarter of fiscal 2018
was $5.1 million, or $0.24 per basic share, including charges of
$0.08 per basic share as previously reported.
Steven G. Miller, the Company’s Chairman,
President and Chief Executive Officer, said, “Our strong fiscal
fourth quarter performance highlights a successful fiscal 2019 that
included positive same store sales growth and a meaningful increase
in net income. These results were driven in part by our
team’s ongoing focus on actively managing expenses and merchandise
selection, coupled with pricing and promotional strategies that
contributed to a notable expansion of merchandise margins over the
back half of the year. Additionally, our model’s unique
combination of value, selection, service and convenience allowed us
to take advantage of seasonal demand, particularly during key
periods of favorable weather.”
Mr. Miller continued, “Looking at the start to
2020, we are facing very challenging comparisons against
extraordinary sales of winter-related products in the first quarter
of 2019, driven by last year’s highly favorable winter weather
conditions across our markets. This year, winter weather
conditions have softened substantially over the course of the first
quarter, and consequently same store sales are currently running
down approximately 10% compared to the approximately 10% increase
that we experienced during the comparable period last year.
Over the balance of the quarter, sales comparisons will ease, and
we believe we are positioned to improve on our current sales trends
as we transition into spring. Although our quarter-to-date
sales have been challenged, our merchandise margins are running up
approximately 75 basis points, as we continue to benefit from the
strategies that drove margin expansion over the second half of
2019.”
Quarterly Cash Dividend The
Company's Board of Directors has declared a quarterly cash dividend
of $0.05 per share of outstanding common stock, which will be paid
on March 20, 2020 to stockholders of record as of March 6,
2020.
GuidanceFor the fiscal 2020
first quarter, the Company expects same store sales to decrease in
the mid-to-high-single-digit range and expects to realize a loss
per basic share in the range of $0.15 to $0.25, compared to a same
store sales increase of 4.6% and earnings per diluted share of
$0.08 in the first quarter of fiscal 2019, including a charge of
$0.02 per diluted share for the write-off of deferred tax assets
related to share-based compensation.
Store OpeningsDuring the fourth
quarter of fiscal 2019, the Company opened one store and relocated
one store, ending fiscal 2019 with 434 stores in operation.
During the fiscal 2020 first quarter, the Company expects to close
three stores and does not expect to open any new stores. For
the fiscal 2020 full year, the Company currently anticipates
opening approximately five new stores and closing approximately
five stores.
Conference Call InformationThe
Company will host a conference call and audio webcast today,
February 25, 2020, at 2:00 p.m. Pacific (5:00 p.m. Eastern), to
discuss financial results for the fourth quarter and full year of
fiscal 2019. To access the conference call, participants in
North America may dial (877) 407-9039 and international
participants may dial (201) 689-8470. 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 telephonic replay will be
available through March 3, 2020 by calling (844) 512-2921 to access
the playback; the passcode is 13699207.
About Big 5 Sporting Goods
CorporationBig 5 is a leading sporting goods retailer in
the western United States, operating 434 stores under the “Big 5
Sporting Goods” name as of the fiscal quarter ended December 29,
2019. 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. These risks and
uncertainties include, among other things, changes in the consumer
spending environment, fluctuations in consumer holiday spending
patterns, increased competition from e-commerce retailers, 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, disruption in product flow, seasonal
fluctuations, weather conditions, changes in cost of goods,
operating expense fluctuations, increases in labor and
benefit-related expense, changes in laws or regulations, including
those related to tariffs and duties, public health issues, 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, risks
related to Big 5’s leveraged financial condition, 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
|
|
|
|
|
|
|
BIG 5
SPORTING GOODS CORPORATION |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(Unaudited) |
|
(In thousands,
except share amounts) |
|
|
|
|
|
|
|
|
|
December
29, |
|
December
30, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash |
$ |
8,223 |
|
$ |
6,765 |
|
Accounts receivable, net of allowances of $58 and $28,
respectively |
|
13,646 |
|
|
14,184 |
|
Merchandise inventories, net |
|
309,315 |
|
|
294,900 |
|
Prepaid expenses |
|
9,680 |
|
|
9,224 |
|
Total current assets |
|
340,864 |
|
|
325,073 |
|
|
|
|
|
|
|
|
Operating
lease right-of-use assets, net |
|
262,588 |
|
|
— |
|
Property and
equipment, net |
|
68,414 |
|
|
76,488 |
|
Deferred
income taxes |
|
13,619 |
|
|
14,543 |
|
Other
assets, net of accumulated amortization of $2,043 and $1,772,
respectively |
|
3,315 |
|
|
3,457 |
|
Total assets |
$ |
688,800 |
|
$ |
419,561 |
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
83,655 |
|
$ |
80,613 |
|
Accrued expenses |
|
64,935 |
|
|
67,659 |
|
Current portion of operating lease liabilities |
|
71,542 |
|
|
— |
|
Current portion of finance lease liabilities |
|
2,678 |
|
|
2,322 |
|
Total current liabilities |
|
222,810 |
|
|
150,594 |
|
|
|
|
|
|
|
|
Operating
lease liabilities, less current portion |
|
206,806 |
|
|
— |
|
Finance
lease liabilities, less current portion |
|
4,787 |
|
|
4,823 |
|
Long-term
debt |
|
66,559 |
|
|
65,000 |
|
Deferred
rent, less current portion |
|
— |
|
|
14,615 |
|
Other
long-term liabilities |
|
7,466 |
|
|
9,668 |
|
Total liabilities |
|
508,428 |
|
|
244,700 |
|
|
|
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Common stock, $0.01 par value, authorized 50,000,000 shares; issued
25,314,289 and |
|
|
|
|
|
25,074,307 shares, respectively; outstanding 21,664,076 and
21,424,094 shares, respectively |
|
252 |
|
|
250 |
|
Additional paid-in capital |
|
120,054 |
|
|
118,351 |
|
Retained earnings (1) |
|
102,593 |
|
|
98,787 |
|
Less: Treasury stock, at cost; 3,650,213 shares |
|
(42,527 |
) |
|
(42,527 |
) |
Total stockholders' equity |
|
180,372 |
|
|
174,861 |
|
Total liabilities and stockholders' equity |
$ |
688,800 |
|
$ |
419,561 |
|
|
|
|
|
|
|
|
(1) In the first quarter of fiscal 2019, the
Company recorded an after-tax decrease to beginning retained
earnings of $0.3 million for a change in accounting principle
related to leases, and in the first quarter of fiscal 2018, the
Company recorded an after-tax increase to beginning retained
earnings of $0.6 million for a change in accounting principle
related to revenue recognition.
|
BIG 5
SPORTING GOODS CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
|
|
December
29, |
|
December
30, |
|
December
29, |
|
December
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
244,094 |
|
$ |
247,101 |
|
$ |
996,495 |
|
$ |
987,581 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
167,057 |
|
|
176,748 |
|
|
684,473 |
|
|
686,732 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
77,037 |
|
|
70,353 |
|
|
312,022 |
|
|
300,849 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expense (1) (2) (3) |
|
75,517 |
|
|
76,252 |
|
|
297,193 |
|
|
302,076 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
1,520 |
|
|
(5,899 |
) |
|
14,829 |
|
|
(1,227 |
) |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
849 |
|
|
1,065 |
|
|
3,046 |
|
|
3,374 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
671 |
|
|
(6,964 |
) |
|
11,783 |
|
|
(4,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) (4) (5) |
|
315 |
|
|
(1,875 |
) |
|
3,338 |
|
|
(1,070 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) (1) (2) (3) (4) (5) |
$ |
356 |
|
$ |
(5,089 |
) |
$ |
8,445 |
|
$ |
(3,531 |
) |
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share: (1) (2) (3) (4) (5) |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.02 |
|
$ |
(0.24 |
) |
$ |
0.40 |
|
$ |
(0.17 |
) |
Diluted |
$ |
0.02 |
|
$ |
(0.24 |
) |
$ |
0.40 |
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
Dividends
per share |
$ |
0.05 |
|
$ |
0.05 |
|
$ |
0.20 |
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
21,132 |
|
|
20,990 |
|
|
21,103 |
|
|
20,977 |
|
Diluted |
|
21,218 |
|
|
20,990 |
|
|
21,149 |
|
|
20,977 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth quarter of fiscal 2019 and
2018, the Company recorded non-cash impairment charges of $0.5
million and $0.8 million, respectively, related to asset
impairments, or $0.02 per diluted share and $0.03 per basic share,
respectively.
(2) In the second quarter of fiscal 2019, the
Company recorded a pre-tax gain of $1.1 million, or $0.03 per
diluted share, related to the favorable settlement of a software
contract.
(3) In the fourth quarter of fiscal 2018, the
Company recorded a pre-tax charge of $1.1 million, or $0.04 per
basic share, related to contract termination costs.
(4) In the first half of fiscal 2019 and 2018,
the Company recorded charges of $0.4 million, or $0.02 per diluted
share, and $0.2 million, or $0.01 per basic share, respectively, to
write-off deferred tax assets related to share-based
compensation.
(5) In the fourth quarter of fiscal 2018, the
Company recorded a charge of $0.2 million, net of the federal
income tax benefit, for a valuation allowance related to unused
California Enterprise Zone Tax Credits, or $0.01 per basic
share.
Contact:
Big 5 Sporting Goods
Corporation
Barry EmersonSr. Vice President and Chief Financial Officer(310)
536-0611
ICR, Inc.John MillsManaging Partner(646) 277-1254
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