Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company”), a
leading sporting goods retailer, today reported financial results
for the fiscal 2018 fourth quarter and full year ended December 30,
2018.
As previously reported, net sales for the fiscal
2018 fourth quarter were $247.1 million compared to net sales of
$242.9 million for the fourth quarter of fiscal 2017. Same
store sales increased 1.1% for the fourth quarter of fiscal
2018.
Gross profit for the fiscal 2018 fourth quarter
was $70.4 million, compared to $72.9 million in the fourth quarter
of the prior year. The Company’s gross profit margin was
28.5% in the fiscal 2018 fourth quarter versus 30.0% in the fourth
quarter of the prior year. The decrease in gross profit
margin largely reflects lower distribution costs capitalized into
inventory as a result of reduced inventory levels and, to a lesser
extent, a decrease in merchandise margins of 11 basis points for
the quarter.
Selling and administrative expense as a
percentage of net sales was 30.9% in the fiscal 2018 fourth quarter
versus 33.3% in the fourth quarter of the prior year. Overall
selling and administrative expense for the quarter decreased $4.5
million from the prior year primarily due to asset impairment
charges in the prior year totaling $5.0 million compared to asset
impairment and contract termination charges totaling $1.9 million
in the current year. Additionally, advertising expense for
the quarter decreased by $1.6 million compared to the prior
year.
Net loss for the fourth quarter of fiscal 2018
was $5.1 million, or $0.24 per share, which includes after-tax
charges of $1.4 million for asset impairment and contract
termination costs and $0.3 million for a deferred tax valuation
allowance for certain income tax credits, or $0.08 per share.
For the fiscal 2018 full year, as previously
reported, net sales were $987.6 million, compared to net sales of
$1.01 billion for the fiscal 2017 full year. Same store sales
decreased 2.7% in fiscal 2018 versus the comparable period in the
prior year. Net loss for fiscal 2018 was $3.5 million, or
$0.17 per share, including the after-tax charges in the fourth
quarter noted above and a deferred tax asset write-off related to
stock compensation in the first quarter of $0.2 million, or $0.09
per share. Net income for fiscal 2017 was $1.1 million, or
$0.05 per diluted share, including after-tax charges in the fourth
quarter totaling $10.9 million, or $0.52 per diluted share.
Steven G. Miller, the Company’s Chairman,
President and Chief Executive Officer, said, “As previously
reported, we had a strong finish to our fourth quarter, with same
store sales increasing 4.4% in December, as we benefited from solid
sales of winter products following Christmas, when winter weather
conditions turned favorable across many of our markets. We
are pleased that the strength of our winter business has continued
into the first quarter of 2019. Our same store sales are
comping up in the low-double-digit range for the quarter to date,
demonstrating that our model is well-positioned to capitalize on
seasonal demand and continues to resonate with our customer base by
delivering a unique combination of product selection, value and
convenience. We have experienced extraordinary sell-through
of winter products, which has allowed us to reduce both inventory
and debt levels and strengthen our balance sheet.”
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 22, 2019 to stockholders of record as of March 8,
2019.
GuidanceFor the fiscal 2019
first quarter, the Company expects same store sales to increase in
the mid-single-digit range and earnings per diluted share to be in
the range of $0.04 to $0.10, compared to a same store sales
decrease of 7.5% and a loss per share of $0.06 in the first quarter
of fiscal 2018. Fiscal 2019 first quarter guidance reflects
an anticipated small positive impact as a result of the calendar
shift of the Easter holiday, during which the Company’s stores are
closed, from the first quarter of fiscal 2018 and into the second
quarter of fiscal 2019. Given the anticipated sales
performance and year-over-year reduction in inventory levels for
the first quarter, the Company expects quarter-end debt levels to
decline to below $50 million, compared to $68.9 million at the end
of the first quarter last year.
Store OpeningsDuring the fourth
quarter of fiscal 2018, the Company opened one store and closed one
store, ending fiscal 2018 with 436 stores in operation.
During the fiscal 2019 first quarter, the Company expects to close
three stores and does not expect to open any new stores. For
the fiscal 2019 full year, the Company currently anticipates
opening approximately five new stores and closing approximately
four stores.
Conference Call InformationThe
Company will host a conference call and audio webcast today,
February 26, 2019, at 2:00 p.m. Pacific (5:00 p.m. ET), to discuss
financial results for the fourth quarter and full year of fiscal
2018. To access the conference call, participants in North
America should dial (888) 221-3881 and international participants
may dial (323) 701-0225. 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 March 5, 2019 by calling (844)
512-2921 to access the playback; the passcode is 6920289.
About Big 5 Sporting Goods
CorporationBig 5 is a leading sporting goods retailer in
the western United States, operating 436 stores under the “Big 5
Sporting Goods” name as of the fiscal quarter ended December 30,
2018. 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, 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 30, 2018 |
|
December 31, 2017 |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
Cash |
$ |
6,765 |
|
$ |
7,170 |
|
Accounts
receivable, net of allowances of $28 and $79, respectively |
|
14,184 |
|
|
10,886 |
|
Merchandise inventories, net |
|
294,900 |
|
|
313,905 |
|
Prepaid
expenses |
|
9,224 |
|
|
18,930 |
|
Total
current assets |
|
325,073 |
|
|
350,891 |
|
|
|
|
|
|
Property and equipment,
net |
|
76,488 |
|
|
77,265 |
|
Deferred income
taxes |
|
14,543 |
|
|
14,172 |
|
Other assets, net of
accumulated amortization of $1,772 and $1,575, respectively |
|
3,457 |
|
|
2,732 |
|
Total
assets |
$ |
419,561 |
|
$ |
445,060 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
80,613 |
|
$ |
113,740 |
|
Accrued
expenses |
|
67,659 |
|
|
68,226 |
|
Current
portion of capital lease obligations |
|
2,322 |
|
|
1,754 |
|
Total
current liabilities |
|
150,594 |
|
|
183,720 |
|
|
|
|
|
|
Deferred rent, less
current portion |
|
14,615 |
|
|
15,948 |
|
Capital lease
obligations, less current portion |
|
4,823 |
|
|
2,800 |
|
Long-term debt |
|
65,000 |
|
|
45,000 |
|
Other long-term
liabilities |
|
9,668 |
|
|
10,523 |
|
Total
liabilities |
|
244,700 |
|
|
257,991 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
Common
stock, $0.01 par value, authorized 50,000,000 shares; issued
25,074,307 and |
|
|
|
|
24,919,624 shares, respectively; outstanding 21,424,094 and
21,345,159 shares, respectively |
250 |
|
|
249 |
|
Additional paid-in capital |
|
118,351 |
|
|
116,495 |
|
Retained
earnings (1) |
|
98,787 |
|
|
112,424 |
|
Less: Treasury stock, at cost; 3,650,213 and 3,574,465
shares, respectively |
|
(42,527 |
) |
|
(42,099 |
) |
Total
stockholders' equity |
|
174,861 |
|
|
187,069 |
|
Total
liabilities and stockholders' equity |
$ |
419,561 |
|
$ |
445,060 |
|
|
|
|
|
|
(1) 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 30, 2018 |
|
December 31, 2017 |
|
December 30, 2018 |
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
247,101 |
|
$ |
242,889 |
|
$ |
987,581 |
|
$ |
1,009,635 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
176,748 |
|
|
170,035 |
|
|
686,732 |
|
|
686,303 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
70,353 |
|
|
72,854 |
|
|
300,849 |
|
|
323,332 |
|
|
|
|
|
|
|
|
|
Selling and
administrative expense (1) (2) (3) |
|
76,252 |
|
|
80,800 |
|
|
302,076 |
|
|
306,990 |
|
|
|
|
|
|
|
|
|
Operating
(loss) income |
|
(5,899 |
) |
|
(7,946 |
) |
|
(1,227 |
) |
|
16,342 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
1,065 |
|
|
549 |
|
|
3,374 |
|
|
1,644 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income before income taxes |
|
(6,964 |
) |
|
(8,495 |
) |
|
(4,601 |
) |
|
14,698 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense (4) (5) |
|
(1,875 |
) |
|
4,455 |
|
|
(1,070 |
) |
|
13,594 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income (1) (2) (3) (4) (5) |
$ |
(5,089 |
) |
$ |
(12,950 |
) |
$ |
(3,531 |
) |
$ |
1,104 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share: (1) (2) (3) (4) (5) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.24 |
) |
$ |
(0.62 |
) |
$ |
(0.17 |
) |
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
(0.24 |
) |
$ |
(0.62 |
) |
$ |
(0.17 |
) |
$ |
0.05 |
|
|
|
|
|
|
|
|
|
Dividends per
share |
$ |
0.05 |
|
$ |
0.15 |
|
$ |
0.50 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
Weighted-average shares
of common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
20,990 |
|
|
21,003 |
|
|
20,977 |
|
|
21,439 |
|
|
|
|
|
|
|
|
|
Diluted |
|
20,990 |
|
|
21,003 |
|
|
20,977 |
|
|
21,585 |
|
|
|
|
|
|
|
|
|
(1) In the fourth quarter of fiscal 2018 and 2017, the Company
recorded non-cash impairment charges of $0.8 million and $0.6
million, respectively, related to asset impairments. These charges
increased net loss by $0.6 million, or $0.03 per share, and reduced
net income by $0.4 million, or $0.02 per share, respectively.
(2) In the fourth quarter of fiscal 2017, the Company recorded a
non-cash goodwill impairment charge of $4.4 million, which reduced
net income by the same amount, or $0.21 per share.
(3) In the fourth quarter of fiscal 2018, the Company recorded a
pre-tax charge of $1.1 million related to contract termination
costs. This charge increased net loss by $0.8 million, or $0.04 per
share.
(4) In the fourth quarter of fiscal 2017, the Company recorded a
charge of $5.5 million to revalue existing net deferred tax assets
resulting from the enactment of the Tax Cuts and Jobs Act in
December 2017. This charge reduced net income by the same amount,
or $0.26 per share. Additionally, in the fourth quarter of fiscal
2018 and 2017, the Company recorded charges of $0.2 million and
$0.6 million, net of the federal income tax benefit, respectively,
for a valuation allowance related to unused California Enterprise
Zone Tax Credits, or $0.01 and $0.03 per share, respectively.
(5) In the first quarter of fiscal 2018, the Company recorded a
write-off of $0.2 million of deferred tax assets related to
share-based compensation, or $0.01 per share.
Contact:Big 5 Sporting Goods CorporationBarry EmersonSr. Vice
President and Chief Financial Officer(310) 536-0611
ICR, Inc.John MillsManaging Partner(646) 277-1254
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