BGFV
$13.49
Big 5 Sporting
$.25
1.89%
Earnings Details
2nd Quarter June 2022
Tuesday, August 2, 2022 4:01:00 PM
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Summary

Big 5 Sporting Goods Guides Below Estimates

Big 5 Sporting (BGFV) reported 2nd Quarter June 2022 earnings of $0.41 per share on revenue of $253.8 million. The consensus earnings estimate was $0.45 per share on revenue of $265.7 million. Revenue fell 22.2% compared to the same quarter a year ago.

The company said it expects third quarter non-GAAP earnings of $0.22 to $0.32 per share. The current consensus earnings estimate is $0.89 per share for the quarter ending September 30, 2022.

Big 5 Sporting Goods Corp is a sporting goods retailer. Products include athletic shoes, apparel & accessories, outdoor & athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, winter & summer recreation & roller sports.

Results
Reported Earnings
$0.41
Earnings Whisper
-
Consensus Estimate
$0.45
Reported Revenue
$253.8 Mil
Revenue Estimate
$265.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Big 5 Sporting Goods Corporation Announces Fiscal 2022 Second Quarter Results

  • EPS of $0.41 for FY 2022 Second Quarter
  • Declares Quarterly Cash Dividend of $0.25 per Share

EL SEGUNDO, Calif., Aug. 02, 2022 (GLOBE NEWSWIRE) -- Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company,” “we,” “our,” “us,” “Big 5”), a leading sporting goods retailer, today reported financial results for the fiscal 2022 second quarter ended July 3, 2022.

Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said, “In a challenging retail climate, we achieved earnings that were within our guidance range and higher than in any pre-pandemic second quarter. Our sales also exceeded any pre-pandemic second quarter, despite being softer than anticipated in the face of macroeconomic headwinds that accelerated over the course of the quarter. The flexibility of the Big 5 model enabled us to mitigate inflationary pressures and continue to generate strong merchandise margins and gross profit dollars. We ended the quarter with a strong balance sheet and a healthy inventory position. Over the course of the pandemic, we have enhanced and evolved our model and emerged a stronger company.   Looking at the back half of the year, Big 5 remains in a great position with its efficient model to continue to achieve solid operating results during a period of tremendous economic challenges.”

Net sales for the fiscal 2022 second quarter were $253.8 million compared to net sales of $326.0 million for the second quarter of fiscal 2021. Same store sales, which are reported on a comparable-day basis, decreased 22.3% for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021, but increased 3.9% versus the comparable-day period in pre-pandemic fiscal 2019.

Gross profit for the fiscal 2022 second quarter was $88.9 million, compared to $126.9 million in the second quarter of the prior year. The Company’s gross profit margin was 35.0% in the fiscal 2022 second quarter versus 38.9% in the second quarter of the prior year. The decrease in gross profit margin compared with the prior year primarily reflects higher store occupancy and warehouse expense as a percentage of net sales, partially offset by higher costs capitalized into inventory. The Company’s merchandise margins decreased by 102 basis points for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021, primarily due to sales mix as well as some select promotional activity to drive sales amid a softening consumer backdrop. Merchandise margins for the second quarter of fiscal 2022 were 310 basis points higher than in any pre-pandemic second quarter in the Company’s history as a public company, reflecting the evolution of the Company’s pricing and promotional strategy.

Overall selling and administrative expense for the quarter decreased by $1.8 million from the prior year primarily due to lower performance-based incentive accruals and credit card fees, partially offset by broad-based inflationary impacts, including increased employee labor and benefit-related expenses year over year, and to a lesser degree higher advertising expense due in part to the Easter calendar shift. Additionally, the Company incurred a $1.0 million charge for the revaluation of workers’ compensation reserves due to a change in claims assessment methodology. As a percentage of net sales, selling and administrative expense increased to 30.2% in the fiscal 2022 second quarter, compared to 24.0% in the fiscal 2021 second quarter, due to the de-leveraging effect of lower sales.

Net income for the second quarter of fiscal 2022 was $8.9 million, or $0.41 per diluted share, within the Company’s guidance range of $0.40 to $0.50 per diluted share. Diluted earnings per share for the quarter include a $0.03 charge related to revaluation of workers’ compensation reserves. This compares to record second quarter net income of $36.8 million, or $1.63 per diluted share, in the second quarter of fiscal 2021.   Compared to pre-pandemic second quarter periods, fiscal 2022 second quarter earnings were the highest in the Company’s history.

For the 26-week period ended July 3, 2022, net sales were $495.8 million compared to net sales of $598.8 million in the first 26 weeks of last year. Same store sales decreased 17.3% in the first half of fiscal 2022 versus the comparable period last year. Net income for the first 26 weeks of fiscal 2022 was $18.0 million, or $0.81 per diluted share. This compares to net income for the first 26 weeks of fiscal 2021 of $58.3 million or $2.59 per diluted share, which included a previously reported net benefit in the first quarter of $0.06 per diluted share.

Adjusted EBITDA was $17.7 million for the second quarter of fiscal 2022, compared to $52.9 million in the prior year period. For the 26-week period ended July 3, 2022, adjusted EBITDA was $32.7 million, compared to $83.2 million in the prior year period. EBITDA and Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for more details and a reconciliation of non-GAAP EBITDA and Adjusted EBITDA to the most comparable GAAP measure, net income.

Balance Sheet
The Company ended the fiscal 2022 second quarter with no borrowings under its credit facility and with cash and cash equivalents of $36.6 million. This compares to no borrowings under the Company’s credit facility and $62.0 million of cash and cash equivalents as of the end of the fiscal 2022 first quarter. Merchandise inventories as of the end of the fiscal 2022 second quarter increased by 26.8% year over year, reflecting more normalized inventory levels relative to sales, along with higher carryover of winter-related inventory. In the fiscal 2022 second quarter, the Company repurchased 199,336 shares of common stock.

Quarterly Cash Dividend
The Company’s Board of Directors has declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on September 15, 2022 to stockholders of record as of September 01, 2022.

Third Quarter Guidance
For the fiscal 2022 third quarter, the Company expects the continuation of macroeconomic headwinds to impact consumer discretionary spending and same store sales to decrease in the high-single-digit range compared to the fiscal 2021 third quarter. Versus the pre-pandemic fiscal 2019, the Company’s same store sales guidance reflects an increase in the low-single-digit range on a comparable-day basis. Fiscal 2022 third quarter earnings per diluted share is expected in the range of $0.22 to $0.32, which compares to third quarter earnings per diluted share of $1.07 in fiscal 2021 and $0.30 in fiscal 2019.

Store Openings
The Company currently has 431 stores in operation. During fiscal 2022, the Company expects to open approximately three stores and close approximately two stores, including one relocation.

Conference Call Information
The Company will host a conference call and audio webcast today, August 2, 2022, at 2:00 p.m. Pacific (5:00 p.m. Eastern), to discuss financial results for the second quarter of fiscal 2022. 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 August 9, 2022 by calling (844) 512-2921 to access the playback; the passcode is 13731041.

About Big 5 Sporting Goods Corporation

Big 5 is a leading sporting goods retailer in the western United States, operating 431 stores under the “Big 5 Sporting Goods” name as of the fiscal quarter ended July 3, 2022. 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, home recreation, tennis, golf, and winter and summer recreation.

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, the economic impacts of COVID-19, including any potential variants, on Big 5’s business operations, including as a result of regulations that may be issued in response to COVID-19, 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, a reduction or loss of product from a key supplier, 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 (including those caused by COVID-19 or any potential variants), impacts from civil unrest or widespread vandalism, 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 historically 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.

Non-GAAP Financial Measures

In addition to reporting our financial results in accordance with generally accepted accounting principles ("GAAP"), we are providing non-GAAP adjusted earnings before interest, income tax expense, depreciation and amortization (“EBITDA”) and other adjustments (“Adjusted EBITDA”). EBITDA and Adjusted EBITDA are not prepared in accordance with GAAP and exclude certain items presented below. We use EBITDA and Adjusted EBITDA internally for forecasting purposes and as factors to evaluate our operating performance. We believe that Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of core operating results and business outlook. While we believe that EBITDA and Adjusted EBITDA can be useful to investors in evaluating our period-to-period operating results, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP. In addition, our definition or calculation of these non-GAAP measures may differ from similarly titled measures used by other companies, limiting the usefulness of this financial measure for comparison to other companies. We believe the GAAP measure that is most comparable to non-GAAP EBITDA and Adjusted EBITDA is net income, and a reconciliation of our non-GAAP EBITDA and Adjusted EBITDA to GAAP net income is provided below.

  13 Weeks Ended 26 Weeks Ended
  July 3,
2022
  July 4, 2021 July 3,
2022
 July 4,
2021
            
  (In thousands)
GAAP net income (as reported) $8,934 $36,803$18,037$58,349 
+ Interest (as reported)  136  184 320 526 
+ Income tax expense (as reported)  3,168  11,557 4,497 17,418 
+ Depreciation and amortization (as reported)  4,420  4,389 8,830 8,648 
  EBITDA $16,658 $52,933$31,684$84,941 
+ Revaluation of workers’ compensation reserves due            
 to change in claims assessment methodology  1,039   1,039   
- Elimination of liability for an employment agreement      (995)
- Gain on recovery of insurance settlement related to civil unrest      (709)
   Adjusted EBITDA $17,697 $52,933$32,723$83,237 
            

FINANCIAL TABLES FOLLOW

 
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
     
  July 3, 2022 January 2, 2022
ASSETS
     
Current assets:    
Cash and cash equivalents$36,597 $97,420 
Accounts receivable, net of allowances of $19 and $62, respectively 14,248  13,654 
Merchandise inventories, net 337,703  279,981 
Prepaid expenses 18,864  16,293 
Total current assets 407,412  407,348 
     
Operating lease right-of-use assets, net 294,828  270,110 
Property and equipment, net 56,717  60,401 
Deferred income taxes 10,490  12,097 
Other assets, net of accumulated amortization of $1,131 and $905, respectively 4,537  3,997 
Total assets$773,984 $753,953 
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Accounts payable$114,784 $104,359 
Accrued expenses 68,195  85,041 
Current portion of operating lease liabilities 77,421  76,882 
Current portion of finance lease liabilities 3,481  3,518 
Total current liabilities 263,881  269,800 
     
Operating lease liabilities, less current portion 227,215  204,134 
Finance lease liabilities, less current portion 5,536  6,456 
Other long-term liabilities 6,937  6,254 
Total liabilities 503,569  486,644 
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 26,482,845 and    
26,109,003 shares, respectively; outstanding 22,176,990 and 22,097,467 shares, respectively 264  260 
Additional paid-in capital 125,151  124,909 
Retained earnings 199,242  192,261 
Less: Treasury stock, at cost; 4,305,855 and 4,011,536 shares, respectively (54,242) (50,121)
Total stockholders' equity 270,415  267,309 
Total liabilities and stockholders' equity$773,984 $753,953 
     


BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
         
  13 Weeks Ended 26 Weeks Ended
  July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
         
         
Net sales$253,800$326,020$495,781$598,826
         
Cost of sales 164,934 199,097 320,982 374,010
         
Gross profit 88,866 126,923 174,799 224,816
         
Selling and administrative expense 76,628 78,379 151,945 148,523
         
Operating income 12,238 48,544 22,854 76,293
         
Interest expense 136 184 320 526
         
Income before income taxes 12,102 48,360 22,534 75,767
         
Income tax expense 3,168 11,557 4,497 17,418
         
Net income$8,934$36,803$18,037$58,349
         
Earnings per share:        
Basic$0.41$1.69$0.83$2.70
Diluted$0.41$1.63$0.81$2.59
         
Weighted-average shares of common stock outstanding:        
Basic 21,675 21,746 21,677 21,582
Diluted 22,039 22,593 22,197 22,507
         

Contact:                                                                                                        
Big 5 Sporting Goods Corporation                                
Barry Emerson
Executive Vice President and Chief Financial Officer
(310) 536-0611

ICR, Inc.
Jeff Sonnek
Managing Director
(646) 277-1263


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Source: Big 5 Sporting Goods Corporation