BGFV
$6.85
Big 5 Sporting
Earnings Details
3rd Quarter September 2017
Tuesday, October 31, 2017 4:02:25 PM
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Summary

Big 5 Sporting Misses

Big 5 Sporting (BGFV) reported 3rd Quarter September 2017 earnings of $0.28 per share on revenue of $270.5 million. The consensus earnings estimate was $0.28 per share on revenue of $271.4 million. The Earnings Whisper number was $0.30 per share. Revenue fell 3.1% compared to the same quarter a year ago.

The company said it expects fourth quarter earnings of $0.16 to $0.28 per share. The current consensus earnings estimate is $0.31 per share for the quarter ending December 31, 2017.

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
$0.28
Earnings Whisper
$0.30
Consensus Estimate
$0.28
Reported Revenue
$270.5 Mil
Revenue Estimate
$271.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Big 5 Sporting Goods Corporation Announces Fiscal 2017 Third Quarter Results

Reports Third Quarter Earnings per Diluted Share of $0.28

-- Declares Quarterly Cash Dividend of $0.15 per Share

Big 5 Sporting Goods Corporation (BGFV) (the "Company"), a leading sporting goods retailer, today reported financial results for the fiscal 2017 third quarter ended October 1, 2017.

For the fiscal 2017 third quarter, net sales were $270.5 million compared to net sales of $279.0 million for the third quarter of fiscal 2016. Same store sales decreased 2.9% for the third quarter of fiscal 2017. This compares to a 6.8% increase in same store sales for the third quarter of fiscal 2016. As anticipated, fiscal 2017 third quarter sales comparisons to the prior year reflect a small benefit from the calendar shift related to the Fourth of July holiday.

Gross profit for the fiscal 2017 third quarter was $87.5 million, compared to $89.9 million in the third quarter of the prior year. The Company’s gross profit margin was 32.4% in the fiscal 2017 third quarter versus 32.2% in the third quarter of the prior year, reflecting an increase in merchandise margins of 51 basis points partially offset by higher store occupancy expense as a percentage of sales.

Selling and administrative expense as a percentage of net sales was 28.6% in the fiscal 2017 third quarter versus 27.3% in the third quarter of the prior year. Overall selling and administrative expense for the quarter increased by $1.1 million from the prior year primarily due to higher employee labor and benefit-related expense and expense related to information technology systems and services.

Net income for the third quarter of fiscal 2017 was $6.0 million, or $0.28 per diluted share, compared to net income for the third quarter of fiscal 2016 of $8.2 million, or $0.38 per diluted share. Results for the third quarter of fiscal 2016 included a charge of $0.03 per diluted share for store closing costs.

For the 39-week period ended October 1, 2017, net sales were $766.7 million compared to net sales of $755.0 million in the first 39 weeks of last year. Same store sales increased 1.6% in the first 39 weeks of fiscal 2017 versus the comparable period last year. Net income for the first 39 weeks of fiscal 2017 was $14.1 million, or $0.65 per diluted share, compared to net income for the first 39 weeks of fiscal 2016 of $9.2 million, or $0.42 per diluted share, including $0.07 per diluted share of charges for store closing costs and the write-off of deferred tax assets related to share-based compensation.

"Our third quarter results were in line with our guidance," said Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer. "Given the challenging and competitive retail environment, we are pleased to have retained a significant portion of the market share gains that we achieved following last year’s competitor store closures in our markets. While our third quarter same store sales declined from the prior year, we achieved two-year stacked quarterly same store sales growth for the period of 3.8%. For the third quarter, same store sales in our hardgoods category declined in the mid-single-digit range, reflecting the continued reduced demand for firearm-related products, and same store sales in our apparel and footwear categories were slightly down. Despite a highly promotional retail environment, we are also pleased to have grown merchandise margins as we benefited from a shift in our product mix."

Mr. Miller added, "Looking toward the fourth quarter, while consumer spending over the holiday season and winter weather conditions in our markets are difficult to predict, we feel that our business model, which focuses on offering the optimal mix of value, selection, service and convenience to our customers, will continue to serve us well in the current environment."

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 December 15, 2017 to stockholders of record as of December 1, 2017.

Share Repurchases

During the fiscal 2017 third quarter, pursuant to its share repurchase program, the Company repurchased 666,609 shares of its common stock for a total expenditure of $6.8 million. For the year-to-date period through October 1, 2017, the Company repurchased 677,109 shares of its common stock for a total expenditure of $6.9 million. As of October 1, 2017, the Company had $16.5 million available for future repurchases under its $25.0 million share repurchase program.

Guidance

For the fiscal 2017 fourth 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 $0.16 to $0.28, compared to a same store sales increase of 3.1% and earnings per diluted share of $0.35, including $0.02 per diluted share for a tax benefit related to share-based compensation, in the fourth quarter of fiscal 2016.

Store Openings

During the third quarter of fiscal 2017, the Company closed one store, ending the quarter with 432 stores in operation. The Company anticipates opening three stores in the fourth quarter. For the fiscal 2017 full year, the Company currently anticipates opening six new stores and closing three stores.

Conference Call Information

The Company will host a conference call and audio webcast today, October 31, 2017, at 2:00 p.m. Pacific (5:00 p.m. EDT), to discuss financial results for the third quarter of fiscal 2017. To access the conference call, participants in North America should dial (888) 334-3020, and international participants should dial (719) 457-2698. 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 November 7, 2017 by calling (844) 512-2921 to access the playback; passcode is 6969139.

About Big 5 Sporting Goods Corporation

Big 5 is a leading sporting goods retailer in the western United States, operating 432 stores under the "Big 5 Sporting Goods" name as of the fiscal quarter ended October 1, 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. These risks and uncertainties include, among other things, worsening of 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, 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, 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

BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
October 1,
January 1,
2017
2017
ASSETS
Current assets:
Cash
$
5,344
$ 7,895
Accounts receivable, net of allowances of $53 and $42, respectively
8,601
12,200
Merchandise inventories, net
309,331
294,319
Prepaid expenses
11,513
10,085
Total current assets
334,789
324,499
Property and equipment, net
77,694
78,420
Deferred income taxes
21,559
23,699
Other assets, net of accumulated amortization of $1,551 and $1,420, respectively
2,919
2,528
Goodwill
4,433
4,433
Total assets
$
441,394
$ 433,579
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
93,585
$ 109,314
Accrued expenses
66,035
76,887
Current portion of capital lease obligations
1,782
1,326
Total current liabilities
161,402
187,527
Deferred rent, less current portion
15,983
17,028
Capital lease obligations, less current portion
3,007
1,999
Long-term debt
46,427
10,000
Other long-term liabilities
11,089
11,988
Total liabilities
237,908
228,542
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 24,922,998 and
24,784,367 shares, respectively; outstanding 21,474,173 and 22,012,651 shares, respectively 249
248
Additional paid-in capital
115,944
114,797
Retained earnings
128,568
124,363
Less:
Treasury stock, at cost; 3,448,825 and 2,771,716 shares, respectively
(41,275 )
(34,371 )
Total stockholders’ equity
203,486
205,037
Total liabilities and stockholders’ equity
$
441,394
$ 433,579
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
13 Weeks Ended
39 Weeks Ended
October 1,
October 2,
October 1,
October 2,
2017
2016
2017
2016
Net sales
$ 270,471
$ 279,015
$ 766,746
$ 754,952
Cost of sales
182,923
189,126
516,268
517,841
Gross profit
87,548
89,889
250,478
237,111
Selling and administrative expense
77,358
76,296
226,190
219,774
Operating income
10,190
13,593
24,288
17,337
Interest expense
447
323
1,095
1,204
Income before income taxes
9,743
13,270
23,193
16,133
Income taxes
3,793
5,083
9,139
6,941
Net income
$ 5,950
$ 8,187
$ 14,054
$ 9,192
Earnings per share:
Basic
$ 0.28
$ 0.38
$ 0.65
$ 0.43
Diluted
$ 0.28
$ 0.38
$ 0.65
$ 0.42
Dividends per share
$ 0.15
$ 0.125
$ 0.45
$ 0.375
Weighted-average shares of common stock outstanding:
Basic
21,324
21,593
21,584
21,607
Diluted
21,355
21,732
21,752
21,790
In the third quarter and first nine months of fiscal 2016, the Company recorded pre-tax charges of $1.1 million and $1.2 million, respectively, related to store closing costs. These charges reduced net income by $0.7 million, or $0.03 per diluted share, and $0.7 million, or $0.03 per diluted share, respectively.
In the first half of fiscal 2016, the Company recorded charges of $0.8 million to write off deferred tax assets related to share-based compensation. These charges reduced net income per diluted share by $0.04.

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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