BGFV
$3.71
Big 5 Sporting
($.18)
(4.63%)
Earnings Details
3rd Quarter September 2018
Tuesday, October 30, 2018 4:01:00 PM
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Summary

Big 5 Guides to a Fourth Quarter Loss

Big 5 Sporting (BGFV) reported 3rd Quarter September 2018 earnings of $0.15 per share on revenue of $266.4 million. The consensus earnings estimate was $0.19 per share on revenue of $277.6 million. Revenue fell 1.5% compared to the same quarter a year ago.

The company said it expects a fourth quarter loss of $0.25 to $0.15 per share. The current consensus estimate is for earnings of $0.16 per share for the quarter ending December 31, 2018.

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
$0.15
Earnings Whisper
-
Consensus Estimate
$0.19
Reported Revenue
$266.4 Mil
Revenue Estimate
$277.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Big 5 Sporting Goods Corporation Announces Fiscal 2018 Third Quarter Results

EL SEGUNDO, Calif., Oct. 30, 2018 (GLOBE NEWSWIRE) -- Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company”), a leading sporting goods retailer, today reported financial results for the fiscal 2018 third quarter ended September 30, 2018.

Net sales for the fiscal 2018 third quarter were $266.4 million, compared to net sales of $270.5 million for the third quarter of fiscal 2017.  Same store sales decreased 2.0% for the third quarter of fiscal 2018.  As anticipated, fiscal 2018 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 2018 third quarter was $82.5 million, compared to $87.5 million in the third quarter of the prior year.  The Company’s gross profit margin was 31.0% in the fiscal 2018 third quarter, versus 32.4% in the third quarter of the prior year, primarily reflecting higher distribution and store occupancy expenses as a percentage of net sales.  The Company also realized a slight contraction of merchandise margins of 10 basis points year-over-year, due in part to added promotions related to the calendar shift of the July 4th holiday. 

Selling and administrative expense as a percentage of net sales was 29.2% in the fiscal 2018 third quarter versus 28.6% in the third quarter of the prior year.  Overall selling and administrative expense for the quarter increased $0.3 million from the prior year, mainly due to higher employee labor and benefit-related expense, partially offset by lower advertising expense.

Net income for the third quarter of fiscal 2018 was $3.1 million, or $0.15 per diluted share, compared to net income for the third quarter of fiscal 2017 of $6.0 million, or $0.28 per diluted share.

For the 39-week period ended September 30, 2018, net sales were $740.5 million, compared to net sales of $766.7 million in the first 39 weeks of last year.  Same store sales decreased 3.9% in the first 39 weeks of fiscal 2018, versus a 1.7% increase in the comparable period last year.  Net income for the first 39 weeks of fiscal 2018 was $1.6 million, or $0.07 per diluted share, including a $0.01 per diluted share charge for the write-off of deferred tax assets related to share-based compensation, compared to net income for the first 39 weeks of fiscal 2017 of $14.1 million, or $0.65 per diluted share.

“Our results for the third quarter reflect positive same store sales in July, offset by lower-than-expected sales in August and September,” said Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer.  “While we are disappointed with our sales performance, we are pleased with our ability to diligently manage our product margins and expenses and generate earnings per share within our guidance range.  Despite the softness in sales, we continue to make progress right-sizing our inventory levels and believe our inventory is well-positioned for the fourth quarter.”

Mr. Miller continued, “We are focused on enhancing our product assortment and marketing strategy to succeed in the evolving retail environment.  While consumer spending over the holiday season and winter weather conditions in our markets are difficult to predict, we are cautiously optimistic that our results for the fourth quarter will benefit from a number of initiatives to drive traffic and sales.”

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 December 14, 2018, to stockholders of record as of November 30, 2018.  This dividend, which represents a reduction from the previous quarterly cash dividend rate of $0.15 per share, reflects the Company’s intent to utilize capital to maintain a healthy financial condition.

Guidance
For the fiscal 2018 fourth quarter, the Company expects same store sales to be in the range of negative low single-digits to positive low single-digits and expects to realize a loss per share in the range of $0.15 to $0.25

Store Openings
During the third quarter of fiscal 2018, the Company opened one store.  The Company anticipates opening one store during the fiscal 2018 fourth quarter.  For the fiscal 2018 full year, the Company anticipates opening four new stores and closing two stores.

Conference Call Information
The Company will host a conference call and audio webcast today, October 30, 2018, at 2:00 p.m. Pacific (5:00 p.m. ET), to discuss financial results for the third quarter of fiscal 2018.  To access the conference call, participants in North America should dial (800) 239-9838, and international participants should dial (323) 994-2093.  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 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 6, 2018 by calling (844) 512-2921 to access the playback; passcode is 8153709.

About Big 5 Sporting Goods Corporation
Big 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 September 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)
     
     
     
  September 30,
2018
 December 31,
2017
ASSETS
     
Current assets:    
Cash$5,018 $7,170 
Accounts receivable, net of allowances of $38 and $79, respectively 14,835  10,886 
Merchandise inventories, net 314,837  313,905 
Prepaid expenses 13,099  18,930 
Total current assets 347,789  350,891 
     
Property and equipment, net 75,587  77,265 
Deferred income taxes 13,306  14,172 
Other assets, net of accumulated amortization of $1,715 and $1,575, respectively 4,402  2,732 
Total assets$441,084 $445,060 
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Accounts payable$83,340 $113,740 
Accrued expenses 61,475  68,226 
Current portion of capital lease obligations 2,294  1,754 
Total current liabilities 147,109  183,720 
     
Deferred rent, less current portion 15,218  15,948 
Capital lease obligations, less current portion 4,932  2,800 
Long-term debt 83,523  45,000 
Other long-term liabilities 9,772  10,523 
Total liabilities 260,554  257,991 
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 25,078,487 and    
24,919,624 shares, respectively; outstanding 21,428,274 and 21,345,159 shares, respectively250  249 
Additional paid-in capital 117,863  116,495 
Retained earnings (1) 104,944  112,424 
Less: Treasury stock, at cost; 3,650,213 and 3,574,465 shares, respectively (42,527) (42,099)
Total stockholders' equity 180,530  187,069 
Total liabilities and stockholders' equity$441,084 $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) 
          
          
  13 Weeks Ended 39 Weeks Ended 
  September 30,
2018
 October 1,
2017
 September 30,
2018
 October 1,
2017
 
          
          
Net sales $  266,351$  270,471$  740,480$  766,746 
          
Cost of sales   183,852   182,923   509,984   516,268 
          
Gross profit    82,499   87,548   230,496   250,478 
          
Selling and administrative expense   77,680   77,358   225,824   226,190 
          
Operating income   4,819   10,190   4,672   24,288 
          
Interest expense   860   447   2,309   1,095 
          
Income before income taxes   3,959 9,743   2,363 23,193 
          
Income taxes (1)   844   3,793   805   9,139 
          
Net income (1)$  3,115$5,950$  1,558$14,054 
          
Earnings per share:         
Basic$  0.15$0.28$  0.07$0.65 
          
Diluted$  0.15$0.28$  0.07$0.65 
          
Dividends per share$  0.15$  0.15$  0.45$  0.45 
          
Weighted-average shares of common stock outstanding:         
Basic   20,990   21,324   20,972   21,584 
          
Diluted   21,000   21,355   21,021   21,752 
          
(1) In the first quarter of fiscal 2018, the Company recorded a charge of $0.2 million to write-off deferred tax assets related to share-based compensation.

 

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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Source: Big 5 Sporting Goods Corporation