Big 5 Sporting Goods Corporation Announces Fiscal 2024 Second Quarter Results
Rhea-AI Summary
Big 5 Sporting Goods (Nasdaq: BGFV) reported financial results for Q2 2024. Net sales were $199.8 million, down from $223.6 million in Q2 2023, with same-store sales decreasing 9.9%. The company reported a net loss of $10.0 million, or $0.46 per basic share, compared to a net loss of $0.3 million in Q2 2023. Gross profit margin decreased to 29.4% from 32.2% last year. The Board has suspended the quarterly cash dividend due to macroeconomic challenges. For Q3 2024, the company expects same-store sales to decrease in the mid-single-digit range and projects a net loss per basic share between $0.15 and $0.35.
Positive
- Merchandise inventories decreased by 10.8% compared to the prior year period
- The company ended Q2 2024 with no borrowings under its credit facility
- Selling and administrative expenses decreased by $0.2 million from the prior year
Negative
- Net sales decreased by 10.6% year-over-year to $199.8 million in Q2 2024
- Same-store sales decreased by 9.9% in Q2 2024 compared to Q2 2023
- Net loss widened to $10.0 million in Q2 2024 from $0.3 million in Q2 2023
- Gross profit margin decreased to 29.4% from 32.2% in the prior year
- EBITDA turned negative at $8.7 million compared to positive $4.2 million in Q2 2023
- The company suspended its quarterly cash dividend
- Projected net loss per basic share of $0.15 to $0.35 for Q3 2024
Insights
Big 5 Sporting Goods 's Q2 2024 results paint a challenging picture for the retailer. The company reported net sales of
The company's gross profit margin contracted to
The net loss of
On a positive note, Big 5 has managed to reduce its inventory levels by
Looking ahead, the projected mid-single-digit decrease in same-store sales for Q3 2024 and an expected loss per share between
Big 5's Q2 results reflect broader challenges in the sporting goods retail sector amidst a tough macroeconomic environment. The
The company's strategy to optimize merchandise margins while managing expenses and inventory levels is commendable, but it's clear that these efforts are not enough to offset the significant sales decline. The slight 27 basis point decrease in merchandise margins suggests that Big 5 is resisting heavy discounting, which could preserve brand value but may also be contributing to the sales slump.
Big 5's store optimization efforts, including the closure of six stores in Q1 and plans to close approximately five more, while opening only three new locations in 2024, signal a defensive posture. This cautious approach to real estate could help improve overall efficiency but may limit growth opportunities when the market recovers.
The suspension of the dividend is a double-edged sword. While it preserves cash and provides financial flexibility, it may also signal to the market that management expects prolonged difficulties, potentially impacting investor confidence.
As Big 5 navigates these challenges, its ability to adapt to changing consumer behaviors, potentially through enhanced omnichannel capabilities or product mix adjustments, will be important for its long-term viability in an increasingly competitive retail landscape.
EL SEGUNDO, Calif., July 30, 2024 (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 2024 second quarter ended June 30, 2024.
“Our second quarter results were consistent with our guidance range, as our customers continue to feel the ongoing and cumulative impact of inflationary pressures on their discretionary spending,” stated Steven G. Miller, the Company’s Chairman, President and Chief Executive Office. “As we battle these sales headwinds, our team remains focused on aspects of the business within our control, including optimization of merchandise margins and managing our expenses and inventory levels. We believe these efforts on the operational front will best position us to generate improved results as the headwinds ease.”
Mr. Miller continued, “Given the uncertainty of the duration of the challenged macroeconomic environment, and our priority of maintaining a healthy balance sheet, we have proactively suspended our dividend to provide added financial flexibility. We remain steadfast in our commitment to maximizing shareholder value and, as we always have, will continue to evaluate opportunities to return value to shareholders.”
Net sales for the fiscal 2024 second quarter were
Gross profit for the fiscal 2024 second quarter was
Overall selling and administrative expense for the quarter decreased by
Net loss for the second quarter of fiscal 2024 was
For the 26-week period ended June 30, 2024, net sales were
EBITDA was a negative
Balance Sheet
The Company ended the 2024 fiscal second quarter with no borrowings under its credit facility and a cash balance of
Quarterly Cash Dividend
The Company’s Board of Directors has proactively suspended the quarterly cash dividend, in an effort to provide added financial flexibility given the uncertain duration of the current macroeconomic challenges.
Third Quarter Guidance
For the fiscal 2024 third quarter, the Company expects same store sales to decrease in the mid single-digit range compared to the fiscal 2023 third quarter. The Company’s same store sales guidance reflects an expectation that macroeconomic headwinds will continue to impact discretionary consumer spending over the balance of the third quarter. Fiscal 2024 third quarter net loss per basic share is expected in the range of
Store Openings
The Company currently has 425 stores in operation, reflecting six store closures in the first quarter of 2024 as part of the Company’s ongoing efforts to optimize its store base, and one store opening in the second quarter of 2024. During the remainder of fiscal 2024, the Company expects to open approximately two additional stores and close approximately five additional stores.
Conference Call Information
The Company will host a conference call to discuss these results and provide additional comments and details. The conference call is scheduled to begin at 2:00 p.m. Pacific Time on Tuesday, July 30, 2024. 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.
In addition, the call will 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 telephonic replay will be available through Tuesday, August 6, 2024, by calling (844) 512-2921 to access the playback; the passcode is 13747712.
About Big 5 Sporting Goods Corporation
Big 5 is a leading sporting goods retailer in the western United States, currently operating 425 stores under the “Big 5 Sporting Goods” name. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 12,000 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, global supply chain disruptions resulting from the ongoing conflict in Ukraine and the Middle East, 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, as well as environmental, social and governance issues, 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 earnings before interest, income tax expense, depreciation and amortization (“EBITDA”) and any 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 | ||||||||||||||
| June 30, 2024 | July 2, 2023 | June 30, 2024 | July 2, 2023 | ||||||||||||
| (In thousands) | |||||||||||||||
| GAAP net loss (as reported) | $ | (10,004 | ) | $ | (282 | ) | $ | (18,290 | ) | $ | (89 | ) | |||
| + Interest expense (income) (as reported) | 82 | (55 | ) | 205 | (170 | ) | |||||||||
| + Income tax benefit (as reported) | (3,581 | ) | (126 | ) | (6,399 | ) | (233 | ) | |||||||
| + Depreciation and amortization (as reported) | 4,768 | 4,631 | 9,285 | 9,141 | |||||||||||
| EBITDA | $ | (8,735 | ) | $ | 4,168 | $ | (15,199 | ) | $ | 8,649 | |||||
| Adjusted EBITDA | $ | (8,735 | ) | $ | 4,168 | $ | (15,199 | ) | $ | 8,649 | |||||
FINANCIAL TABLES FOLLOW
| BIG 5 SPORTING GOODS CORPORATION | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Unaudited) | ||||||
| (In thousands, except share amounts) | ||||||
| June 30, 2024 | December 31, 2023 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $ | 4,938 | $ | 9,201 | ||
| Accounts receivable, net of allowances of | 10,453 | 9,163 | ||||
| Merchandise inventories, net | 289,572 | 275,759 | ||||
| Prepaid expenses | 13,845 | 16,052 | ||||
| Total current assets | 318,808 | 310,175 | ||||
| Operating lease right-of-use assets, net | 265,557 | 253,615 | ||||
| Property and equipment, net | 56,785 | 58,595 | ||||
| Deferred income taxes | 19,790 | 13,427 | ||||
| Other assets, net of accumulated amortization of | 8,428 | 8,871 | ||||
| Total assets | $ | 669,368 | $ | 644,683 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 92,003 | $ | 55,201 | ||
| Accrued expenses | 59,317 | 61,283 | ||||
| Current portion of operating lease liabilities | 65,971 | 70,372 | ||||
| Current portion of finance lease liabilities | 3,712 | 3,843 | ||||
| Total current liabilities | 221,003 | 190,699 | ||||
| Operating lease liabilities, less current portion | 206,893 | 191,178 | ||||
| Finance lease liabilities, less current portion | 10,372 | 11,856 | ||||
| Other long-term liabilities | 6,061 | 6,536 | ||||
| Total liabilities | 444,329 | 400,269 | ||||
| Commitments and contingencies | ||||||
| Stockholders' equity: | ||||||
| Common stock, | 269 | 267 | ||||
| Additional paid-in capital | 129,880 | 128,737 | ||||
| Retained earnings | 149,147 | 169,667 | ||||
| Less: Treasury stock, at cost; 4,307,255 shares | (54,257 | ) | (54,257 | ) | ||
| Total stockholders' equity | 225,039 | 244,414 | ||||
| Total liabilities and stockholders' equity | $ | 669,368 | $ | 644,683 | ||
| BIG 5 SPORTING GOODS CORPORATION | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited) | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||
| June 30, 2024 | July 2, 2023 | June 30, 2024 | July 2, 2023 | |||||||||
| Net sales | $ | 199,824 | $ | 223,567 | $ | 393,251 | $ | 448,506 | ||||
| Cost of sales | 141,100 | 151,664 | 274,129 | 301,459 | ||||||||
| Gross profit | 58,724 | 71,903 | 119,122 | 147,047 | ||||||||
| Selling and administrative expense | 72,227 | 72,366 | 143,606 | 147,539 | ||||||||
| Operating loss | (13,503 | ) | (463 | ) | (24,484 | ) | (492 | ) | ||||
| Interest expense (income) | 82 | (55 | ) | 205 | (170 | ) | ||||||
| Loss before income taxes | (13,585 | ) | (408 | ) | (24,689 | ) | (322 | ) | ||||
| Income tax benefit | (3,581 | ) | (126 | ) | (6,399 | ) | (233 | ) | ||||
| Net loss | $ | (10,004 | ) | $ | (282 | ) | $ | (18,290 | ) | $ | (89 | ) |
| Loss per share: | ||||||||||||
| Basic | $ | (0.46 | ) | $ | (0.01 | ) | $ | (0.84 | ) | $ | (0.00 | ) |
| Diluted | $ | (0.46 | ) | $ | (0.01 | ) | $ | (0.84 | ) | $ | (0.00 | ) |
| Weighted-average shares of common stock outstanding: | ||||||||||||
| Basic | 21,956 | 21,762 | 21,894 | 21,696 | ||||||||
| Diluted | 21,956 | 21,762 | 21,894 | 21,696 | ||||||||
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
FAQ
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