Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company”), a
leading sporting goods retailer, today provided select preliminary
fiscal 2020 second quarter financial results for the period ended
June 28, 2020.
Steven G. Miller, the Company’s Chairman, President and Chief
Executive Officer, commented, “We are pleased with our
exceptionally strong second quarter performance that was driven by
substantial sales and merchandise margin gains over the back half
of the quarter and considerable operating leverage from meaningful
reductions in our cost structure. This powerful combination has
contributed to significantly reduced inventory and net borrowing
levels, and our business is in a very strong financial
position.
“Over the first half of the second quarter, when the impacts of
the COVID-19 pandemic forced us to operate with a highly reduced
store count, our same store sales decreased by 28.2% compared to
the prior year period. However, as we reopened stores our product
assortment and convenience clearly resonated with consumers and for
the second half of the second quarter our same store sales
increased by 15.5% compared to the prior year period with very
strong merchandise margins. We are pleased that the positive sales
and margin momentum in our business has continued into the start of
the third quarter.”
Mr. Miller continued, “We are extremely proud of how our team
has responded to the challenges imposed by COVID-19 over the last
few months. Recognizing significant shifts in consumer demand, we
leveraged our long-standing vendor partnerships to quickly evolve
our product assortment. Our buying and distribution teams worked
tirelessly in an effort to optimize our inventory levels across a
rapidly evolving landscape. We implemented meaningful cost
reduction initiatives throughout our organization. And our store
and field personnel were dedicated to safely serving our
communities as we established new operational protocols in our
stores. We are recognizing these efforts by awarding a special
bonus to most members of the Big 5 team, with the exception of
senior executives. Additionally, we are moving forward with
previously planned annual pay increases for the Big 5 team that had
been suspended due to the uncertainties surrounding COVID-19.
Although the future impacts of the pandemic remain uncertain,
moving forward we are confident that our recent experience will
help us to navigate challenges that may arise.”
For the fiscal 2020 second quarter, the Company’s same store
sales decreased 4.2% versus the comparable period in 2019, when
same store sales increased 0.7% from 2018. Total net sales for the
fiscal 2020 second quarter were approximately $228 million,
compared to $241 million in the prior year period. Merchandise
margins increased approximately 175 basis points for the fiscal
2020 second quarter versus the prior year period, reflecting margin
strength in fiscal May and June. Operating expenses for the quarter
benefited from reduced payroll costs, lower advertising costs, rent
abatement and other expense savings during the period. Although a
certain portion of such operating expense savings will only benefit
the fiscal 2020 second quarter, the Company expects aspects of such
operating expense savings to continue beyond the period.
For the fiscal 2020 second quarter, the Company expects to
realize earnings per diluted share in the range of $0.52 to
$0.54, including a net benefit of approximately $0.15 per diluted
share related to rent abatement savings and a recovery in eminent
domain litigation partially offset by the expense associated with
the special employee recognition bonus awards discussed above,
compared to earnings per diluted share of $0.00 for the
second quarter of the prior year, which included a $0.03 per
diluted share net benefit primarily related to the favorable
settlement of a software contract termination.
The Company’s merchandise inventories at the end of the fiscal
2020 second quarter decreased approximately 14.6% compared to the
prior year. The Company completed the fiscal 2020 second quarter
with borrowings under its revolving credit facility, net of cash,
of approximately $18 million, reflecting a $38 million improvement
on a year-over-year basis and a $62 million improvement compared to
the end of the fiscal 2020 first quarter.
Store Operations Update
As previously announced, beginning on March 20, 2020, the
Company temporarily closed approximately one-half of its
retail store locations in response to state and local shelter
orders related to the COVID-19 outbreak. At the end of
April, approximately one-quarter of the Company’s stores
remained temporarily closed. As of the end of May, all of the
Company’s stores that were temporarily closed due to COVID-19
had reopened in some capacity, with less than 10% of the open
stores operating for curbside business only in compliance with
local regulations. As of the end of the second quarter and
continuing as of today, all of the Company’s stores that were
temporarily closed due to COVID-19 had reopened for in-store
shopping, subject to appropriate social distancing restrictions and
with reduced operating hours. Additionally, during the second
quarter, four of the Company’s stores were temporarily closed due
to damage incurred in connection with civil unrest, three of which
reopened prior to the end of the second quarter and one of which
reopened in the third quarter. During the second quarter, the
Company also reopened its Pasadena, California store, which had
been closed for an extended period due to a fire. The Company is
currently operating 431 stores, which compares to 434 stores in
operation at the same time in the prior year.
All figures in this release remain subject to the completion of
normal quarter-end accounting procedures, which could result in
changes to these preliminary results and the related
earnings forecast.
Fiscal Second Quarter Earnings Release Date
The Company expects to report earnings results for the fiscal
2020 second quarter by the end of July.
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 June 28, 2020.
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, the economic impacts of
COVID-19 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, 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), 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 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.
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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