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 third quarter
ended September 29, 2024.
“Our third quarter performance reflected the
impact of ongoing economic pressures on consumer discretionary
spending,” commented Steven G. Miller, Chairman, President and CEO.
“Despite these challenges, we’re encouraged by the fact that we
have seen sequential improvement in same store sales each quarter
this year and we continue to see that trend early in the fourth
quarter as well. With this positive trajectory in our sales and our
enhanced promotional plans and product assortment, we are
optimistic about the potential of the approaching holiday season.
That said, we are mindful of how inflation continues to strain
consumers’ budgets and of the multitude of distractions that are
impacting consumer purchasing decisions in the near-term.
Throughout this prolonged period of uncertainty, we have been
steadfast in our commitment to inventory management and cost
control, which we believe has fortified our ability to navigate
ongoing market conditions while creating opportunities to
capitalize on any favorable macroeconomic shifts.”
Net sales for the fiscal 2024 third quarter were
$220.6 million, compared to net sales of $239.9 million for the
third quarter of fiscal 2023. Same store sales decreased 7.5% for
the third quarter of fiscal 2024, compared to the third quarter of
fiscal 2023.
Gross profit for the fiscal 2024 third quarter
was $64.2 million, compared to $79.6 million in the third quarter
of the prior year. The Company’s gross profit margin was 29.1% in
the fiscal 2024 third quarter versus 33.2% in the third quarter of
the prior year. The decrease in gross profit margin compared with
the prior year primarily reflected lower merchandise margins, which
declined 119 basis points year-over-year, along with higher store
occupancy and distribution expense, including costs capitalized
into inventory, as a percentage of net sales in the third quarter
of fiscal 2024.
Overall selling and administrative expense for
the quarter decreased by $1.6 million from the prior year,
primarily reflecting lower legal expense and reduced
performance-based incentive accruals. As a percentage of net sales,
selling and administrative expense was 34.0% in the fiscal 2024
third quarter, compared to 31.9% in the fiscal 2023 third quarter
due to the lower sales base.
Net loss for the third quarter of fiscal 2024
was $29.9 million, or $1.36 per basic share, and included a
non-cash charge for the establishment of a valuation allowance
related to deferred tax assets of $21.8 million, or $0.99 per basic
share, as well as a non-cash store asset impairment charge of $0.7
million, or $0.03 per basic share. This compares to net income of
$1.9 million, or $0.08 per diluted share in the third quarter of
fiscal 2023.
For the 39-week period ended September 29, 2024,
net sales were $613.8 million compared to net sales of $688.4
million in the first 39 weeks of last year. Same store sales
decreased 10.2% in the first nine months of fiscal 2024 versus the
comparable period last year. Net loss for the first 39 weeks of
fiscal 2024 was $48.2 million, or $2.20 per basic share, including
the non-cash charges discussed above. This compares to net income
for the first 39 weeks of fiscal 2023 of $1.8 million, or $0.08 per
diluted share.
Adjusted EBITDA was a negative $5.1 million for
the third quarter of fiscal 2024, compared to a positive $7.4
million in the prior year period. For the 39-week period ended
September 29, 2024, Adjusted EBITDA was a negative $20.3 million,
compared to a positive $16.0 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 SheetThe Company ended
the 2024 fiscal third quarter with no borrowings under its credit
facility and a cash balance of $4.0 million. This compares to no
borrowings under the Company’s credit facility and $17.9 million of
cash as of the end of the 2023 fiscal third quarter. Merchandise
inventories as of the end of the third quarter decreased by 8.7%
compared to the prior year period, reflecting the Company’s efforts
to manage inventory levels relative to sales.
Fourth Quarter GuidanceFor the
fiscal 2024 fourth quarter, the Company expects same store sales in
the range of positive low single digits to negative low single
digits compared to the fiscal 2023 fourth 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 fourth quarter. Guidance
also anticipates that the Company will benefit from winter weather
normalizing relative to last year when our winter product sales
were down nearly 40% over the prior year period, as extraordinarily
unfavorable winter weather conditions across the Company’s markets
weighed heavily on the category’s performance. In connection with
the Company’s establishment of a valuation allowance in the fiscal
2024 third quarter related to deferred tax assets, the Company does
not anticipate realizing any income tax benefit in the fiscal 2024
fourth quarter, which will result in a tax provision of
approximately zero for the quarter. On this basis, the Company
expects fiscal 2024 fourth quarter net loss per basic share in the
range of $0.80 to $1.05. For prior period comparison purposes,
assuming an estimated effective tax rate of 26.3%, the Company
expects fiscal 2024 fourth quarter adjusted net loss per basic
share in the range of $0.59 to $0.77, which compares to fiscal 2023
fourth quarter net loss per basic share of $0.41, which was not
impacted by the deferred tax asset valuation allowance.
Store OpeningsThe Company
currently has 423 stores in operation, reflecting six store
closures in the 2024 first quarter, two store closures in the 2024
third quarter, and two store closures in the 2024 fourth quarter to
date as part of the Company’s ongoing efforts to optimize its store
base, as well as one store opening in the 2024 second quarter, one
store opening in the 2024 third quarter, and one store opening in
the 2024 fourth quarter to date. During the remainder of fiscal
2024, the Company expects to close approximately one additional
store.
Conference Call InformationThe
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, October
29, 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, November 5, 2024, by calling (844) 512-2921 to access the
playback; the passcode is 13749066.
About Big 5 Sporting Goods
CorporationBig 5 is a leading sporting goods retailer in
the western United States, currently operating 423 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, our ability to
reverse valuation allowances on deferred tax assets, 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 MeasuresIn
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 |
|
39 Weeks Ended |
|
|
|
|
Sept. 29, 2024 |
|
|
Oct. 1, 2023 |
|
Sept. 29, 2024 |
|
Oct. 1, 2023 |
|
|
|
(In Thousands) |
|
|
GAAP net (loss) income (as
reported) |
$ |
|
(29,901) |
|
|
|
$ |
1,858 |
|
$ |
(48,191) |
|
$ |
1,769 |
|
|
+ Interest expense (income) (as reported) |
|
|
187 |
|
|
|
|
(95) |
|
|
392 |
|
|
(265) |
|
|
+ Income tax expense (as reported) |
|
|
18,886 |
|
|
|
|
1,220 |
|
|
12,487 |
|
|
987 |
|
|
+ Depreciation and amortization (as reported) |
|
|
5,058 |
|
|
|
|
4,524 |
|
|
14,343 |
|
|
13,665 |
|
|
EBITDA |
$ |
|
(5,770) |
|
|
|
$ |
7,507 |
|
$ |
(20,969) |
|
$ |
16,156 |
|
|
+ Store asset impairment |
|
|
663 |
|
|
|
|
— |
|
|
663 |
|
|
— |
|
|
- Extinguishment of certain real estate-related liabilities |
|
|
— |
|
|
|
|
(1,638) |
|
|
— |
|
|
(1,638) |
|
|
+ Legal settlement provision |
|
|
— |
|
|
|
|
1,500 |
|
|
— |
|
|
1,500 |
|
|
Adjusted EBITDA |
$ |
|
(5,107) |
|
|
|
$ |
7,369 |
|
$ |
(20,306) |
|
$ |
16,018 |
|
|
FINANCIAL TABLES FOLLOW
|
|
|
|
|
|
|
|
|
|
BIG 5
SPORTING GOODS CORPORATION |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands,
except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
September 29, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
$ |
3,991 |
|
$ |
9,201 |
|
Accounts receivable, net of allowances of $64 and $48,
respectively |
|
9,644 |
|
|
9,163 |
|
Merchandise inventories, net |
|
265,984 |
|
|
275,759 |
|
Prepaid expenses |
|
9,235 |
|
|
16,052 |
|
Total current assets |
|
288,854 |
|
|
310,175 |
|
|
|
|
|
|
Operating
lease right-of-use assets, net |
|
260,572 |
|
|
253,615 |
|
Property and
equipment, net |
|
54,081 |
|
|
58,595 |
|
Deferred
income taxes |
|
— |
|
|
13,427 |
|
Other
assets, net of accumulated amortization of $2,807 and $1,954,
respectively |
|
8,307 |
|
|
8,871 |
|
Total assets |
$ |
611,814 |
|
$ |
644,683 |
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
$ |
64,395 |
|
$ |
55,201 |
|
Accrued expenses |
|
60,260 |
|
|
61,283 |
|
Current portion of operating lease liabilities |
|
69,939 |
|
|
70,372 |
|
Current portion of finance lease liabilities |
|
3,758 |
|
|
3,843 |
|
Total current liabilities |
|
198,352 |
|
|
190,699 |
|
|
|
|
|
|
Operating
lease liabilities, less current portion |
|
202,049 |
|
|
191,178 |
|
Finance
lease liabilities, less current portion |
|
9,462 |
|
|
11,856 |
|
Other
long-term liabilities |
|
6,129 |
|
|
6,536 |
|
Total liabilities |
|
415,992 |
|
|
400,269 |
|
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $0.01 par value, authorized 50,000,000 shares; issued
27,007,055 and |
|
|
|
26,747,617 shares, respectively; outstanding 22,699,800 and
22,440,362 shares, respectively |
|
269 |
|
|
267 |
|
Additional paid-in capital |
|
130,553 |
|
|
128,737 |
|
Retained earnings |
|
119,257 |
|
|
169,667 |
|
Less: Treasury stock, at cost; 4,307,255 shares |
|
(54,257) |
|
|
(54,257) |
|
Total stockholders' equity |
|
195,822 |
|
|
244,414 |
|
Total liabilities and stockholders' equity |
$ |
611,814 |
|
$ |
644,683 |
|
|
|
|
|
|
BIG 5
SPORTING GOODS CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
39 Weeks Ended |
|
|
September 29, 2024 |
|
October 1, 2023 |
|
September 29, 2024 |
|
October 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
220,598 |
|
$ |
239,889 |
|
$ |
613,849 |
|
$ |
688,395 |
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
156,387 |
|
|
160,331 |
|
|
430,516 |
|
|
461,790 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
64,211 |
|
|
79,558 |
|
|
183,333 |
|
|
226,605 |
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expense |
|
75,039 |
|
|
76,575 |
|
|
218,645 |
|
|
224,114 |
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(10,828) |
|
|
2,983 |
|
|
(35,312) |
|
|
2,491 |
|
|
|
|
|
|
|
|
|
|
Interest
expense (income) |
|
187 |
|
|
(95) |
|
|
392 |
|
|
(265) |
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
(11,015) |
|
|
3,078 |
|
|
(35,704) |
|
|
2,756 |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
18,886 |
|
|
1,220 |
|
|
12,487 |
|
|
987 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(29,901) |
|
$ |
1,858 |
|
$ |
(48,191) |
|
$ |
1,769 |
|
|
|
|
|
|
|
|
|
|
(Loss)
earnings per share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(1.36) |
|
$ |
0.09 |
|
$ |
(2.20) |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
(1.36) |
|
$ |
0.08 |
|
$ |
(2.20) |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
22,000 |
|
|
21,801 |
|
|
21,929 |
|
|
21,731 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
22,000 |
|
|
22,045 |
|
|
21,929 |
|
|
22,003 |
|
|
|
|
|
|
|
|
|
|
Contact:Big 5 Sporting Goods CorporationBarry EmersonExecutive
Vice President and Chief Financial Officer(310) 536-0611
ICR, Inc.Jeff SonnekManaging Director(646) 277-1263
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