Big 5 Sporting Goods Corporation Announces Fiscal 2023 Fourth Quarter and Full Year Results
- Company declared a quarterly cash dividend of $0.05 per share for Q4 2023.
- Net sales for Q4 2023 decreased to $196.3 million compared to $238.3 million in Q4 2022.
- Gross profit for Q4 2023 was $59.2 million, down from $79.8 million in Q4 2022.
- Same store sales decreased by 17.7% in Q4 2023 compared to Q4 2022.
- Net loss for Q4 2023 was $8.9 million, or $0.41 per basic share.
- Adjusted EBITDA for Q4 2023 was $(8.7) million compared to $6.9 million in the prior year period.
- Merchandise inventories decreased by 9.1% at the end of fiscal 2023 compared to the prior year period.
- Company expects a decrease in same store sales in the low double-digit range for Q1 2024.
- Company plans to open approximately five stores and close four additional stores during fiscal 2024.
- Conference call scheduled to discuss results and provide additional details.
- Decrease in gross profit margin compared to the prior year.
- Net loss for fiscal 2023 was $7.1 million.
- Reduction in quarterly cash dividend rate from $0.125 to $0.05 per share.
- Expectation of net loss per basic share in the range of $0.30 to $0.40 for Q1 2024.
- Continued impact of macroeconomic headwinds on discretionary consumer spending.
Insights
The reported decrease in net sales and same-store sales for Big 5 Sporting Goods Corporation is a significant indicator of the company's performance, especially in the context of the retail sector. A 17.7% drop in same-store sales suggests a substantial decline in consumer traffic or spending, which could be indicative of broader economic trends or company-specific challenges. The gross profit margin contraction from 33.5% to 30.2% reflects heightened cost pressures, likely due to higher store occupancy and distribution expenses. These figures are crucial for investors as they can impact the company's ability to generate profit and ultimately affect its stock price.
The reduction of the quarterly cash dividend from $0.125 to $0.05 per share signals a strategic shift towards conserving capital amidst challenging macroeconomic conditions. This decision is likely to influence investor sentiment and could be interpreted as a cautious approach by management to ensure financial stability. The balance sheet shows a decrease in cash balance year-over-year, which might raise concerns about liquidity and cash flow management. However, the lack of borrowings is a positive sign, indicating that the company is not overly leveraged.
The decline in Big 5's sales performance can be attributed to external factors such as macroeconomic headwinds and unusual weather patterns, which have affected discretionary consumer spending and specific product categories like winter sports gear. The retail industry, particularly sporting goods, is sensitive to such variations and Big 5's results may reflect broader consumer behavior trends. The company's proactive inventory management, as evidenced by the 9.1% decrease in merchandise inventories, is a strategic move to align with reduced demand and avoid overstocking, which is a common issue in retail during downturns.
Furthermore, the expectation of continued low double-digit declines in same-store sales for the upcoming quarter suggests that the company does not foresee an immediate recovery in consumer spending. This outlook could impact investor confidence and the company's market valuation. The ongoing optimization of the store base, with store closures and openings, is part of a larger trend in retail where companies are re-evaluating their physical footprint to adapt to changing consumer preferences and shopping behaviors.
The performance of Big 5 Sporting Goods Corporation reflects wider economic conditions, including discretionary spending patterns. The reported net loss and the expectation of a continued decrease in same-store sales indicate that the company is experiencing the effects of a strained economic climate. The specific mention of macroeconomic challenges by the company's CEO underscores the impact of external economic factors on the retail sector. These challenges are likely to persist in the short term, affecting not only Big 5 but also its competitors and the industry as a whole.
The company's strategic focus on managing controllable aspects of the business, such as merchandise margins and expense control, is essential in navigating economic downturns. Investors would benefit from considering the potential long-term effects of the company's cost management strategies and the broader economic recovery on Big 5's financial health and stock performance.
Declares Quarterly Cash Dividend of
EL SEGUNDO, Calif., Feb. 27, 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 2023 fourth quarter and full year ended December 31, 2023.
As previously reported, net sales for the fiscal 2023 fourth quarter were
Gross profit for the fiscal 2023 fourth quarter was
Overall selling and administrative expense for the quarter decreased by
Net loss for the fourth quarter of fiscal 2023 was
For the fiscal 2023 full year, net sales were
Adjusted EBITDA was
Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said, “As previously reported, our fourth quarter results were impacted by the challenging macroeconomic environment, which pressured discretionary spending among our consumers. Additionally, the combination of warmer temperatures and reduced snowfall across our western footprint weighed heavily on our winter product sales, which are typically an important seasonal driver of our fourth quarter results.”
Mr. Miller continued, “Looking at our current trending, our first quarter to date sales continue to reflect persistent macroeconomic uncertainty and have been influenced by extreme weather across much of our geography. While our winter seasonal categories have accelerated with improved winter weather in February, that benefit has been largely offset by the historic rainfall our markets experienced in the past month, which impacted sales for other outdoor recreational activities, including baseball. In the challenging sales landscape, we remain steadfast in managing the controllable aspects of our business, including optimizing merchandise margins to maximize gross profit dollars, managing inventory levels, and controlling expenses.”
Balance Sheet
The Company ended the 2023 fiscal year with no borrowings under its credit facility and with a cash balance of
Quarterly Cash Dividend
The Company's Board of Directors has declared a quarterly cash dividend of
First Quarter Guidance
For the fiscal 2024 first quarter, the Company expects same store sales to decrease in the low double-digit range compared to the fiscal 2023 first 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 first quarter. Fiscal 2024 first quarter net loss per basic share is expected in the range of
Store Openings
During fiscal 2023, the Company opened two new stores and closed four stores, ending the year with 430 stores. The Company currently has 424 stores in operation, reflecting six store closures in the 2024 first quarter to date as part of the Company’s ongoing efforts to optimize its store base. During the remainder of fiscal 2024, the Company expects to open approximately five stores and close approximately four 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, February 27, 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, March 5, 2024 by calling (844) 512-2921 to access the playback; the passcode is 13744246.
About Big 5 Sporting Goods Corporation
Big 5 is a leading sporting goods retailer in the western United States, currently operating 424 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 | Fiscal Year Ended | |||||||||||||||
| Dec. 31, 2023 | Jan. 1, 2023 | Dec. 31, 2023 | Jan. 1, 2023 | |||||||||||||
| (In thousands) | ||||||||||||||||
| GAAP net (loss) income (as reported) | $ | (8,852 | ) | $ | 1,728 | $ | (7,083 | ) | $ | 26,134 | ||||||
| + Interest expense (income) (as reported) | 112 | 183 | (153 | ) | 572 | |||||||||||
| + Income tax (benefit) expense (as reported) | (4,485 | ) | 372 | (3,498 | ) | 6,809 | ||||||||||
| + Depreciation and amortization (as reported) | 4,650 | 4,596 | 18,315 | 18,020 | ||||||||||||
| EBITDA | $ | (8,575 | ) | $ | 6,879 | $ | 7,581 | $ | 51,535 | |||||||
| - Extinguishment of certain real estate-related liabilities | (789 | ) | — | (2,428 | ) | — | ||||||||||
| + Legal settlement provision | — | — | 1,500 | — | ||||||||||||
| + Revaluation of workers’ compensation reserves due to change in claims assessment methodology | — | — | — | 1,039 | ||||||||||||
| + Store asset impairment | 631 | — | 631 | — | ||||||||||||
| Adjusted EBITDA | $ | (8,733 | ) | $ | 6,879 | $ | 7,284 | $ | 52,574 | |||||||
| BIG 5 SPORTING GOODS CORPORATION | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Unaudited) | ||||||
| (In thousands, except share amounts) | ||||||
| December 31, 2023 | January 1, 2023 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $ | 9,201 | $ | 25,565 | ||
| Accounts receivable, net of allowances of | 9,163 | 12,270 | ||||
| Merchandise inventories, net | 275,759 | 303,493 | ||||
| Prepaid expenses | 16,052 | 16,632 | ||||
| Total current assets | 310,175 | 357,960 | ||||
| Operating lease right-of-use assets, net | 253,615 | 276,016 | ||||
| Property and equipment, net | 58,595 | 58,311 | ||||
| Deferred income taxes | 13,427 | 9,991 | ||||
| Other assets, net of accumulated amortization of | 8,871 | 6,515 | ||||
| Total assets | $ | 644,683 | $ | 708,793 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 55,201 | $ | 67,417 | ||
| Accrued expenses | 61,283 | 70,261 | ||||
| Current portion of operating lease liabilities | 70,372 | 70,584 | ||||
| Current portion of finance lease liabilities | 3,843 | 3,217 | ||||
| Total current liabilities | 190,699 | 211,479 | ||||
| Operating lease liabilities, less current portion | 191,178 | 214,584 | ||||
| Finance lease liabilities, less current portion | 11,856 | 7,089 | ||||
| Other long-term liabilities | 6,536 | 6,857 | ||||
| Total liabilities | 400,269 | 440,009 | ||||
| Commitments and contingencies | ||||||
| Stockholders' equity: | ||||||
| Common stock, | ||||||
| 26,491,750 shares, respectively; outstanding 22,440,362 and 22,184,495 shares, respectively | 267 | 264 | ||||
| Additional paid-in capital | 128,737 | 126,512 | ||||
| Retained earnings | 169,667 | 196,265 | ||||
| Less: Treasury stock, at cost; 4,307,255 shares | (54,257 | ) | (54,257 | ) | ||
| Total stockholders' equity | 244,414 | 268,784 | ||||
| Total liabilities and stockholders' equity | $ | 644,683 | $ | 708,793 | ||
| BIG 5 SPORTING GOODS CORPORATION | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited) | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||
| December 31, 2023 | January 1, 2023 | December 31, 2023 | January 1, 2023 | |||||||||
| Net sales | $ | 196,350 | $ | 238,312 | $ | 884,745 | $ | 995,538 | ||||
| Cost of sales | 137,111 | 158,479 | 598,901 | 654,323 | ||||||||
| Gross profit | 59,239 | 79,833 | 285,844 | 341,215 | ||||||||
| Selling and administrative expense | 72,464 | 77,550 | 296,578 | 307,700 | ||||||||
| Operating (loss) income | (13,225 | ) | 2,283 | (10,734 | ) | 33,515 | ||||||
| Interest expense (income) | 112 | 183 | (153 | ) | 572 | |||||||
| (Loss) income before income taxes | (13,337 | ) | 2,100 | (10,581 | ) | 32,943 | ||||||
| Income tax (benefit) expense | (4,485 | ) | 372 | (3,498 | ) | 6,809 | ||||||
| Net (loss) income | $ | (8,852 | ) | $ | 1,728 | $ | (7,083 | ) | $ | 26,134 | ||
| (Loss) earnings per share: | ||||||||||||
| Basic | $ | (0.41 | ) | $ | 0.08 | $ | (0.33 | ) | $ | 1.21 | ||
| Diluted | $ | (0.41 | ) | $ | 0.08 | $ | (0.33 | ) | $ | 1.18 | ||
| Weighted-average shares of common stock outstanding: | ||||||||||||
| Basic | 21,805 | 21,595 | 21,749 | 21,634 | ||||||||
| Diluted | 21,805 | 21,944 | 21,749 | 22,089 | ||||||||
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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