Sporting products retailer,
Big 5 Sporting Goods Corp.
) reported disappointing first-quarter 2012 results, below the
Zacks Consensus Estimate. The quarterly earnings of 1 cent per
share was below the Zacks Consensus Estimate of 3 cents per
However, earnings for the quarter trailed 92.3% from 13 cents
per share reported in the same quarter last year and were near the
lower end of the company's guidance range of break-even to 6 cents
Big 5's net sales of $218.5 million in the reported quarter
slipped 1.2% from the prior-year quarter sales of $221.1 million,
missing the Zacks Consensus Estimate of $221 million. In the first
quarter, same-store sales inched down 2.9%, resulting from
unfavorable winter weather in most markets, where the company
Quarter at Length
First quarter gross profit moved down 6.6% to $67.4 million
while gross profit margin contracted 170 basis points to 30.9% due
to lower merchandise margins driven by impacts of promotional
activities and increased product costs as well as product mix shift
resulting from unfavorable winter weather.
Selling and administrative expense as a percentage of net sales
increased 10 basis points to 30.5% attributable to a decline in
employee benefit-related costs, compared to higher-than-normal
levels in the prior-year period, as well as a downside in debit
card fees due to recent federal legislation.
As of April 1, 2012, Big 5 had cash and cash equivalents of $5.6
million, long-term debt of $60.2 million and shareholders' equity
of $153.8 million.
The company also continues to enhance shareholder value by
returning cash in the form of dividend and share repurchases. Big 5
declared a quarterly cash dividend of 7.5 cents a share to be paid
on June 15, 2012 to shareholders of record as of June 1, 2012.
In the first quarter, the company bought back 172,471 shares
valued at $1.4 million. As of April 1, 2012, the company had nearly
$11.8 million available to be bought back under $20.0 million
authorization, approved in the fourth quarter of fiscal 2007.
During the first quarter of 2012, Big 5 added one store,
bringing its store count at the end of the quarter to 407 stores.
The store opened in the first quarter is a relocation of an
existing store, which is slated to close in the second quarter.
Management expects earnings per share in the second quarter to
range from 5 cents to 11 cents per share compared with 14 cents per
share in the comparable quarter last year. Same store sales are
pegged in the positive low single-digit range.
Looking ahead, Big 5 plans to open three new stores in the
second quarter of fiscal 2012, one of which will replace an
existing store. The company expects to close four stores in the
second quarter of 2012. For fiscal 2012, the company targets to
open nearly 10 new stores, relocate about 6 stores and close 3
Of the 6 stores, which are lined up for relocation in fiscal
2012, Big 5 will shut 3 stores this year and 3 in the next
Big 5 faces intense competition from national layers such as
Dick's Sporting Goods Inc.
Hibbett Sports Inc.
), mass merchandisers such as
Wal-Mart Stores Inc.
), as well as regional and local sporting goods stores.
Big 5 currently retain a Zacks #2 Rank, which translates into a
Buy rating. Our long-term Neutral recommendation is guided by the
company's strategy of resuming the store expansion program to boost
top line, offset by the sluggish top- and bottom-line performances
in the recent quarters.
BIG 5 SPORTING (BGFV): Free Stock Analysis
DICKS SPRTG GDS (DKS): Free Stock Analysis
HIBBET SPORTS (HIBB): Free Stock Analysis
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
To read this article on Zacks.com click here.