Sporting products retailer,
Big 5 Sporting Goods Corp.
(
BGFV
), is scheduled to report its first-quarter 2012 financial results
after the market closes on May 1, 2012. The current Zacks Consensus
Estimate for the quarter is 3 cents per share. For the quarter
under review, revenue is expected to be $221 million, according to
the Zacks Consensus Estimate.
Fourth-Quarter 2011, a Synopsis
Big 5 reported better-than-expected fourth-quarter 2011 results.
The quarterly adjusted earnings of 5 cents per share came a penny
ahead of the Zacks Consensus Estimate of 4 cents per share. The
results also met the higher end of the company's recently revised
guidance range of 2-5 cents. However, adjusted earnings dropped 80%
from 25 cents per share reported in the same quarter last year.
Big 5's net sales of $226.7 million in the fourth quarter were
flat compared with the year-earlier quarter. Quarterly sales almost
came in line with the Zacks Consensus Estimate of $227 million.
Same store sales in the fourth quarter were down 2.1% on a
year-over-year basis. Soft same store sales results in the quarter,
affected by unfavorable winter weather in most markets, where the
company operates as well as heightened promotional activities,
impacted the quarter's sales.
Guidance for Fiscal 2012
For the first quarter of 2012, management expects earnings per
share to range from break-even to 6 cents per share compared with
13 cents per share in the first quarter of fiscal 2011. Same store
sales are pegged in the negative low-single digit range.
The company's outlook for first quarter is based on expectations
of merchandising margins, which continue to struggle due to impacts
of higher promotional and product costs, as well as shift in the
product sales mix resulting from unfavorable winter weather.
Looking ahead, Big 5 targets to open nearly 10 new stores and
relocate about 7 stores during fiscal 2012.
Zacks Consensus
The analyst covered by Zacks expects Big 5 to post first-quarter
2012 earnings of 3 cents a share, lower than 13 cents delivered in
the prior-year quarter. Currently, the Zacks Consensus Estimate
ranges between earnings of 2 cents and 6 cents a share.
For fiscal 2012, the Zacks Consensus Estimate stood at 61 cents
per share, higher than its previous fiscal earnings of 46 cents.
The current Zacks estimate ranges between 44 cents and 75 cents per
share.
Agreement of Estimates
In the last 7 and 30 days, no movement in estimates has been
noticed in either direction, either for first-quarter 2012 or
fiscal 2012.
Magnitude of Estimate Revisions
In the last 30 days, the Zacks Consensus Estimates for
first-quarter as well as for fiscal 2012 has been lowered by a
penny to 3 cents and 61 cents per share.
Surprise History
With respect to earnings surprises, Big 5 has missed as well as
topped the Zacks Consensus Estimate over the last four quarters in
the range of negative 31.6% to positive 60%. The average remained
at positive 28.1%, indicating that Big 5 has missed the Zacks
Consensus Estimate by that measure in the trailing four
quarters.
Our Recommendation
Big 5 Sporting is in midst of its store expansion strategy in
the emerging markets. During the period of recession in 2009, the
company slowed down its store expansion program. Big 5 have now
resumed its strategy of store expansion, which we believe will
boost its top and bottom line in future.Looking ahead, Big 5
targets to open nearly 10 new stores and will relocate about 7
stores in fiscal 2012.
Further,Big 5 Sporting is introducing a business intelligence
system, which will help in making decision for merchandising and
assortment selection at the store level. Moreover, the company has
opened a new distribution center in Oregon, which will service
about 75 stores in Pacific Northwest. The new distribution channel
is expected to save about $800,000 in transportation expense
annually.
However, Big 5 faces intense competition from national players,
such as
Dick's Sporting Goods Inc.
(
DKS
) and
Hibbett Sports Inc.
(
HIBB
); mass merchandisers, such as
Wal-Mart Stores Inc.
(
WMT
) and
Target Corp.
(
TGT
), as well as regional and local sporting goods stores.
Consequently, this may dent the company's future operating
performance.
Big 5 currently retain a Zacks #5 Rank, which translates into a
'Strong Sell' rating. However, we are maintaining a long-term
'Neutral' recommendation on the stock.
BIG 5 SPORTING (
BGFV
): Free Stock Analysis Report
DICKS SPRTG GDS (
DKS
): Free Stock Analysis Report
HIBBET SPORTS (
HIBB
): Free Stock Analysis Report
TARGET CORP (
TGT
): Free Stock Analysis Report
WAL-MART STORES (
WMT
): Free Stock Analysis Report
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