Big 5 Sporting Goods Corp. (BGFV) reported first quarter 2011 earnings per share of 13 cents, falling short of the Zacks Consensus Estimate of 19 cents a share and trailing 43.5% from 23 cents per share reported in the same quarter last year.
Quarter in Detail
Net sales increased to $221.1 million in the first quarter from $218.5 million in the year-earlier period. Sales also matched up to the Zacks Consensus Estimate of $222 million. Same store sales decreased 0.9% on a year-over-year basis.
Gross profit increased 0.9% to $72.2 million while gross margin shrunk 10 basis points to 32.6% as a result of higher store occupancy costs partially offset by a rise of 12 basis points in merchandise margins.
Selling and administrative expense as a percentage of net sales increased 160 basis points to 30.4% in the first quarter of fiscal 2011 attributable to increased store-related expenses on a higher store count coupled with higher employee benefit costs and advertising expense.
The company has declared a quarterly cash dividend of 75 cents a share to be paid on June 15, 2011 to stockholders of record as of June 1, 2011.
Financial Update
At quarter end, Big 5 had cash and cash equivalents of $6.5 million, long-term debt of $51.8 million and shareholders’ equity of $152.2 million.
Looking Ahead
For the second quarter 2011 management expects earnings per share to come in a band of 6 cents to 14 cents. Same store sales are pegged in a flat-to-negative low single-digit range.
Store Update
In the first quarter, the company relocated two stores and closed two stores that were relocated in late 2010.
In the second quarter, the company expects to close one store. Also, the company currently anticipates opening between 10 and 15 net new stores during fiscal 2011.
Big 5 Sporting Goods Corp. operates as a sporting goods retailer in the western U.S. The company offers athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding, and in-line skating.
The company operates in a highly fragmented specialty retail sector and faces intense competition from national chains, such as Dick's Sporting Goods Inc Commo (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.
The shares currently retain a Zacks #4 Rank for Big 5 Sporting, which translates into a Sell rating. Our long-term recommendation on the stock is Underperform.
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