Big 5 Sporting Goods Corp. (BGFV) reported better-than-expected third-quarter 2011 results. The quarterly earnings of 27 cents per share came well ahead of its guidance range of 12–20 cents, handily beating the Zacks Consensus Estimate of 17 cents. However, earnings trailed 9.7% from 31 cents per share reported in the same quarter last year.
Quarter in Detail
Net sales came in at $234.7 million in the third quarter compared with $231.8 million in the year-earlier period. Sales beat the Zacks Consensus Estimate of $232.0 million. Same store sales inched up 0.1% on a year-over-year basis. Weakness in consumer environment has a negative impact on sales, which was partially offset by an increase in average sales ticket.
Gross profit inched down 0.5% to $77.0 million while gross profit margin shrunk 60 basis points to 32.8% as a result of lower merchandise margins due to impact of promotional activities and increased product costs.
Selling and administrative expense as a percentage of net sales increased 20 basis points to 28.8% in the third quarter of fiscal 2011 attributable to increased store-related expenses on a higher store count.
The company has declared a quarterly cash dividend of 7.5 cents a share to be paid on December 15, 2011 to stockholders of record as of December 1, 2011.
Financial Update
At quarter end, Big 5 had cash and cash equivalents of $4.7 million, long-term debt of $69.1 million and shareholders’ equity of $158.8 million.
Looking Ahead
For the fourth quarter of 2011, management expects earnings per share to come in a band of 12 cents to 24 cents. Same store sales are pegged in a positive low to low single-digit range.
Store Update
In the third quarter, the company opened three stores bringing the total store count to 398 stores.
From fourth quarter to date, the company has opened two new stores and expects to open six new stores in the quarter. Moreover, the company currently expects to open 11 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. (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’.
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
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment