Sporting products retailer, Big 5 Sporting Goods Corporation’s (BGFV) sales of $226.7 million in the fiscal 2011 fourth quarter were flat compared to last year, due to soft same store sales results, which were affected by unfavorable winter weather in most markets where the company operates as well as heightened promotional activities.
Same store sales (comps) for the fourth quarter were down 2.1%. During the first half of the fourth quarter, Big 5’s comps grew in the low mid-single-digit range, while in the second half comps were impacted by negative sales trends for winter products, especially winter apparel. Footwear and hardgoods categories sales at Big 5 also dropped in the low single-digit range.
Additionally, the company’s merchandise margins in the quarter were blown down 190 basis points year over year, affected by higher promotional activities and product cost inflation, together with a shift in sales mix away from higher margin carrying winter products. Excluding the impact of winter product sales, the company’s comps were marginally positive.
Despite soft sales results, the company pointed out that it held a strong inventory position at the end of the quarter. Preliminary per-store inventories rose 2.2% year over year, a significant improvement from the third quarter per-store inventories increase of 11.4%.
For the fiscal full year ended January 1, 2012, Big 5 reported net sales of $902.1 million, a marginal increase of 0.6% from $896.8 million reported in fiscal 2010. Comps for the full year declined 1.2% compared to last year.
Sighting the fall in demand due to warm winter weather and poor sales results, Big 5 has cut its fourth quarter and full year 2011 EPS guidance. The company now expects earnings per share for the fourth quarter to come between 2 cents and 5 cents, while full year earnings per share is expected in the range of 55 cents – 58 cents. Earlier, management had projected fourth quarter earnings per share to come in the band of 12 cents to 24 cents.
The current Zacks Consensus earnings per share estimate for the fiscal fourth quarter and full year 2011 are 21 cents and 75 cents, respectively. Big 5 is expected to release its fourth quarter and fiscal 2011 financial results by the end of February.
Big 5 Sporting Goods Corp., a leading sporting goods retailer in the western U.S., 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 faces intense competition from national specialty retail 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.
Big 5 Sporting currently retains a Zacks #2 Rank, which translates into a ‘Buy’ rating. Our long-term recommendation on the stock is ‘Underperform’.
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