Big 5 Sporting Goods Corp. (BGFV) reported second quarter 2011 earnings per share of 16 cents, beating the Zacks Consensus Estimate of 10 cents a share but trailing 27.3% from 22 cents per share reported in the same quarter last year. Earnings including impairment charges came in at 14 cents a share
Quarter in Detail
Net sales came in at $219.6 million in the second quarter compared with $219.8 million in the year-earlier period. Sales failed to beat the Zacks Consensus Estimate of $235 million. Same store sales decreased 1.7% on a year-over-year basis. The shifting of the Easter holiday to the second quarter, from the first, hurt sales as stores remained closed.
Gross profit slipped 1.6% to $71.8 million while gross margin shrunk 50 basis points to 32.7% as a result of lower merchandise margins.
Selling and administrative expense as a percentage of net sales increased 90 basis points to 30.5% in the second quarter of fiscal 2011 attributable to increased store-related expenses on a higher store count coupled with non-cash pre-tax impairment charge.
The company has declared a quarterly cash dividend of 75 cents a share to be paid on September 15, 2011 to stockholders of record as of September 1, 2011.
Financial Update
At quarter end, Big 5 had cash and cash equivalents of $5.4 million, long-term debt of $64 million and shareholders’ equity of $154.2 million.
Looking Ahead
For the third quarter 2011 management expects earnings per share to come in a band of 12 cents to 20 cents. Same store sales are pegged in a negative low single-digit to positive low single-digit range.
Store Update
In the second quarter, the company closed one store that was relocated in late 2010.
The company expects to open three stores in the third quarter. Also, the company currently anticipates opening between 10 and 12 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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