EL SEGUNDO, Calif., – Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company,” “we,” “our,” “us,” “Big 5”), a leading sporting goods retailer, today reported financial results for the fiscal 2023 first quarter ended April 2, 2023.
Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said “We achieved earnings near the midpoint of our guidance range, as we benefitted from favorable expense results relative to plan, which partially offset topline headwinds from deteriorating macroeconomic conditions and unfavorable weather over the last month of the quarter. Although our business benefitted from favorable winter weather during the first half of the quarter, when the winter weather persisted into the start of spring with unseasonably cold temperatures and record levels of rainfall across much of our geography, it negatively impacted the start of the baseball season and other spring recreational activities.”
Mr. Miller continued, “As we begin the second quarter, the macro environment is continuing to pressure our customers’ discretionary spending. We remain focused on navigating the challenging conditions by driving healthy merchandise margins and managing our cost structure in an effort to offset inflationary pressures. Despite the tough economy, we are excited about our product assortment for the spring and summer seasons and are hopeful that the wet winter will alleviate drought conditions and lead to favorable summer recreation opportunities.”
Net sales for the fiscal 2023 first quarter were $224.9 million compared to net sales of $242.0 million for the first quarter of fiscal 2022. Same store sales decreased 7.1% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.
Gross profit for the fiscal 2023 first quarter was $75.1 million, compared to $85.9 million in the first quarter of the prior year. The Company’s gross profit margin was 33.4% in the fiscal 2023 first quarter versus 35.5% in the first quarter of the prior year. The decrease in gross profit margin compared with the prior year primarily reflects higher store occupancy and distribution expense, including costs capitalized into inventory, as a percentage of net sales, and a slight decrease in merchandise margins. While the Company’s merchandise margins decreased by 23 basis points for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022, merchandise margins continued to run several hundred basis points ahead of pre-pandemic rates, supported by the evolution of the Company’s pricing and promotional strategy.
Overall selling and administrative expense for the quarter decreased by $0.1 million from the prior year, primarily reflecting lower performance-based incentive accruals and advertising expense, almost fully offset by continued upward pressure on labor costs and other broad-based inflationary impacts. As a percentage of net sales, selling and administrative expense increased to 33.4% in the fiscal 2023 first quarter, compared to 31.1% in the fiscal 2022 first quarter due to the lower sales base.
Net income for the first quarter of fiscal 2023 was $0.2 million, or $0.01 per diluted share. This compares to net income of $9.1 million, or $0.41 per diluted share in the first quarter of fiscal 2022.
EBITDA was $4.5 million for the first quarter of fiscal 2023 compared to $15.0 million in the prior year period. EBITDA and Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for more details and a reconciliation of non-GAAP EBITDA and Adjusted EBITDA to the most comparable GAAP measure, net income.
Balance Sheet
The Company ended the 2023 fiscal first quarter with no borrowings under its credit facility and with a cash and cash equivalent balance of $27.5 million. This compares to no borrowings under the Company’s credit facility and $25.6 million of cash and cash equivalents as of the end of the 2022 fiscal year. Merchandise inventories as of the end of the first quarter increased by 5.3% compared to the prior year period which was impacted by supply chain disruptions, partially offset by strong sell-through of winter inventory this season.
Quarterly Cash Dividend
The Company’s Board of Directors has declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on June 15, 2023 to stockholders of record as of June 1, 2023.
Second Quarter Guidance
For the fiscal 2023 second quarter, the Company expects same store sales to decrease in the high single-digit range compared to the fiscal 2022 second quarter. The Company’s same store sales guidance reflects an expectation that macroeconomic headwinds will continue to impact discretionary consumer spending over the balance of the second quarter. Fiscal 2023 second quarter earnings per share is expected in the range of negative $0.10 to positive $0.05, which compares to fiscal 2022 second quarter earnings per diluted share of $0.41.
Store Openings
The Company currently has 430 stores in operation, which reflects two store closures during the fiscal 2023 first quarter. During the remainder of fiscal 2023, the Company expects to open approximately five new stores, relocate one store, and close approximately three stores.
Conference Call Information
The Company will host a conference call to discuss these results and provide additional comments and details. The conference call is scheduled to begin at 2:00 p.m. Pacific Time on Tuesday, May 2, 2023. To access the conference call, participants in North America may dial (877) 407-9039 and international participants may dial (201) 689-8470. Participants are encouraged to dial in to the conference call ten minutes prior to the scheduled start time.
In addition, the call will be broadcast live over the Internet and accessible through the Company’s website at www.big5sportinggoods.com. Visitors to the website should select the “Investor Relations” link to access the webcast. The webcast will be archived and accessible on the same website for 30 days following the call. A telephonic replay will be available through Tuesday, May 9, 2023 by calling (844) 512-2921 to access the playback; the passcode is 13738245.
About Big 5 Sporting Goods Corporation
Big 5 is a leading sporting goods retailer in the western United States, currently operating 430 stores under the “Big 5 Sporting Goods” name. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 12,000 square feet. Big 5’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation.