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 fourth quarter
and full year ended December 31, 2023.
As previously reported, net sales for the fiscal
2023 fourth quarter were $196.3 million, compared to net sales of
$238.3 million for the fourth quarter of fiscal 2022. Same store
sales decreased 17.7% for the fourth quarter of fiscal 2023,
compared to the fourth quarter of fiscal 2022.
Gross profit for the fiscal 2023 fourth quarter
was $59.2 million, compared to $79.8 million in the fourth quarter
of the prior year. The Company’s gross profit margin was 30.2% in
the fiscal 2023 fourth quarter versus 33.5% in the fourth 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, partially offset by the
extinguishment of certain real estate-related liabilities. The
Company’s merchandise margins decreased by 43 basis points for the
fourth quarter of fiscal 2023.
Overall selling and administrative expense for
the quarter decreased by $5.1 million from the prior year,
primarily reflecting lower employee labor and benefit-related
expense, partially offset by a $0.6 million store asset impairment
charge. As a percentage of net sales, selling and administrative
expense increased to 36.9% in the fiscal 2023 fourth quarter,
compared to 32.5% in the fiscal 2022 fourth quarter due to the
lower sales base.
Net loss for the fourth quarter of fiscal 2023
was $8.9 million, or $0.41 per basic share, including a $0.02 store
asset impairment charge, which was not reflected in our guidance
for the quarter. This compares to net income of $1.7 million, or
$0.08 per diluted share in the fourth quarter of fiscal 2022.
For the fiscal 2023 full year, net sales were
$884.7 million compared to net sales of $995.5 million for fiscal
2022. Same store sales decreased 11.2% for the fiscal 2023 full
year compared to fiscal 2022, and the Company’s merchandise margins
were essentially flat for the fiscal 2023 full year compared to
fiscal 2022. Net loss for fiscal 2023 was $7.1 million, or $0.33
per basic share. This compares to net income for fiscal 2022 of
$26.1 million, or $1.18 per diluted share.
Adjusted EBITDA was $(8.7) million for the
fourth quarter of fiscal 2023, compared to EBITDA of $6.9 million
in the prior year period. For the fiscal 2023 full year, Adjusted
EBITDA was $7.3 million compared to $52.6 million in fiscal 2022.
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.
Steven G. Miller, the Company’s Chairman,
President and Chief Executive Officer, said, “As previously
reported, our fourth quarter results were impacted by the
challenging macroeconomic environment, which pressured
discretionary spending among our consumers. Additionally, the
combination of warmer temperatures and reduced snowfall across our
western footprint weighed heavily on our winter product sales,
which are typically an important seasonal driver of our fourth
quarter results.”
Mr. Miller continued, “Looking at our current
trending, our first quarter to date sales continue to reflect
persistent macroeconomic uncertainty and have been influenced by
extreme weather across much of our geography. While our winter
seasonal categories have accelerated with improved winter weather
in February, that benefit has been largely offset by the historic
rainfall our markets experienced in the past month, which impacted
sales for other outdoor recreational activities, including
baseball. In the challenging sales landscape, we remain steadfast
in managing the controllable aspects of our business, including
optimizing merchandise margins to maximize gross profit dollars,
managing inventory levels, and controlling expenses.”
Balance SheetThe Company ended
the 2023 fiscal year with no borrowings under its credit facility
and with a cash balance of $9.2 million. This compares to no
borrowings under the Company’s credit facility and $25.6 million of
cash as of the end of fiscal 2022. Merchandise inventories as of
the end of fiscal 2023 decreased by 9.1% compared to the prior year
period, reflecting the Company’s efforts to manage inventory levels
relative to sales.
Quarterly Cash DividendThe
Company's Board of Directors has declared a quarterly cash dividend
of $0.05 per share of outstanding common stock, which will be paid
on March 22, 2024, to stockholders of record as of March 8, 2024.
This dividend, which represents a reduction from the previous
quarterly cash dividend rate of $0.125 per share, reflects the
Company’s capital management objective of maintaining a healthy
financial condition given the uncertain duration of current
macroeconomic challenges.
First Quarter GuidanceFor the
fiscal 2024 first quarter, the Company expects same store sales to
decrease in the low double-digit range compared to the fiscal 2023
first 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 first
quarter. Fiscal 2024 first quarter net loss per basic share is
expected in the range of $0.30 to $0.40, which compares to fiscal
2023 first quarter earnings per diluted share of $0.01.
Store OpeningsDuring fiscal
2023, the Company opened two new stores and closed four stores,
ending the year with 430 stores. The Company currently has 424
stores in operation, reflecting six store closures in the 2024
first quarter to date as part of the Company’s ongoing efforts to
optimize its store base. During the remainder of fiscal 2024, the
Company expects to open approximately five stores and close
approximately four additional stores.
Conference Call InformationThe
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, February
27, 2024. 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, March 5, 2024 by calling (844) 512-2921 to access the
playback; the passcode is 13744246.
About Big 5 Sporting Goods
CorporationBig 5 is a leading sporting goods retailer in
the western United States, currently operating 424 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.
Except for historical information contained
herein, the statements in this release are forward-looking and made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties and other factors that
may cause Big 5’s actual results in current or future periods to
differ materially from forecasted results. These risks and
uncertainties include, among other things, the economic impacts of
COVID-19, including any potential variants, on Big 5’s business
operations, including as a result of regulations that may be issued
in response to COVID-19, global supply chain disruptions resulting
from the ongoing conflict in Ukraine and the Middle East, changes
in the consumer spending environment, fluctuations in consumer
holiday spending patterns, increased competition from e-commerce
retailers, breach of data security or other unauthorized disclosure
of sensitive personal or confidential information, the competitive
environment in the sporting goods industry in general and in Big
5’s specific market areas, inflation, product availability and
growth opportunities, changes in the current market for (or
regulation of) firearm-related products, a reduction or loss of
product from a key supplier, disruption in product flow, seasonal
fluctuations, weather conditions, changes in cost of goods,
operating expense fluctuations, increases in labor and
benefit-related expense, changes in laws or regulations, including
those related to tariffs and duties, as well as environmental,
social and governance issues, public health issues (including those
caused by COVID-19 or any potential variants), impacts from civil
unrest or widespread vandalism, lower than expected profitability
of Big 5’s e-commerce platform or cannibalization of sales from Big
5’s existing store base which could occur as a result of operating
the e-commerce platform, litigation risks, stockholder campaigns
and proxy contests, risks related to Big 5’s historically leveraged
financial condition, changes in interest rates, credit
availability, higher expense associated with sources of credit
resulting from uncertainty in financial markets and economic
conditions in general. Those and other risks and uncertainties are
more fully described in Big 5’s filings with the Securities and
Exchange Commission, including its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q. Big 5 conducts its business in a
highly competitive and rapidly changing environment. Accordingly,
new risk factors may arise. It is not possible for management to
predict all such risk factors, nor to assess the impact of all such
risk factors on Big 5’s business or the extent to which any
individual risk factor, or combination of factors, may cause
results to differ materially from those contained in any
forward-looking statement. Big 5 undertakes no obligation to revise
or update any forward-looking statement that may be made from time
to time by it or on its behalf.
Non-GAAP Financial MeasuresIn
addition to reporting our financial results in accordance with
generally accepted accounting principles ("GAAP"), we are providing
non-GAAP earnings before interest, income tax expense, depreciation
and amortization (“EBITDA”) and any other adjustments (“Adjusted
EBITDA”). EBITDA and Adjusted EBITDA are not prepared in accordance
with GAAP and exclude certain items presented below. We use EBITDA
and Adjusted EBITDA internally for forecasting purposes and as
factors to evaluate our operating performance. We believe that
Adjusted EBITDA provides useful information to both management and
investors by excluding certain expenses, gains and losses that may
not be indicative of core operating results and business outlook.
While we believe that EBITDA and Adjusted EBITDA can be useful to
investors in evaluating our period-to-period operating results,
this information should be considered supplemental and is not a
substitute for financial information prepared in accordance with
GAAP. In addition, our definition or calculation of these non-GAAP
measures may differ from similarly titled measures used by other
companies, limiting the usefulness of this financial measure for
comparison to other companies. We believe the GAAP measure
that is most comparable to non-GAAP EBITDA and Adjusted EBITDA is
net income, and a reconciliation of our non-GAAP EBITDA and
Adjusted EBITDA to GAAP net income is provided below.
|
|
13 Weeks Ended |
|
Fiscal Year Ended |
|
|
Dec. 31,2023 |
|
|
Jan. 1, 2023 |
|
Dec. 31, 2023 |
|
Jan. 1, 2023 |
|
|
|
(In thousands) |
GAAP net (loss) income (as reported) |
|
$ |
(8,852 |
) |
|
$ |
1,728 |
$ |
(7,083 |
) |
$ |
26,134 |
|
+ Interest expense (income) (as reported) |
|
|
112 |
|
|
|
183 |
|
(153 |
) |
|
572 |
|
+ Income tax (benefit) expense (as reported) |
|
|
(4,485 |
) |
|
|
372 |
|
(3,498 |
) |
|
6,809 |
|
+ Depreciation and amortization (as reported) |
|
|
4,650 |
|
|
|
4,596 |
|
18,315 |
|
|
18,020 |
|
EBITDA |
|
$ |
(8,575 |
) |
|
$ |
6,879 |
$ |
7,581 |
|
$ |
51,535 |
|
- Extinguishment of certain real estate-related liabilities |
|
|
(789 |
) |
|
|
— |
|
(2,428 |
) |
|
— |
|
+ Legal settlement provision |
|
|
— |
|
|
|
— |
|
1,500 |
|
|
— |
|
+
Revaluation of workers’ compensation reserves due to change in
claims assessment methodology |
|
|
— |
|
|
|
— |
|
— |
|
|
1,039 |
|
+ Store asset impairment |
|
|
631 |
|
|
|
— |
|
631 |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(8,733 |
) |
|
$ |
6,879 |
$ |
7,284 |
|
$ |
52,574 |
|
|
BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
January 1, 2023 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
Cash |
$ |
9,201 |
|
$ |
25,565 |
|
Accounts receivable, net of allowances of $48 and $44,
respectively |
|
9,163 |
|
|
12,270 |
|
Merchandise inventories, net |
|
275,759 |
|
|
303,493 |
|
Prepaid expenses |
|
16,052 |
|
|
16,632 |
|
Total current assets |
|
310,175 |
|
|
357,960 |
|
|
|
|
|
|
Operating lease right-of-use assets, net |
|
253,615 |
|
|
276,016 |
|
Property and equipment, net |
|
58,595 |
|
|
58,311 |
|
Deferred income taxes |
|
13,427 |
|
|
9,991 |
|
Other assets, net of accumulated amortization of $1,954 and $1,359,
respectively |
|
8,871 |
|
|
6,515 |
|
Total assets |
$ |
644,683 |
|
$ |
708,793 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
55,201 |
|
$ |
67,417 |
|
Accrued expenses |
|
61,283 |
|
|
70,261 |
|
Current portion of operating lease liabilities |
|
70,372 |
|
|
70,584 |
|
Current portion of finance lease liabilities |
|
3,843 |
|
|
3,217 |
|
Total current liabilities |
|
190,699 |
|
|
211,479 |
|
|
|
|
|
|
Operating lease liabilities, less current portion |
|
191,178 |
|
|
214,584 |
|
Finance lease liabilities, less current portion |
|
11,856 |
|
|
7,089 |
|
Other long-term liabilities |
|
6,536 |
|
|
6,857 |
|
Total liabilities |
|
400,269 |
|
|
440,009 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $0.01 par value, authorized 50,000,000 shares; issued
26,747,617 and |
|
|
|
26,491,750 shares, respectively; outstanding 22,440,362 and
22,184,495 shares, respectively |
|
267 |
|
|
264 |
|
Additional paid-in capital |
|
128,737 |
|
|
126,512 |
|
Retained earnings |
|
169,667 |
|
|
196,265 |
|
Less: Treasury stock, at cost; 4,307,255 shares |
|
(54,257 |
) |
|
(54,257 |
) |
Total stockholders' equity |
|
244,414 |
|
|
268,784 |
|
Total liabilities and stockholders' equity |
$ |
644,683 |
|
$ |
708,793 |
|
|
|
|
|
|
BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
|
|
December 31, 2023 |
|
January 1, 2023 |
|
December 31, 2023 |
|
January 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
196,350 |
|
$ |
238,312 |
|
$ |
884,745 |
|
$ |
995,538 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
137,111 |
|
|
158,479 |
|
|
598,901 |
|
|
654,323 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
59,239 |
|
|
79,833 |
|
|
285,844 |
|
|
341,215 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expense |
|
72,464 |
|
|
77,550 |
|
|
296,578 |
|
|
307,700 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(13,225 |
) |
|
2,283 |
|
|
(10,734 |
) |
|
33,515 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income) |
|
112 |
|
|
183 |
|
|
(153 |
) |
|
572 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
(13,337 |
) |
|
2,100 |
|
|
(10,581 |
) |
|
32,943 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
(4,485 |
) |
|
372 |
|
|
(3,498 |
) |
|
6,809 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(8,852 |
) |
$ |
1,728 |
|
$ |
(7,083 |
) |
$ |
26,134 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.41 |
) |
$ |
0.08 |
|
$ |
(0.33 |
) |
$ |
1.21 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
(0.41 |
) |
$ |
0.08 |
|
$ |
(0.33 |
) |
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
21,805 |
|
|
21,595 |
|
|
21,749 |
|
|
21,634 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
21,805 |
|
|
21,944 |
|
|
21,749 |
|
|
22,089 |
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Big
5 Sporting Goods
Corporation Barry
EmersonExecutive Vice President and Chief Financial Officer(310)
536-0611
ICR, Inc.Jeff SonnekManaging Director(646) 277-1263
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