Big 5 Sporting Goods Faces Significant Losses Amid Sales Decline
Shares of Big 5 Sporting Goods Corporation (BGFV) dropped 17.8% following the company’s earnings report for the quarter ending December 29, 2024. This decline is significant when compared to the S&P 500 index, which fell by 2.2% in the same period. Notably, the stock fell 26.7% over the past month, while the S&P 500 experienced a 3.4% decrease.
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For the fourth quarter of fiscal 2024, Big 5 reported a net loss of 95 cents per share, a significant increase from a loss of 41 cents per share during the same quarter last year.
The company’s net sales reached $181.6 million in the fourth quarter, reflecting a 7.5% decrease from $196.3 million in the previous year. Additionally, same-store sales fell by 6.1% year-over-year.
Overall, Big 5 reported a net loss of $20.9 million, compared to a net loss of $8.9 million in the prior-year period.
Price Performance Overview
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Profitability and Expense Analysis
Gross profit for the fiscal fourth quarter declined to $51.2 million from $59.2 million in the prior-year quarter, leading to a reduced gross profit margin of 28.2%, down from 30.2%. This contraction was primarily due to increased store occupancy and distribution costs relative to sales, along with a 23-basis-point decline in merchandise margins.
Although selling and administrative expenses decreased by $1 million year-over-year—primarily from lower labor costs and a $0.9 million insurance settlement gain—these expenses still rose as a percentage of net sales to 39.3% from 36.9%, largely due to the lower sales base. Adjusted EBITDA came in at a negative $16.4 million for the fiscal fourth quarter, compared to negative $8.7 million in the same period last year.
Annual Fiscal Summary for BGFV
For the entirety of fiscal 2024, Big 5 reported a net loss per share of $3.15, a notable increase from a loss of 33 cents per share in fiscal 2023. Total net sales fell by 10.1%, amounting to $795.5 million compared to $884.7 million in the previous fiscal year. The annual same-store sales reflected a decline of 9.4%.
The company’s net loss also widened significantly to $69.1 million from $7.1 million in fiscal 2023, which included a $21.8 million non-cash charge related to deferred tax assets. Adjusted EBITDA for the year was negative $36.7 million, compared to a positive figure of $7.3 million in fiscal 2023.
Insights from Management
Steven G. Miller, Chairman and CEO, acknowledged the current challenging retail climate. He highlighted the company’s efforts to manage margins and expenses despite the ongoing decline in sales. He indicated that sales trends remained under pressure during the first quarter of fiscal 2025 due to macroeconomic headwinds affecting discretionary consumer spending and inconsistent weather patterns across southern regions.
Looking forward, Miller expressed optimism regarding Big 5’s merchandise assortment as the company gears up for the spring season.
Liquidity and Balance Sheet Overview
At the conclusion of the fiscal fourth quarter, Big 5 had $13.8 million in borrowings against its $150 million credit facility, which was amended and extended in December 2024, now maturing in December 2029. The cash balance at the quarter’s end was $5.4 million, down from $9.2 million year-over-year. Merchandise inventories decreased by 5.6% compared to the prior year, demonstrating the company’s efforts to align inventory levels with sales trends.
First-Quarter Guidance for Fiscal 2025
For the first quarter of fiscal 2025, Big 5 anticipates same-store sales to decline in the mid-to-high single-digit range compared to the same period last year. The ongoing macroeconomic challenges affecting discretionary consumer spending are expected to impact this guidance, with the company forecasting a net loss per share between 75 cents to 85 cents.
Operational Developments
At the end of the fourth quarter, Big 5 operated 414 stores, following eight closures in the first quarter of fiscal 2025 as part of its optimization strategy. The company plans to close approximately seven additional stores throughout fiscal 2025 and does not expect to open any new locations.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
