Big 5 Sporting Goods Q4 2024 Earnings Report

Big 5 Sporting Goods EPS Results

• Actual EPS: -$0.95
• Consensus EPS: -$0.96
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Big 5 Sporting Goods Revenue Results

• Actual Revenue: $181.62 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Big 5 Sporting Goods Announcement Details

• Quarter: Q4 2024
• Date: 2/25/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 25, 2025
• Conference Call Time: 5:00PM ET

Big 5 Sporting Goods (NASDAQ:BGFV) operates as a sporting goods retailer in the western United States. Its products include athletic shoes, apparel, and accessories. The company also offers a selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, and winter and summer recreation, as well as home recreation. It also provides private label items, such as shoes, apparel, camping equipment, fishing supplies, and snow sport equipment. The company sells private label merchandise under its trademarks comprising Golden Bear, Harsh, Pacifica, and Rugged Exposure. It also operates an e-commerce platform under the Big 5 Sporting Goods name. Big 5 Sporting Goods Corporation was founded in 1955 and is headquartered in El Segundo, California.

Big 5 Sporting Goods Q4 2024 Earnings Call Transcript

Key Takeaways

• Soft Q4 demand: Net sales fell to $181.6 million (down 6.1% same-store) as unfavorable winter weather and macro headwinds hit apparel (−1.3%), footwear (−5.4%) and hard goods (−8.7%).
• Margin pressure and losses: Gross profit margin dropped to 28.2% (from 30.2%), SG&A was 39.3% of sales, and Q4 net loss widened to $20.9 million (−$0.95/shr) versus a $8.9 million loss a year ago.
• Deepened full-year losses: FY24 net loss reached $69.1 million (−$3.15/shr) with adjusted EBITDA of −$36.7 million compared to +$7.3 million the prior year.
• Strategic cost and portfolio actions: Inventory was cut 5.6%, 15 underperforming stores slated for closure, and CapEx pared to $4–8 million in FY25 to optimize capital and margins.
• Challenging Q1 outlook: Expect mid-to-high single-digit same-store sales declines and a net loss of $0.75–0.85 per share as winter softness persists ahead of spring season ramp.

Presentation

[Operator]

Good day, ladies and gentlemen. Welcome to the Big five Sporting Goods Fourth Quarter twenty twenty four Earnings Results Conference Call. Today's call is being recorded. With us today are Mr.

[Operator]

Steve Miller, President and Chief Executive Officer and Mr. Barry Emerson, Chief Financial Officer of Big Five Sporting Goods. At this time, for opening remarks and introductions, I'd like to turn the conference over to Mr. Miller. Please go ahead, sir.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

Thank you, operator. Good afternoon, everyone. Welcome to our twenty twenty four fourth quarter conference call. Today, we will review our financial results for the fourth quarter of fiscal twenty twenty four as well as provide an outlook for the first quarter of fiscal twenty twenty five. I will now turn the call over to Barry to read our Safe Harbor statement.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

Thanks, Steve. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward looking statements 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 that may cause our actual results in current and future periods to differ materially from forecasted results. These risks and uncertainties include those more fully described in our annual reports on Form 10 K, our quarterly reports on Form 10 Q and our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward looking statements that may be made from time to time by us or on our behalf.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

Please refer to our press release to find a reconciliation of certain non GAAP financial measures referenced in today's call.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

Thank you, Barry. Our fourth quarter results were consistent with our previously announced expectations, delivering earnings in the middle of our guidance range despite ongoing challenges to our top line performance. Net sales for the fourth quarter were $181,600,000 compared to $196,300,000 in the prior year with same store sales down 6.1%. These sales reflect a continuation of the persistent macroeconomic headwinds which have been impacting consumer discretionary spending. Additionally, our winter related product sales over the fourth quarter were soft relative to expectations as winter weather conditions were unfavorable, particularly across our southern tier of stores where we experienced drought like conditions.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

The dry conditions were a huge factor in contributing to the environment that led to the tragic wildfires that devastated the Greater Los Angeles area last month. Looking at our major merchandise categories on a same store basis, apparel declined 1.3%, footwear was down 5.4% and hard goods decreased 8.7%. Our average sale was down 2.3% with transactions down 3.8%. Our merchandise margins in the fourth quarter decreased 23 basis points compared to the prior year. In the face of ongoing sales challenges, we remain focused on how best to optimize gross profit dollars.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

We ended the quarter with inventory down 5.6% year over year, reflecting our efforts to align inventory levels with sales. This positioning enables us to deploy inventory more productively across our network, while maintaining flexibility to capitalize on opportunistic buying opportunities that align with our customers' value orientation. As part of our broader strategic initiatives, we continue to optimize our store portfolio to focus our resources on our most productive stores. We anticipate closing 15 stores in fiscal twenty twenty five, including eight locations that we have already closed in the first quarter. This strategic footprint rationalization enables us to reallocate capital and inventory to our best performing locations while driving meaningful cost efficiencies across our network.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

Turning to the beginning of our fiscal twenty twenty five, sales trends remain challenged as we have yet to see improvement in the macroeconomic conditions that are affecting consumer discretionary spending. Additionally, our winter business, which is highly significant to our first quarter performance, has continued to be very soft relative to last year. Consumer spending in this category is especially discretionary and of course responsive to weather conditions. We have experienced a distinct geographic bifurcation in our winter product sales due to weather variances with our Southern markets continuing to experience well below normal snowfall. Over the balance of the quarter, although our winter business is still potentially meaningful as we transition seasons, spring related activities including the ramp up of baseball become the key drivers to our business.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

We believe our inventories are well positioned for this transition with positive enhancements to our product assortments. In closing, as we continue to navigate the current dynamic environment, we remain very focused on the elements of our business most within our control, including working to closely manage merchandise margins, expenses and inventory levels. We believe this focused approach strengthens our ability to drive growth as business conditions improve. With that, I'll now turn it over to Barry to provide additional details regarding our fourth quarter performance and first quarter outlook.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

Thanks, Steve. Gross profit for the fiscal twenty twenty four fourth quarter was $51,200,000 compared to gross profit of $59,200,000 in the fourth quarter of the prior year. Our gross profit margin of 28.2% in the twenty twenty four fourth quarter compared to 30.2% in the fourth quarter last year. The decrease in gross profit margin versus the prior year primarily reflected higher store occupancy and distribution expense, including costs capitalized in inventory as a percentage of net sales and lower merchandise margins of 23 basis points. Overall selling and administrative expense for the fiscal twenty twenty four fourth quarter decreased $1,000,000 compared to the prior year.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

The year over year reduction primarily reflected lower labor costs and a gain of $900,000 related to an insurance settlement. As a percent of net sales, selling and administrative expense was 39.3% in the twenty twenty four fourth quarter versus 36.9% in the twenty twenty three fourth quarter, reflecting the lower sales base. We continue to focus on managing the expenses within our control considering the ongoing economic challenges. Now looking at our bottom line, net loss for the fourth quarter of fiscal twenty twenty four was $20,900,000 or $0.95 per basic share, which included a $0.04 per basic share gain related to an insurance settlement. This compares to a net loss of $8,900,000 or $0.41 per basic share in the fourth quarter last year.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

Because of the valuation allowance related to the deferred tax assets established in the third quarter of fiscal twenty twenty four, net loss for the fourth quarter of fiscal twenty twenty four does not reflect an income tax benefit. Net loss for the fourth quarter of fiscal twenty twenty three reflects an income tax benefit of $4,500,000 Adjusted EBITDA was negative $16,400,000 in the fourth quarter of fiscal twenty twenty four compared to negative adjusted EBITDA of $8,700,000 in the fourth quarter last year. Briefly reviewing our full year results for fiscal twenty twenty four, net sales were $795,500,000 compared to net sales of $884,700,000 in the prior year. Same store sales decreased 9.4% for fiscal twenty twenty four versus the comparable prior year period. Net loss for fiscal twenty twenty four was $69,100,000 or $3.15 per basic share and included a non cash charge for the establishment of a valuation allowance related to deferred tax assets of $21,800,000 or $0.99 per basic share recorded in the third quarter, along with the aforementioned gain related to an insurance settlement.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

This compares to a net loss for fiscal twenty twenty three of $7,100,000 or $0.33 per basic share. Adjusted EBITDA was negative $36,700,000 for the 2024 full year compared to positive $7,300,000 in the prior year. Turning to the balance sheet, our merchandise inventory at the end of the fourth quarter of fiscal twenty twenty four decreased 5.6% year over year. This reduction reflects our efforts to manage inventory levels lower in response to the soft sales environment. Reviewing our capital spending, our CapEx excluding non cash acquisitions totaled $10,900,000 for fiscal twenty twenty four, primarily representing investments in store related remodeling, new stores, distribution center equipment and computer hardware and software purchases.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

For the 2025 full year, we expect CapEx in the range of $4,000,000 to $8,000,000 representing investments in store related remodeling primarily. Now looking at our cash flow, net cash used in operating activities was $11,400,000 in fiscal twenty twenty four. This compares to net cash provided by operating activities of $18,500,000 last year. The decrease was primarily attributed to a larger net loss in the current period. In December 2024, we amended and extended our $150,000,000 credit agreement with Bank of America, which matures in December of twenty twenty nine.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

As of our December year end, we had $13,800,000 of borrowings under this credit facility and a cash balance of $5,400,000 This credit agreement provides us financial flexibility as we navigate this dynamic market environment and execute our strategy. Now I'll spend a moment on guidance. For the fiscal twenty twenty five first quarter, we expect same store sales to decline in the mid to high single digit range compared to the twenty twenty four first quarter. Our same store sales guidance reflects an expectation that macroeconomic headwinds will continue through the first quarter. On that basis, we expect fiscal twenty twenty five first quarter net loss per basic share in the range of $0.75 to $0.85 which reflects no tax benefit for the period compared to fiscal twenty twenty four first quarter net loss per basic share of $0.38 That concludes our prepared remarks.

[Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods]

I'll now turn the call back to Steve for closing comments.

[Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods]

Thank you, Barry. Thank you all for joining us in today's call. We appreciate your interest in Big Five Sporting Goods and look forward to speaking with you again after the conclusion of our first quarter.

[Operator]

Thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines.

Participants

Analysts

• Steven Miller, Chairman, President & CEO at Big 5 Sporting Goods
• Barry Emerson, Executive VP, CFO, Treasurer & Assistant Secretary at Big 5 Sporting Goods