Big 5 Sporting Goods Corp. reported that net sales for the second quarter fell 10.6 percent year-over-year to $199.8 million, compared to $223.6 million for the 2023 Q2 period. Same-store sales decreased 9.9 percent for the second quarter ended June 30, compared to the second quarter of fiscal 2023.
Gross profit for the quarter was $58.7 million, compared to $71.9 million in the second quarter of the prior-year Q2 period.
The company’s gross margin was 29.4 percent of net sales in the second quarter versus 32.2 percent in the second quarter of the prior year, a 280-basis-point decline year over year. Compared with the prior year, the decrease in gross profit margin primarily reflects higher store occupancy and distribution expense, including costs capitalized into inventory, as a percentage of net sales.
Big 5’s merchandise margins decreased by 27 basis points year-over-year for the second quarter.
Overall selling and administrative expenses for the quarter decreased by $0.2 million year-over-year, primarily reflecting “lower employee labor and staffing expense and reduced performance-based incentive accruals.” As a percentage of net sales, selling and administrative expenses were 36.1 percent in the 2024 second quarter, compared to 32.4 percent in the 2023 second quarter, reportedly due to the lower sales base.
The net loss for the second quarter was $10.0 million, or 46 cents per basic share, for the quarter ended June 30, compared to a net loss of $0.3 million, or 1 cent per basic share, in the second quarter of fiscal 2023.
“Our second quarter results were consistent with our guidance range, as our customers continue to feel the ongoing and cumulative impact of inflationary pressures on their discretionary spending,” stated Steven G. Miller, chairman, president and CEO of Big 5 Sporting Goods Corp. “As we battle these sales headwinds, our team remains focused on aspects of the business within our control, including optimization of merchandise margins and managing our expenses and inventory levels. We believe these efforts on the operational front will best position us to generate improved results as the headwinds ease.”
Miller continued, “Given the uncertainty of the duration of the challenged macroeconomic environment and our priority of maintaining a healthy balance sheet, we have proactively suspended our dividend to provide added financial flexibility. We remain steadfast in our commitment to maximizing shareholder value and, as we always have, will continue to evaluate opportunities to return value to shareholders.”
Balance Sheet
The company ended the 2024 fiscal second quarter with no borrowings under its credit facility and a cash balance of $4.9 million. This reportedly compares to no borrowings under the company’s credit facility and $5.9 million cash as of the end of the 2023 fiscal second quarter.
As of the end of the quarter, merchandise inventories decreased by 10.8 percent year-over-year, reflecting the company’s efforts to manage inventory levels relative to sales.
Quarterly Cash Dividend
The company’s Board of Directors has proactively suspended the quarterly cash dividend to provide added financial flexibility given the uncertain duration of the current macroeconomic challenges.
Third Quarter Guidance
For the fiscal 2024 third quarter, Big 5 expects same-store sales to decrease in the mid-single-digit range compared to the fiscal 2023 third quarter. The company said its same-store sales guidance reflects an expectation that macroeconomic headwinds will continue to impact discretionary consumer spending over the balance of the third quarter.
Third-quarter net loss per basic share is expected to range from 15 cents to 35 cents, which compares to the 2023 third-quarter net income per diluted share of 8 cents per basic share.
Store Openings
Big 5 has 425 stores in operation, reflecting six store closures in the first quarter of 2024 as part of the company’s ongoing efforts to optimize its store base and one store opening in the second quarter of 2024. During the remainder of fiscal 2024, the company expects to open two additional stores and close five.
Image courtesy Big 5 Corporation