The big news for Big 5 in Q2 was an end to 45
consecutive quarters of positive quarterly comps results. Management noted the difficult macro-economic environment as a cause behind the sales decline with President and CEO Steve Miller saying they are “seeing a clear correlation between a number of the areas that have been spoken about or written about as having more significant housing/foreclosures/mortgage defaults issues and others
with our store performance.”
Though same-store sales were slightly off, BGFV did see a “small increase” in average transaction size for the quarter, but this was offset by a decline in customer traffic. Miller further commented that the company generated positive sales for May and June, but those sales were not enough to offset weakness in April. From a product standpoint, hard goods category was slightly positive, footwear was slightly negative, and apparel was the softest category, comping down in the low-single-digits. Miller said the company “had strength in the fitness business” and the “camping and fishing business was pretty solid.”
Looking ahead to Q3, BGFV expects comps to fall in the low-single-digit range, positive or negative, with earnings per diluted share in the range of 27 cents to 35 cents. For the full year, the company expects comps in the same range as Q3 with earnings per diluted share between $1.22 and $1.42.
The company opened four new stores in the quarter, including a relocation of a store that the company had closed during Q1, bringing its total store count as of the end of the second quarter to 348 stores. The company plans to open five stores in Q3, including one relocation, and 20 new stores, net of relocations, during fiscal 2007.
