Big 5 Sporting Goods Corporation reiterated its fiscal 2022 fourth quarter net sales were $238.3 million, compared to net sales of $273.4 million for the fourth quarter of fiscal 2021. Same-store sales decreased 13.2 percent for the fourth quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021.

Gross profit margin was 33.5 percent of sales in the fourth quarter, 420 basis points lower that the 37.7 percent margins in the prior-year fourth quarter. The decrease in gross profit margin compared with the prior year was said to primarily reflect a decrease in merchandise margins combined with higher store occupancy and distribution expense, including costs capitalized into inventory, as a percentage of net sales. Big 5’s merchandise margins decreased by 129 basis points for the fourth quarter, compared to the fourth quarter of fiscal 2021, but remain higher than the pre-pandemic fourth quarter of fiscal 2019 by 308 basis points, reflecting the evolution of the company’s pricing and promotional strategy.

Overall selling and administrative expense for the quarter increased by $1.4 million from the prior-year Q4, primarily reflecting continued upward pressure on labor costs and other broad-based inflationary impacts, partially offset by lower performance-based incentive accruals. As a percentage of net sales, selling and administrative expense increased to 32.5 percent in the fiscal 2022 fourth quarter, compared to 27.9 percent in the fiscal 2021 fourth quarter due to the de-leveraging effect of increased expense on a lower sales base.

EBITDA was $6.9 million for the fourth quarter of fiscal 2022, compared to $31.5 million in the prior-year comp period.

Net income for the fourth quarter was $1.7 million, or 8 cents per diluted share, compares to net income of $19.9 million, or 89 cents per diluted share in the fourth quarter of fiscal 2021.

For the full year, Big 5 net sales were $995.5 million compared to net sales of $1.16 billion for fiscal 2021. Same-store sales decreased 14.5 percent for the fiscal 2022 full year compared to fiscal 2021.

Net income for fiscal 2022 was $26.1 million, or $1.18 per diluted share, for the full year, including a previously reported charge in the second quarter of 3 cents per diluted share. This compares to the record net income for fiscal 2021 of $102.4 million, or $4.55 per diluted share, including a previously reported net benefit of 6 cents per diluted share.

For the fiscal 2022 full year, Adjusted EBITDA was $52.6 million compared to a record $152.0 million in fiscal 2021.

Big 5 ended the 2022 fiscal year with no borrowings under its credit facility and with a cash balance of approximately $25.6 million. This compares to no borrowings under the company’s credit facility and $97.4 million of cash and cash equivalents as of the end of the 2021 fiscal year.

Merchandise inventories as of the end of fiscal 2022 increased by 9.6 percent compared to the prior year-end when the company’s inventories were significantly constrained due to supply chain disruptions.

Steven G. Miller, the company’s chairman, president and CEO, said, “2022 was a dynamic year. Our team contended with accelerating headwinds in the form of persistent inflation on our expense structure, as well as related macroeconomic impacts that softened discretionary spending. In the face of these headwinds, we produced a solid year of earnings, benefitting from disciplined inventory management that enabled us to prioritize merchandise margins to drive gross profit dollars. Our business ended the year in a solid financial condition with a strong debt-free balance sheet supported by a healthy inventory position.”

Mr. Miller continued, “Looking at our current trending, while our seasonal winter products have performed well in the first quarter to date, macroeconomic conditions have continued to impact our customers’ discretionary spending. We are focused on remaining nimble to capitalize on product trends and opportunities while managing the controllable aspects of our business, including maintaining healthy merchandise margins, closely controlling inventory levels, and managing our expenses in an effort to mitigate inflationary pressures.”

First Quarter Guidance
For the fiscal 2023 first quarter, Big 5 expects same-store sales to decrease in the mid-single-digit range compared to the fiscal 2022 first quarter. The company’s same-store sales guidance reflects an expectation that macroeconomic headwinds will continue to impact consumer discretionary spending over the balance of the first quarter. Fiscal 2023 first-quarter earnings per share is expected in the range of negative 2 cents to positive 6 cents, which compares to fiscal 2022 first-quarter earnings per diluted share of 41 cents a share.

Store Openings
For fiscal 2022, Big 5 opened two new stores, relocated one store, and closed one store, ending the year with 432 stores. The company currently has 430 stores in operation, which reflects two store closures in the 2023 first quarter to date. During the remainder of fiscal 2023, the company expects to open approximately five new stores, relocate one store, and close approximately two stores.