Shares of Big 5 Sporting Goods fell 11.3% for the week to close at $13.70 on Friday after the retailer fell short of Wall Street expectations for the second quarter. Big 5 posted EPS of 28 cents a share for the second quarter, 2 cents lower than analysts' average estimate.
On an GAAP basis, net income tripled to $6.3 million versus $2.1 million a year ago. On a pro forma basis, net income would have risen just 3.3% from $6.1 million in Q2 2002.
A US Bancorp Piper Jaffray analyst said that both sales and profits at Big 5 were lower than he expected, but noted that, “we expect this company to return to its historical record of stable, consistent growth.”
On a comp store basis, hardgoods categories were slightly up and the footwear business was slightly down. The strongest performing category was apparel, which realized an increase in the mid-single digit range. Business was softer in the early part of the quarter, but improved as warmer, drier weather moved in for June.
The slight improvement in gross margins was driven by “improved product margin comparisons”, but was partially offset by the de-leveraging of distribution center and store occupancy costs.
While total inventories increased just 2.1%, the retailer pointed to the 3.0% decline in per-store inventories as a key operational improvement. The largest sporting-goods-retailer-on-the-west-coast operated 275 stores at quarter-end, 14 more than last year.
The retailer said that it was difficult to “get a real feel” of the overall economic landscape and how it might impact the back half of the year at retail. BGFV is estimating low single-digit same-store sales growth in Q3 and the year, leading to earnings between 26 cents to 29 cents per diluted share for third quarter and re-affirming previous guidance of $1.18 to $1.23 per diluted share for the year.
>>> These folks have always run one of the tightest ships in the business. It must be frustrating to have analysts looking over your shoulder every day
