Big 5 Sporting Goods Corporation reported improved revenues and better-than-expected profit for the fiscal first quarter ended April 4 as a prolonged winter and increases in traffic and average ticket prices boosted results for the period. Management for the West Coast sporting goods retailer said Q1 comps improved 2.4% during the quarter, representing Big 5’s best quarterly comp growth since Q4 2006 and its fourth consecutive quarter of same-store sales growth.
Consolidated sales grew 3.9% to $218.5 million and earnings nearly doubled to $5,0 million, or 23 cents per share, as the aforementioned prolonged winter spurred winter gear sales during January and February and the retailer capitalized on more foot traffic in-store. Growth for the retailer came despite challenging year-ago results that included inflated sales of ammunition and firearms and cooler-than-usual April weather in many of the company’s key markets this year.
On a conference call with analysts, Big 5 management said overcoming one less day of selling due to an earlier Easter was a challenge.
BGFV posted positive low-single digit increases across the apparel, footwear and hard goods merchandise categories. The apparel category was said to be the strongest performer for the quarter, driven largely by sales of winter product, but all three categories reportedly performed within a “relatively tight range of one another.”
Along with improved sales, an 80 basis-point gross margin improvement was a result of a 15 basis point improvement in merchandise margins and increased sales leverage on distribution and store occupancy costs. Inventory levels were up for the quarter, but management said they were confident that the company had made “opportunistic buys” that look to benefit sales and margins for the remainder of the year.
Management said Q2 same-store sales are currently running up in the positive low-single digit range and the quarter should end up in the same range, largely due to the fact that the second quarter will benefit from an extra day and will also contain a shift of 4th of July holiday from the third quarter.
April has seen a positive trend from the Easter shift, but the month continued to be impacted by tough comps against strong firearm and ammunition sales in the prior-year period. Additionally, April sales this year were said to be impacted by unfavorable weather comparisons in many of the retailer’s markets. Management said April has been “much cooler than last year” when sales benefited from an early heat wave.
Management noted some “expense pressure” pertaining to health benefits and fuel costs will weigh on earnings. Diluted EPS is expected to be between 24 cents and 30 cents per share for the second quarter.
