Big 5 Sporting Goods achieved a new milestone last week, opening their 300th store on their way to 309 stores by the end of the year. The new San Diego store joined three others in Q3 and one more since the start of the quarter. BGFV saw the additional stores over the last year and a 2.6% comp store sales increase boost results that exceeded the companys previous guidance and consensus estimates.
Third quarter comps were actually limited a bit by the implementation of a new sales return allowance in the period. Excluding the effect of the allowance discussed below, same-store sales increased 3.6% versus Q3 last year. BGFV said the increase in sales for the quarter was driven entirely by increased customer traffic. The average ticket was virtually flat to last year.
Footwear and Hardgoods both comped up in the low- to mid-single digit range, while Apparel benefited from seasonal weather, comping up on the high end of the mid-single-digit neighborhood.
The Skate business “remains soft” here and the Fitness business was said to be “relatively flat”. Steven Miller, BGFV chairman, president CEO, called out the summer Outdoor business, indicating that the Camping and Water Sports categories were “very solid” in the quarter.
The cumulative effect of the accounting change resulted in a reduction of approximately $1.9 million in net sales two cents per diluted share, for Q3. Previously, Big 5's net sales were reported net of actual sales returns.
The retailer also reported improvement in gross margins in the Footwear and Hardgoods categories, while Apparel GM was flat to last year. GM were impacted by DC costs as product margins gains were partially offset by higher fuel and labor costs that negatively impacted margins by 20 basis points.
Staying true to Big 5 form, management shrugged off the impact of the slower conditions at west coast ports, saying that the two-week delays they see havent hurt them, but they do see potential “opportunistic” buys resulting from delay-driven cancellations.
Big 5 expects to see comp sales growth in the low single-digit range for the fourth fiscal quarter, resulting in EPS in the range of 57 cents to 61 cents per diluted share. Miller said sales trends have been “outstanding thus far” in the fourth quarter.
For the full year, Big 5 is forecasting same-store sales growth in the low- to mid-single-digit range and expects earnings to be in the range of $1.58 to $1.62 per diluted share, up from previous guidance of $1.55 to $1.61 per diluted share. Calculated in accordance with GAAP, the full year earnings estimate is in the range of $1.53 to $1.57 per diluted share.
>>> With the early wet and snowy weather the west is getting, the fourth quarter could also deliver some nice surprises…
