Big 5 Sporting Goods Corp. reported same-store sales jumped 31.8 percent in its first quarter ended April 4, well above guidance calling for a gain of 20 percent. Earnings likewise soared and came in about double guidance.
Steven G. Miller, the chairman, president and CEO, said in a statement, “We are pleased to report record first-quarter results driven by a combination of top-line sales strength, merchandise margin expansion and an improved cost structure. Our team continues to do a tremendous job satisfying the incredible consumer demand we see across our diverse product mix.”
Miller continued, “Same-store sales were up 31.8 percent for the fiscal 2021 first quarter reflecting broad-based strength across apparel, footwear and hardgoods, including very robust demand for winter-related products. These results were especially remarkable given the headwinds impacting sales of team sports products due to the widespread suspension of league play over most of the quarter. Our sales accelerated beyond expectations in March, benefitting from the resumption of team sports activities, along with school re-openings and stimulus checks. Our strong sales momentum has continued into the second quarter with sales performing at historically high levels for the quarter to date. We are excited by the strength in our business, which has translated to our balance sheet, as we continue to operate with zero debt while growing our cash position. In light of this strength and to continue to return value to shareholders, our Board of Directors has declared a 20 percent increase in our regular cash dividend to an annual rate of $0.72 per share and also has declared a special cash dividend of $1.00 per share.”
Net sales for the fiscal 2021 first quarter were $272.8 million compared to net sales of $217.7 million for the first quarter of fiscal 2020, which included significant store closures due to COVID-19 over the last ten days of the period.
Same-store sales increased 31.8 percent for the first quarter of fiscal 2021. When it reported fourth-quarter results on March 2, the retailer forecast same-store sales would increase approximately 20 percent. This compares to a same-store sales decrease of 10.8 percent in the 2020 quarter.
The increase in net sales was partially offset by an approximately $10.0 million unfavorable impact from the calendar shift related to the company’s 53-week fiscal 2020 that caused fiscal 2021 to begin one week later than fiscal 2020, as well as an unfavorable impact from the calendar shift related to the Easter holiday, during which the company’s stores are closed, from the second quarter in fiscal 2020 to the first quarter in fiscal 2021. Same-store sales comparisons are made on a comparable-week basis and the calendar shifts did not have a material impact on same-store sales comparisons.
Gross profit for the fiscal 2021 first quarter increased to $97.9 million from $64.6 million in the first quarter of the prior year. The company’s gross profit margin was 35.9 percent in the fiscal 2021 first quarter versus 29.6 percent in the first quarter of the prior year. The increase in gross profit margin largely reflects a 350-basis point increase in merchandise margins, lower store occupancy and warehousing costs as a percentage of net sales, and, to a lesser degree, the favorable impact from an insurance settlement, partially offset by lower distribution costs capitalized into inventory for the quarter.
Selling and administrative expense as a percentage of net sales was 25.7 percent in the fiscal 2021 first quarter versus 32.8 percent in the fiscal 2020 first quarter. Overall selling and administrative expense for the quarter decreased $1.3 million from the prior year primarily due to lower print advertising expense and the elimination of a liability for an employment agreement, partially offset by higher performance-based incentive compensation accruals.
Net income for the first quarter of fiscal 2021 was $21.5 million, or $0.96 per diluted share, which includes a benefit of $0.06 per diluted share related to the elimination of the employment agreement liability and the insurance settlement. When it reported fourth-quarter results on March 2, the retailer forecast EPS in the range of 47 cents to 53 cents a share.
Net loss for the first quarter of fiscal 2020 was $4.6 million, or $0.22 per basic share.
Adjusted EBITDA for the first quarter of fiscal 2021 was $30.3 million, compared to a loss of $2.2 million in the prior-year period. EBITDA and
The company ended the fiscal 2021 first quarter with no borrowings under its credit facility and with cash and cash equivalents of $100.1 million. This compares to zero borrowings and $64.7 million of cash and cash equivalents as of the end of the 2020 fiscal year and to $124.3 million of borrowings and $44.2 million of cash as of the end of the fiscal 2020 first quarter, reflecting a $180.2 million improvement in net cash (cash less revolver borrowings) on a year-over-year basis and a $35.4 million improvement in net cash compared to the end of fiscal 2020. Total merchandise inventories decreased by approximately 20.8 percent as of the end of the fiscal 2021 first quarter versus the first quarter of the prior year.
Quarterly Cash Dividend and Special Cash Dividend
In light of the continued strength of the company’s business, cash flow generation and improved balance sheet, the company’s Board of Directors has declared a 20 percent increase in its quarterly cash dividend from $0.15 per share of outstanding common stock to $0.18 per share of outstanding common stock, which will be paid on June 15, 2021 to stockholders of record as of June 1, 2021. Additionally, to further return value to shareholders, the company’s Board of Directors has declared a special cash dividend of $1.00 per share of outstanding common stock, which will be paid on June 1, 2021 to stockholders of record as of May 17, 2021.
Second Quarter Guidance
For the fiscal 2021 second quarter, the company expects same-store sales to increase in the range of 22 percent to 27 percent and expects to realize earnings per diluted share in the range of $1.05 to $1.25. Fiscal 2021 second-quarter guidance reflects the combined positive impact of calendar shifts of the Easter holiday, during which the company’s stores are closed, from the second quarter of fiscal 2020 into the first quarter of fiscal 2021, and the Fourth of July holiday from the third quarter of fiscal 2020 into the second quarter of fiscal 2021. The company’s second-quarter guidance compares to a same-store sales decrease of 4.2 percent and earnings per diluted share of 52 cents in the second quarter of fiscal 2020, which included a net benefit of approximately 13 cents per diluted share related to rent abatement savings and recovery in eminent domain litigation, partially offset by expense associated with special employee recognition bonus awards.
The company currently has 430 stores in operation. During fiscal 2021, the company expects to open approximately five stores and close approximately two stores.
Photo courtesy Big 5