Big 5 Sporting Goods Corporation posted strong top line gains for the first quarter of 2006, with same-store sales increasing 5.3%, representing the company's 41st consecutive quarter of positive same-store sales comparisons and the strongest quarterly comp sales performance in the last 16 quarters. However, several operations issues, including challenges with getting a new distribution center up and running smoothly and the ever-present rising fuel costs all fought to dampen bottom line growth.
In a conference call with analysts, management attributed the sales gains to positive comps in each of the companys three major categories, with footwear up in low-single-digits, hardgoods up in mid-single-digits, and apparel up in the double-digits. The apparel sales strength was driven by strong winter-product sales late in the quarter as much of the companys market experienced a late winter.
However, the late winter had a dampening effect on margins, causing product margins to decline 10 basis points as much of the winter-product was sold at a discounted rate. Excluding winter merchandise, product margins increased 20 basis points. Also affecting margins was the opening of the companys new distribution center, which experienced an increase in costs of $4.6 million.
SG&A expenses for the quarter were flat to last year, which combined with the margin decline to offset the sales gains to produce the 7.3% decline on the bottom line.
The company expects to realize same-store sales growth in the low- to mid-single-digit range for the second quarter of fiscal 2006 with earnings per diluted share in the range of 23 cents to 27 cents, including a two cents per share charge for expensing stock options. The company continues to expect full-year same-store sales growth in the low- to mid-single-digit range and full-year earnings per diluted share in the range of $1.23 to $1.33. Full-year earnings guidance includes a charge of approximately six cents per diluted share for the expensing of stock options.
The company opened two new stores during the first quarter of fiscal 2006, bringing its store count at the end of the first quarter to 326 stores. The company has opened one new store in the second quarter to date. The company anticipates opening a total of three new stores during the second quarter of fiscal 2006, and opening a total of approximately 20 new stores during fiscal 2006.
| Big 5 Sporting Goods | |||
| First Quarter Results | |||
| (in $ millions) | 2006 | 2005 | Change |
| Total Sales | $207.2 | $190.1 | 9.0% |
| GM% | 35.4% | 35.7% | -30 bps |
| Net Income | $5.9 | $6.4 | -7.3% |
| Diluted EPS | 26¢ | 28¢ | -7.1% |
| Comp Sales | +5.3% | +1.7% | |
| Inventories* | $227.2 | $223.2 | +1.8% |
| * at quarter-end | |||
