Big 5 Sporting Goods Corp. reported a net loss for the second quarter of fiscal 2018 of $0.2 million, or (1) cent per share, compared to net income for the second quarter of fiscal 2017 of $2.8 million, or 13 cents per diluted share. Analysts had expected a profit of 11 cents per share.
The company reported sales for the quarter of $240 million, compared to net sales of $243.7 million for the second quarter of fiscal 2017 and missing analysts’ estimates by $7.1 million. Same-store sales decreased 2.1 percent for the second quarter of fiscal 2018 compared to a 0.9 percent increase in same-store sales for the second quarter of fiscal 2017.
Gross profit for the fiscal 2018 second quarter was $75.3 million, compared to $79.3 million in the second quarter of the prior year. The company’s gross profit margin was 31.4 percent in the fiscal 2018 second quarter versus 32.5 percent in the second quarter of the prior year, primarily reflecting higher distribution and store occupancy expenses as a percentage of net sales, partially offset by an increase in merchandise margins of 42 basis points.
Selling and administrative expense as a percentage of net sales was 31.1 percent in the fiscal 2018 second quarter versus 30.4 percent in the second quarter of the prior year. Overall selling and administrative expense for the quarter increased $0.5 million from the prior year, mainly due to higher employee labor and benefit-related expense, partially offset by lower advertising expense.
For the 26-week period ended July 1, 2018, net sales were $474.1 million compared to net sales of $496.3 million in the first 26 weeks of last year. Same-store sales decreased 4.9 percent in the first half of fiscal 2018 versus the comparable period last year. Net loss for the first 26 weeks of fiscal 2018 was $1.6 million, or 7 cents per share, including 1 cent per share of charges for the write-off of deferred tax assets related to share-based compensation compared to net income for the first 26 weeks of fiscal 2017 of $8.1 million, or 37 cents per diluted share.
“While our sales comped positively for the first half of the quarter, sales softened significantly over the back half of the period, which led to results that were below our expectations,” said Steven G. Miller, the company’s chairman, president and CEO. “Much of the softness resulted from weak sales of camping and water sports products, which were negatively impacted by unfavorable weather conditions in key markets around the high-volume selling periods of Memorial Day, Father’s Day and the start of summer. Although our sales results were challenged, our merchandise margins improved 42 basis points for the quarter on top of the 37 basis-point margin improvement that we achieved in the second quarter of last year.
“For the third quarter to date, our sales are comping positively in the low-single-digit range as our summer product categories have responded well to improved weather conditions in our markets. We believe our merchandise assortment is well-positioned for the balance of the summer and the back-to-school and fall sports seasons.”
Quarterly Cash Dividend
The company’s board of directors has declared a quarterly cash dividend of 15 cents per share of outstanding common stock, which will be paid on September 14, 2018 to stockholders of record as of August 31, 2018.
Guidance
For the fiscal 2018 third quarter, the company expects same-store sales to be in the flat-to-positive low single-digit range and earnings per diluted share to be in the range of 14 cents to 24 cents, compared to a same-store sales decrease of 2.9 percent and earnings per diluted share of 28 cents in the third quarter of fiscal 2017.
Store Openings
During the second quarter of fiscal 2018, the company opened two stores and closed two stores, including one closure related to a relocation. During the fiscal 2018 third quarter, the company anticipates opening one store. For the fiscal 2018 full year, the company currently anticipates opening approximately five new stores and closing approximately three stores.
