Big 5 Sporting Goods Corp. reported earnings of $356,000, or 2 cents share, in the fourth quarter, rebounding from a loss of $5.1 million, or 24 cents, a year ago. But the retailer said it expects a loss in the first quarter as winter weather conditions have softened significantly over the course of the period.
The latest earnings include an after-tax charge of $0.3 million, or 2 cents per share, for asset impairment. Excluding this charge, fourth-quarter earnings were 4 cents per diluted share, at the high-end of the company’s previously issued guidance range of 2 to 4 cents per diluted share provided on January 16.
Prior to the updated guidance, Big 5 had expected a loss per share in the range of 4 cents to 16 cents a share. The year-ago period included non-recurring charges amounting to 9 cents a share.
As previously reported, net sales for the fiscal 2019 fourth quarter were $244.1 million compared to net sales of $247.1 million for the fourth quarter of fiscal 2018. Same-store sales decreased 0.6 percent for the fourth quarter of fiscal 2019.
Gross profit for the fiscal 2019 fourth quarter increased 9.4 percent to $77.0 million, compared to $70.4 million in the fourth quarter of the prior year. The company’s gross profit margin was 31.6 percent in the fiscal 2019 fourth quarter versus 28.5 percent in the fourth quarter of the prior year. The increase in gross profit margin largely reflects an increase in merchandise margins of 239 basis points and higher distribution costs capitalized into inventory for the quarter.
Selling and administrative expense, as a percentage of net sales, was flat versus the prior year at 30.9 percent in the fiscal 2019 fourth quarter. Overall selling and administrative expense for the quarter decreased $0.7 million from the prior year primarily due to lower print advertising expenses in the quarter and contract termination charges in the prior year. This was partially offset by higher employee labor and benefit-related expenses during the quarter.
For fiscal 2019 full-year, as previously reported, net sales were $996.5 million, compared to net sales of $987.6 million for fiscal 2018 full-year. Same-store sales increased 1.2 percent in fiscal 2019 versus the prior year. Net income for fiscal 2019 was $8.4 million, or 40 cents per diluted share. Net loss for fiscal 2018 was $3.5 million, or 17 cents per basic share, including charges of $0.09 per basic share as previously reported.
Steven G. Miller, the company’s chairman, president and chief executive officer, said, in a statement, “Our strong fiscal fourth-quarter performance highlights a successful fiscal 2019 that included positive same-store sales growth and a meaningful increase in net income. These results were driven in part by our team’s ongoing focus on actively managing expenses and merchandise selection, coupled with pricing and promotional strategies that contributed to a notable expansion of merchandise margins over the back-half of the year. Additionally, our model’s unique combination of value, selection, service, and convenience allowed us to take advantage of seasonal demand, particularly during key periods of favorable weather.”
Miller continued, “Looking at the start to 2020, we are facing very challenging comparisons against extraordinary sales of winter-related products in the first quarter of 2019, driven by last year’s highly favorable winter weather conditions across our markets. This year, winter weather conditions have softened substantially over the course of the first quarter, and consequently, same-store sales are currently running down approximately 10 percent compared to the approximately 10 percent increase that we experienced during the comparable period last year. Over the balance of the quarter, sales comparisons will ease, and we believe we are positioned to improve on our current sales trends as we transition into spring. Although our quarter-to-date sales have been challenged, our merchandise margins are running up approximately 75 basis points as we continue to benefit from the strategies that drove margin expansion over the second half of 2019.”
Guidance
For the fiscal 2020 first quarter, the company expects same-store sales to decrease in the mid- to high-single-digit range and expects to realize a loss per basic share in the range of 15 cents to 25 cents, compared to a same-store sales increase of 4.6 percent and earnings per diluted share of 8 cents in the first quarter of fiscal 2019 including a charge of 2 cents per diluted share for the write-off of deferred tax assets related to share-based compensation.
Store Openings
During the fourth quarter of fiscal 2019, the company opened one store and relocated one store ending fiscal 2019 with 434 stores in operation. During the fiscal 2020 first quarter, the company expects to close three stores and does not expect to open any new stores. For fiscal 2020 full-year, the company currently anticipates opening approximately five new stores and closing approximately five stores.
Photo courtesy Big 5
