Big 5 Sporting Goods Corp. reported same-store sales were down 11.4 percent for the first quarter ended April 3 and flat compared to the pre-pandemic first quarter of fiscal 2019. Earnings were also down against year-ago record results but exceeded guidance.

Steven G. Miller, company chairman, president and chief executive officer, said, “We are pleased to report first-quarter earnings results that were slightly ahead of the high end of the guidance range that we provided and significantly ahead of any pre-pandemic first quarter in our history. As we emerge from the pandemic, the foundation of our business remains extremely solid. While our results versus 2021 reflect very difficult comparisons against last year’s record first quarter, when sales surged due to COVID-related factors, in this year’s first quarter we generated historically strong earnings despite facing a variety of headwinds throughout the period, including unfavorable winter weather, Omicron-related challenges, supply chain disruptions, and inflationary pressures.”

Net sales for the fiscal 2022 first quarter were $242.0 million compared to net sales of $272.8 million for the first quarter of fiscal 2021. Same-store sales decreased 11.4 percent for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 and were flat compared to the pre-pandemic first quarter of fiscal 2019.

Same-store sales had surged 31.8 in the 2021 first quarter.

Gross profit for the fiscal 2022 first quarter was $85.9 million, compared to $97.9 million in the first quarter of the prior year. The company’s gross profit margin was 35.5 percent in the fiscal 2022 first quarter versus 35.9 percent in the first quarter of the prior year. The decrease in gross profit margin compared with the prior year primarily reflects higher store occupancy expense as a percentage of net sales, partially offset by the favorable impact of higher merchandise margins. The company’s merchandise margins increased by 119 basis points for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 and increased by 461 basis points versus the first quarter of fiscal 2019.

Overall selling and administrative expense for the quarter increased by $5.2 million from the prior year primarily due to broad-based inflationary impacts, including increased employee labor and benefit-related expenses year-over-year, along with the elimination of an employment agreement-related liability last year. As a percentage of sales, selling and administrative expense increased to 31.1 percent in the fiscal 2022 first quarter, compared to 25.7 percent in the fiscal 2021 first quarter, due to the combination of lower sales and higher expenses.

Net income for the first quarter of fiscal 2022 was $9.1 million, or $0.41 per diluted share, above the high end of the company’s guidance range of $0.30 to $0.40 per diluted share. This compares to a record first-quarter net income of $21.5 million, or $0.96 per diluted share, in the first quarter of fiscal 2021, which included a previously reported benefit of $0.06 per diluted share. Net income for the first quarter of fiscal 2019 was $1.7 million, or $0.08 per diluted share.

Adjusted EBITDA was $15.0 million for the first quarter of fiscal 2022, compared to $30.3 million in the prior-year period. EBITDA and Adjusted EBITDA are non-GAAP financial measures.

When Big 5 reported fourth-quarter results on March 1, the company said it expected same-store sales in the first quarter to decrease 10 percent to 13 percent compared to the fiscal 2021 first quarter, with earnings per diluted share in the range of 30 to 40 cents.

Balance Sheet
The company ended the fiscal 2022 first quarter with no borrowings under its credit facility and with cash and cash equivalents of $62.0 million. This compares to no borrowings under the company’s credit facility and $97.4 million of cash and cash equivalents as of the end of the fiscal 2021 fourth quarter. Merchandise inventories as of the end of the first quarter increased by 18.2 percent year-over-year, reflecting more normalized inventory levels relative to sales, with a higher carryover of winter-related inventory. In the fiscal 2022 first quarter, the company repurchased 94,983 shares of its common stock.

Quarterly Cash Dividend
The company’s Board of Directors has declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on June 15, 2022 to stockholders of record as of June 1, 2022.

Second Quarter Guidance
For the fiscal 2022 second quarter, the company expects same-store sales to decrease in the high-teens compared to the record sales of the fiscal 2021 second quarter when net sales were more than $82 million, or 34 percent, higher than any pre-pandemic second quarter in the company’s history. As a reminder, sales in the second quarter of fiscal 2021 benefited from pent-up demand following an easing of pandemic-related restrictions in many of the company’s markets. The company’s sales guidance reflects an expected same-store sales increase in the high-single-digit range versus the pre-pandemic fiscal 2019 second quarter.

Fiscal 2022 second-quarter earnings per diluted share are expected in the range of $0.40 to $0.50, which compares to record second-quarter earnings per diluted share of $1.63 in the second quarter of fiscal 2021.

Miller concluded, “Our second quarter to date business continues to perform well above historical rates and we expect to generate sales and earnings significantly exceeding any pre-pandemic second quarter in our history. While last year’s record second-quarter certainly was remarkable, beating last year’s pandemic-driven results is not a prerequisite to producing another very profitable and successful quarter for the business. We are in a great position, as we stand to continue to benefit from many of the drivers of our success over the last two years, including favorable product trends, higher merchandise margins, and meaningfully reduced print advertising spend. We look forward to continuing to generate very positive bottom-line results.”

Store Openings
The company currently has 431 stores in operation. During fiscal 2022, the company expects to open approximately four stores and close approximately two stores.

Photo courtesy Big 5