Shares of Big 5 Sporting Goods Corporation BGFV have declined 17.8% since the company reported its earnings for the quarter ended Dec. 29, 2024. This compares to the S&P 500 index’s decline of 2.2% over the same time frame. Over the past month, the stock has declined 26.7% compared with the S&P 500’s 3.4% decline.

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The company incurred a net loss of 95 cents per share in the fourth quarter of fiscal 2024, wider than a loss of 41 cents per share in the year-ago period. 

Big 5 reported net sales of $181.6 million for the fourth quarter of fiscal 2024, marking a 7.5% decline from $196.3 million in the prior-year period. Same-store sales decreased 6.1% year over year. 

The company incurred a net loss of $20.9 million, wider than a net loss of $8.9 million in the year-ago period.

BGFV’s Profitability and Expense Trends

Gross profit for the fiscal fourth quarter declined to $51.2 million from $59.2 million in the prior-year quarter. Gross profit margin contracted to 28.2% from 30.2%, primarily due to higher store occupancy and distribution costs relative to sales and a 23-basis-point decline in merchandise margins.

Selling and administrative expenses decreased by $1 million from the previous year, largely due to lower labor costs and a $0.9 million gain from an insurance settlement.  However, as a percentage of net sales, selling and administrative expenses increased to 39.3% from 36.9% due to the lower sales base.

Adjusted EBITDA stood at negative $16.4 million for the fiscal fourth quarter compared to negative $8.7 million in the same period last year.

Full-Year Update for BGFV

The company incurred a net loss per share of $3.15 in 2024, wider than a net loss of 33 cents per share in fiscal 2023. Net sales fell 10.1% to $795.5 million from $884.7 million in fiscal 2023, with a same-store sales decline of 9.4%.

The net loss widened significantly to $69.1 million from a net loss of $7.1 million in fiscal 2023. The full-year results included a $21.8 million non-cash charge related to the establishment of a valuation allowance on deferred tax assets. For 2024, Adjusted EBITDA was negative $36.7 million, down from a positive $7.3 million in fiscal 2023.

Management Commentary for BGFV

Chairman, president and CEO Steven G. Miller acknowledged the challenging retail environment and the company’s ability to manage margins and expenses despite declining sales. He noted that sales trends have remained under pressure in the first quarter of fiscal 2025, driven by macroeconomic headwinds affecting discretionary spending and inconsistent weather patterns, particularly in the southern part of the company’s footprint.

Looking ahead, Miller expressed confidence in Big 5’s merchandise assortment as the company transitions into the spring season.

BGFV’s Balance Sheet and Liquidity

Big 5 ended the fiscal fourth quarter with $13.8 million in borrowings under its $150 million credit facility, which was amended and extended in December 2024 and now matures in December 2029. The company’s cash balance stood at $5.4 million at quarter-end, down from $9.2 million in the prior-year period. Merchandise inventories declined 5.6% year over year, reflecting efforts to manage inventory levels in line with sales trends.

BGFV’s Fiscal 2025 First-Quarter Guidance

For the first quarter of fiscal 2025, Big 5 expects same-store sales to decline in the mid-to-high single-digit range compared to the prior-year period. The company cited ongoing macroeconomic challenges impacting discretionary consumer spending as the primary factor behind the guidance. It anticipates a net loss per share in the range of 75 cents to 85 cents.

Other Developments

Big 5 reported having 414 stores in operation at the end of the fourth quarter, reflecting eight store closures in the first quarter of fiscal 2025 as part of its store base optimization strategy. The company plans to close approximately seven additional stores during the remainder of fiscal 2025 and does not anticipate opening any new locations.

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This article originally published on Zacks Investment Research (zacks.com).

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