Shares of Big 5 Sporting Goods Corporation BGFV have gained 4.2% since the company reported its earnings for the quarter ended March 30, 2025. This compares to the S&P 500 index’s 2.9% growth over the same time frame. Over the past month, the stock has gained 15.3% compared with the S&P 500’s 12.3% growth, signaling investor confidence amid a challenging consumer environment.

For the first quarter of fiscal 2025, Big 5 incurred a net loss of 78 cents per share, wider than the net loss of 38 cents per share in the first quarter of fiscal 2024. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company reported net sales of $175.6 million, down 9.2% from $193.4 million in the prior-year period. Same-store sales declined 7.8%. 

The company incurred a net loss of $17.3 million, wider than the net loss of $8.3 million from the first quarter of fiscal 2024. The absence of an income tax benefit in the latest quarter, due to a valuation allowance on deferred tax assets, contributed to the steeper bottom-line loss. Gross profit fell to $54.3 million from $60.4 million, with gross margin slipping to 30.9% from 31.2% a year earlier.

Other Key Business Metrics

EBITDA for the quarter was negative $12 million, widening from a negative $6.5 million in the prior-year period. Merchandise margins declined by 78 basis points year over year, and selling and administrative expenses decreased slightly by $0.6 million. However, as a percentage of sales, those expenses rose to 40.3% from 36.9%, reflecting deleverage from the reduced revenue base. Inventory levels increased 6.5% year over year, driven by earlier receipt timing of seasonal products in anticipation of potential tariff increases. The company had $3.9 million in cash and $30.9 million drawn on its $150 million credit facility at quarter-end.

Management Commentary

CEO Steven G. Miller remarked that results were in line with expectations, which already factored in continued macroeconomic pressures. Weather disruptions early in the quarter affected winter merchandise sales, particularly in southern markets, but a sequential improvement was observed in March. Miller expressed cautious optimism for the spring and summer seasons, highlighting proactive inventory planning and product refresh efforts.

Factors Influencing Headline Numbers

The quarter’s underperformance was primarily attributed to ongoing macroeconomic headwinds limiting discretionary spending, compounded by unfavorable weather conditions that suppressed early-quarter sales. Margin compression resulted from both higher store occupancy costs as a percentage of sales and lower merchandise margins. The lack of a tax benefit further exacerbated the net loss. Additionally, the company experienced a year-over-year increase in interest expense — from $0.1 million to $0.8 million — further impacting bottom-line results.

Guidance

Looking ahead to the second quarter of fiscal 2025, Big 5 expects same-store sales to decline in the low to mid-single-digit range year over year. Management forecasts a net loss per share between 75 cents and 90 cents, again reflecting no tax benefit. This compares to a 46 cents per share net loss in the second quarter of fiscal 2024, which did include a 16 cents tax benefit. The guidance incorporates expected pressure from calendar shifts, notably the Easter holiday moving into the second quarter and the Fourth of July pushing further into the third quarter this year.

Other Developments

During the first quarter, Big 5 closed eight stores as part of a continued effort to optimize its store base, bringing the total store count to 414. The company does not plan to open any new stores in fiscal 2025 but expects to close approximately seven more locations by year-end. 

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

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