Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Big 5 Sporting Goods Corp (NASDAQ:BGFV) delivered a first quarter performance consistent with expectations despite macroeconomic and weather-related challenges.
• March same-store sales showed significant improvement, marking a recovery from earlier double-digit declines.
• The company strategically increased inventory by 6.5% year-over-year, preparing for the spring and summer selling periods.
• Early receipt of seasonal merchandise helped mitigate the impact of increased tariff costs.
• The company is optimizing its store portfolio by closing underperforming stores, focusing resources on more productive locations.

Negative Points

• Net sales for the first quarter decreased to $175.6 million from $193.4 million in the prior year, with same-store sales down 7.8%.
• Merchandise margins decreased by 78 basis points due to product mix shifts and promotional efforts.
• The company reported a net loss of $17.3 million for the first quarter, compared to a net loss of $8.3 million in the prior year.
• Gross profit margin slightly decreased to 30.9% from 31.2% in the previous year, reflecting higher store occupancy expenses.
• Second quarter sales are expected to be down in the low to mid-single-digit range, with continued macroeconomic headwinds anticipated.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with BGFV.

Q: Can you provide more details on the impact of weather on your sales performance this quarter? A: Steven Miller, CEO: Our sales in January and February were significantly impacted by unfavorable seasonal weather, particularly in the southern tier of our store footprint. Winter-related sales were down nearly 25%. However, sales trends improved in March with more favorable weather conditions, resulting in flat same-store sales compared to the prior year.

Q: How did the merchandise categories perform during the first quarter? A: Steven Miller, CEO: On a same-store basis, hard goods decreased by 4.7%, apparel declined by 8.7%, and footwear was down 11.8%. Apparel and footwear were the most affected by the unfavorable weather comparisons.

Q: What are your expectations for inventory levels moving forward? A: Steven Miller, CEO: We ended the quarter with inventory up 6.5% year-over-year due to earlier receipts of seasonal merchandise. We anticipate inventory levels will normalize as we move through summer and expect to be in a lower inventory position by year-end.

Q: Can you elaborate on the strategic store closures? A: Steven Miller, CEO: We closed eight stores in the first quarter and plan to close approximately seven more throughout the year. This is part of our strategy to optimize our store portfolio and focus resources on our most productive locations.

Q: What is your outlook for the second quarter, considering the current economic conditions? A: Barry Emerson, CFO: We expect same-store sales to be down in the low to mid-single-digit range due to ongoing macroeconomic headwinds and calendar shifts. We are focusing on capitalizing on sales opportunities around key periods like Memorial Day and Father's Day.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.