BGFV - Earnings call transcript Q3 2020 | Big 5 Sporting Goods Corporation

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Operator

Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods Third Quarter 2020 Earnings Results Conference Call. Today's call is being recorded. With us today are Mr. Steve Miller, President and Chief Executive Officer; Mr. Officer X Financial Goods. Chief Emerson, of Sporting Big Barry introductions, opening to Mr. At for and I'd to this time over remarks like conference turn the Miller. go sir. Please ahead

Steve Miller

our to conference Thank quarter. XXXX for I harbor the the as the safe fiscal turn review everyone. provide Good of you, results call Welcome will quarter Barry as operator. our financial now third Today to call. over fourth XXXX, quarter third we an will afternoon, for read our statement. to well outlook

Barry Emerson

Thanks, for that of plans fact, we Litigation statements Safe historical may constitute Securities Act expectations, Private the made Reform prospects, Steve. future Harbor of statements Except the any provisions pursuant to make remarks about and of forward-looking our XXXX.

risks actual XX-K, cause unknown described periods more that Form Forward-looking in other These forward-looking and statements forecasted future those our undertake from revise on any annual known and update reports results Form differ our current and Exchange reports statements our us filings or by materially no from risks fully our to may obligation behalf. results. and and be may in include uncertainties uncertainties involve We time and Securities on time that made Commission. quarterly or the to with XX-Q to our on

Steve Miller

the I and sales performance from mix. with which our through sales first a month product far nicely With active the our remarkably to Thank our strong healthy fourth continued so environment, history. strongest our momentum many margin From recent third standpoint, am quarter both in was looking report any Barry. tremendously pleased to stay corresponds third with recreational of in you benefited and by people quarter and have trends, the of current results sales along earnings quarter. quarter our

exceptional product outdoor strength our have fitness array We of categories. broad across recreational home a sales seen and

with recreation should we reflect unlikely level continue and we surges benefit that truly at our strength, extraordinary margin business recognize are been indefinitely, adjustments in Along fitness do bottom are the results and shift ongoing these cost have producing consumer believe leverage. and in to our long favoring our structure While that to that the this sales run. significant demand operating the line

Our reduced substantially sheet. operating success with driving our sales balance has strengthened costs

company increase our Reflecting Over quarter, the $XX the course traded cash down our balance we has with third nearly the a rate time Board regularly in our have the strength, a to authorized we share. debt is prior of $X.XX publicly dividend million quarterly paid of to Directors that end this debt. have we fully double balance at zero had from history revolving the as of quarter. This of first per sheet an operated in the $X.XX our and cash

our quarter Now million quarter compared to I'll Net take quarter fourth the of touch to $XXX sales a XXXX the on sales were for the and results quarter a few date. to net of quarter then X.X% of for color Same-store fiscal to third fiscal provide third increase some of XX.X% third increased moments XXXX. third fiscal million third the sales quarter our $XXX.X XXXX for fiscal compared for XXXX. on

was our Our sales markets. geographic broad-based strength across

We in despite majority shift market July. sales. back-to-school in across Sales September sports a and increases of in of result of sales of as related the weak schooling to season led rollout for the sports Looking products were September. XX.X% at then league up our impacted X.X% previously back-to-school headwinds cancellation were COVID-XX. related vast categories of suspensions widespread negatively the achieved by and in We team August the and and to quarter virtual our sales and these same-store our X.X% as were team reported, extraordinary up August

Although team September. products pronounced more significantly the the in was year-over-year throughout sales August drag and were of sports down quarter

exceeded and would product, sports sales in XX% team August comp in September. our Excluding have

which Additionally, limited throughout sales quarter activity. category products sales air in markets, wildfires late our XX% quality poor demand August increased extraordinary for in and home in fitness product caused outdoor goods September by From impacted a were to that recreation. by standpoint, outdoor nearly category western related our negatively same-store driven hard the widespread for and

was footwear apparel team reflect strong high significantly The in the for products. activities Similarly decrease which sales. mid-single-digit number decrease of by was sales of most units apparel. offset decreased sales. Footwear our of back-to-school in increases accounted single-digits for in team sales and to unit, partially a sales year-over-year was Additionally, the apparel our price the category significant sales decrease which sales by in by teens. footwear, On cleated of also our lack a sports the basis, firearms-related both in weak overall sale we average weak entire sports our average Same-store footwear high increase impacted in category customer in category in driven the attributable per experienced demand transactions. for and a of decreased per impacted

up product a gains. of the period. key quarter year drivers were A activity promotional in the basis margins achieved merchandise expansion increasing remarkable the XXX mix reduction third points to of basis the favorable over when with margins compared shifts third XXXX in also our quarter XX of the prior along were points We margin

this start sales October fourth the for are XX.X% fiscal to strong our with quarter, ended at which increasing Looking Sunday. we period, a past off

quarter, strength with well levels. performed markets We seeing strong trends. geographic broad-based the perform to been the sales elevated reflecting at quarter-to-date our throughout all quarter recent continuing categories of third the merchandise that virtually are also a in margins has third to continuation Similar our

sports they the sports to third, team as they seeing so some degree team are in note were part down although resumption quarter year Additionally, in last below continued categories smaller to a because our the of than products our represent sports. I period. comp a to much the impact they lesser quarter in run in team that third numbers against of the fourth opposed are a organized markets quarter to smaller also fourth should

with pleased we to as holiday product certainly start the typical our the season. our the and assortment fourth successful we in winter winter holiday key are we to for year the seasonal are start revolves a quarter transition and season, spending mindful the to upcoming a While that quarter around of

recognize Although, we year. been believe a certainly we this of balance has but the we are typical well for the positioned quarter, anything, that

forward, are a period, impacts recreation particularly Looking COVID And the it to can over major of impact that or of be about is plays which out results as assortments. the always, business outdoor which how impact gifting. positively holiday well that for factors we likely winter as are our as largest negatively, All our as demand the And weather, number there merchandise said, we approaching any the proud all to done in that in want as enabled unpredictable. are team prepared our Big has for excited is pandemic again I X a entire us circumstances be to upside potential extremely this year moment, might make changing adapted express so to we year, the and quarter am of of remainder to how strongly has perform necessary. arise. will I capitalize as this ready rapidly have environment. to adjustments Stepping the how opportunities on we a And once back

it capitalize the and customers key confident made strength model. success earnings our over recognizing our provide place confronted our challenges to forward. has critical been team's to the strategic quarter on and us to speak quarter, to-date designed the as has information as Barry operating which sheet, that, and to team well as guidance. tremendous serve fourth decisions to dedication our moving well experience their of now a are shop will I'm and balance and will more our Our turn stores about fulfill convenient continue to to third Clearly, needs. I

Barry Emerson

to XXXX fiscal the profit third million in Gross Steve. the of $XX compared prior Thanks, for $XXX year. million was quarter third quarter the

period. margins offset administrative lower gross sales, profit reduced and discussed for gross third increase $X.X to lower warehousing versus the XXXX quarter XXX fiscal the Steve gross prior in percentage occupancy prior XX.X% decreased versus the and quarter points to of increased hours primarily was also expense, fiscal reflects The store profit the year employee costs in distribution margin expense during inventory of quarter. reflecting capitalized higher merchandise the XX.X% period, Selling expense largely third year that Our by year. store costs partially margin and margin last due quarter as improvement which the third million profit advertising XXXX reduced the period. The a reflects operating in the lower labor in in basis compared

containment cost in the XX.X% As of measures to year, volume net as sales a selling decreased higher from percentage of expense third and result our a administrative the prior and quarter. in sales, XX.X%

income million, or diluted in increased for fiscal net our $XX.X the net $X.XX quarter $X.XX diluted the or share million, a at looking fiscal from of Now $X.X quarter per per third of third bottom XXXX. share to of healthy income line, XXX% XXXX

through year-to-date reviewing results our the XXXX quarter. briefly third Now

first by This store our rent or $XXX.X benefit eminent partially reminder, per quarter offset to was the awards. in second recorded to million in related months the fiscal diluted prior quarter the recovery first $X.XX versus for compares the nine special share through Net share including of net sales to year. of during and assets nine per income second period. net a abatement the the of per impact compared $X.XX share As a a the tax of related Same-store results million months net diluted the recognition X.X% XXXX per income employee include including deferred XXXX closures sales charge write-off bonus share-based domain year increased nine and in third quarters. in pandemic-related XXXX litigation, Year-to-date the sales million to of $XXX.X first of last for a months comparable net first compensation. $X.XX diluted of share, diluted or million $X.XX were of $X.X fiscal savings $XX.X

XXXX of of of was to delay weather winter XX% last because significant carrying to a the the product in amount quarter This result Our and inventory higher of a the was compared warm also inventory despite COVID-XX. carryover inventory unfavorably the at reduction sports-related fiscal prior year. due the season's of of seasons league team as suspension down third end of in winter

positioned well year. and next Our be with excellent should a summer we seasonal sell-through for assortment fresh inventory was

For this expect proposition and value mix healthy. we we people merchandise have to our continue of winter active a resonate coming a uncertainties. of that believe time will seasonal to remain help economic And season compelling strong we during

COVID-XX, to spending, center purchases. investments resumed capital computer hardware and in investments. have software in our excluding back non-cash store-related capital of we months initially investments and in CapEx $X.X primarily distribution nine at year, Looking capital this scaling spending acquisitions, first response our million our planned the now representing our totaled remodeling, After

temporary lower-than-normal However, result suspension the year. will for of capital this spending in capital expenditures

million the for acquisitions, the non-cash XXXX and to generate margins, $X The be flow very is substantial fiscal of us CapEx quarter. range in to savings positive trends combination allowed million. cash in $X sales Excluding expense inventory expected third to lower and of

positive $XX.X year period. flow our This nine Our position strengthening from operations the positive net cash a the end to cash improvement XXXX borrowings million our $XXX.X cash into we of compared the XXXX translated in of flow a and under a representing of credit our fiscal had strong to $XXX.X cash of facility months the revolving first of an company's increase current sheet. business has Directors December which cash million on prior $XX.X quarter. our At balance fiscal million per from generation of to end per In a fiscal Board and third further of has strength in XXXX consideration in December zero a quarter, was flow million, XXXX. stockholders stock our compared to million XXXX the year-over-year share outstanding of and second the of be as cash in XX, improvement $XX paid of X, basis sheet, declared the balance quarterly $X.XX $X.XX will common dividend share, on of the record

that pleased allowed long this a to our value business flexibility are and dividend. and have increase of our We strength financial shareholders has of the in provided enhanced returning history we

for As Steve trends our period sales and increasing XX.X%. same-store margin continued discussed, quarter into sales fiscal the have our October positive fourth with

reduced of savings that implemented also expense savings uncertainties reduction COVID-XX. continued surrounding We expense hours response a to and among to the aspects store in quarter are during contributing labor anticipate initiatives other certain These from initiatives the reductions. were operating to expense due cost benefit our advertising

For expense operating instance, we in XX%, store hours into approximately October, which reduced by meaningful savings. translates payroll

sales impacting meaningful which to these evaluating without the the over fourth our sustainable extent produce current are cost we We to expense lower help the operating leverage. are reductions structure quarter, long-term, still unduly for but expect

in COVID-XX, focused our cost we more from measures In benefiting are response implemented addition to also on measures other savings recent supporting the ongoing various to profitability.

are For reorganizing with in efforts the wage benefit added results our our of pleased structure, providing management example, to store labor continued our of mitigate store pressures we scheduling. has flexibility additional the which by

Although, we for the the the we of in for carry difficult cautiously sales quarter the circumstances, potential the the the potential optimistic for surrounding XXXX in and other and season, guidance. the stimulus from spending or to providing restrictions uncertainties that outbreaks course strength ranges consumer into and fourth ahead. it any uncertainties are holiday consideration uncertainty unusually season, our months recent of winter related earnings on upcoming these us wide impact shutdowns or demand consumer and are the will current fiscal the sales over including the holidays unprecedented elections, benefits the make COVID-XX increased environment, forecast of of winter In for for

believe as to issued to fiscal to not long X% our in continue reasonable to over expect we XXXX. sales stores, materially to our same same-store X% the relating response COVID-XX operate minus the plus conditions the pandemic, regulations of any to pandemic fiscal compared other range impact to the fourth or the it do in quarter is So including conditions in ability remainder period of XXXX the

which fiscal of full period range benefit quarter would with same-store in per comparable over of We Assuming XXXX remainder the associated $X.X in fourth $X.XX diluted or $X.XX, expect to also achieve our share share expect result the fourth will guidance fiscal approximately Pasadena This the compares fire quarter the to of be $X.XX fourth settlement fiscal XX-week a comparable sales the diluted we year earlier fiscal the to our would quarter. of includes last insurance periods. flat $X.XX, earnings versus XXXX. year a a per of include fiscal XXXX the fourth fourth weeks. reflects XX and same-store $X.XX of per within charge included of asset earnings be X% in per same-store Also, as that sales range quarter for a included in calendar, of to the noted The we and at last plus decrease sales XX sales to California quarter, the weeks that the an range which I quarter XXXX share diluted for of store. X.X% million diluted in impairment after-tax share

the reminder Finally, are earnings compared questions. with expenses associated period our for higher Operator, third sales sales quarter. to related and third holidays and due half environment promotional up to we fourth quarter reflects volumes the as a labor during store advertising seasonally holiday the for in combination it now compared the open lower to fourth ready a the of to quarter until quarter typically first holiday sales of our lower quarterly

Operator

a session. Please Street from first question. is your Instructions] time, [Operator Lake with proceed Capital Mark Smith will question And conducting Markets. Our with at this be question-and-answer we

Mark Smith

Hi guys. Thanks for today. taking questions

for we August one negative and that September were can with at me, your if at sales, inventory constrained as you First a you say and all impact? supply had if look

Steve Miller

Sure. Sure, Yes. Mark.

over others. did it the the categories, we supply In demand I catch to not in are some third up different caught think up. certain And quarter. hasn't categories, than clearly no of still course

I So, chasing say to that were fair think products. we

relationships, of of our is still much vendors. a a of very Lots phenomenal in with chase it think I job experience, working great categories. did number but a team our

Mark Smith

your at sounds of today, kind question from your carried kind of But items? footwear some it you've get kind some last of inventory resupply and about look apparel at is, feel that's over you're my And and like Okay. to where as you year. how winter you next of high-demand do ability today

Steve Miller

we're problem you're when selling it. Well, feel surge these we good. so a of as getting quickly high-class as we of cases categories I some some almost supplies in mean, it's the get it good high -- we're arguably think -- I

doing problem and high-class a after think the we great that's of job So, product. we're a going

terms the no mean, of out the challenging turned quite it of then in had In winter product, And reasonably QX we a snow winter XXXX/'XX in season, solid I dismal, our of a It season. -- XXXX. was be was the quarter first to XXXX.

winter great that during product the So as year summer the us season a this being as shape prospects we recreate outdoors. winter the enter during were bought with pretty left they We've equal interested all that we're as carryover. in hefty about of to that feel the and of things and people feel good winter being around and

Mark Smith

year's last Okay. the QX? And this and of at monthly QX, year last as us you cadence of year guidance for QX in we walk kind in through look your can comp comps

Steve Miller

Well that? year is last year different this -- I that... - I or have so do you than distinctly mean we're

Barry Emerson

to just this. remind Mark

So last we down in November were up in XX.X%. And were we X%. year October

Steve Miller

with do holiday. Which the Black of shift had a to Friday

Barry Emerson

we And then X.X%. up were December

Steve Miller

Again shift holiday. to Black Friday

Mark Smith

Okay. And fourth volleyball drives basketball there team team at anything kind in look No sports sales sense. that makes quarter in Steve drives or there kind QX? anything of sports is of that or some we as that really

Steve Miller

right people are upside that basketball There's into of coming circumstances have of it is if lots with prime some cancelled. normal these be primary would We'll the sports. in the soften. of that sports season. Under into driven lots most the to been in time lots kicking for And some in, in into fourth us, chatter. December fall football of markets the heart seasons this Well plays out have QX -- normal to of our throughout and in But the quarter how wonderful a seasons perhaps circumstances, of January. postponed drive think as QX, I sales stores schools cases the delayed those kind of fall our our under that fall in is holiday seasons there's and scenario begin see

Mark Smith

I just fantastic sheet looks one big here kind Okay. balance the me for cash And strong of last picture, the think net with position.

You Can you use forward Or as cash else other you on investment raised go cash? unit potentially into of more talk dividend. anywhere of where about plan putting growth? you uses the

Barry Emerson

still Well Mark. we're foremost first a and the of Yes heat pandemic. in

sheet. to balance maintain critical we just us think for so, And strong it's a so

active which that So a in a we all of in them And an we'll we investing we legs for in of right We've on been us continue From is in active the an investing that that -- the and stock and something forefront. in is terms also really debt is the we've certainly the certainly plus. four priority program. buyback stool there's number paid have business terms well a the big have of of dividend. down been the on

of million. comes authorization to... When did it investing want business, an We in Steve have you $XX.X to the

Steve Miller

part terms for way. in in we felt that unit growth our it standpoint a never been is grown capital Mark, constrained that felt to grown Yes. continue a how of manner business. We'll from view stores. We've that our the we've we've we've most to appropriate for

make to the standpoint and space through could competitive I eye we'll pandemic to our think available that now normalizes play that. from we want and there's on decisions see appropriate going forward real a sort estate from certainly rationalization how forward. and becoming the potential from going world right of Certainly us favor keep that more retail

Barry Emerson

very very that provide has on And And meaningful And dividend. quite course, saw been it focused the to quarter. time. something why continue to the you a to of increase dividend for Board I base some that's absolutely our has important the the we dividend. in dividend is Mark, announced been And think a in the here of our investor doubling

cash -- that. important but think dividend often basis Also And to quarterly And a that so our will opportunistic, focus our I more course, if the we the than be very we're that's of evaluate for not use a Board. us. of very, is something best on

Mark Smith

This Thank been helpful. great. guys. Excellent, has you

Barry Emerson

you, Thank Mark.

Operator

back our question-and-answer any over that Thank session closing turn to Miller will our remarks. session. concludes now And Mr. and I the you. for call

Steve Miller

Well, thank the our closing, you pleased sheet. performance strong are extremely operator. our and balance we with position In recent of

fourth afternoon. Sporting of after future us We to conclusion the speaking about are excited and We appreciate quarter. today's five Dodgers. to may forward to Big I'd if with Go Thank it's everyone on call again a all We of Goods. to Championship time I conference you World look the like joining the Los back you great have and Let's add bring And Angeles. think a

Operator

for Thank today's you joining conference.

lines. you have great You a disconnect and may your now Thank day.

Big 5 Sporting Goods (BGFV) 27 Oct 202020 Q3 Earnings call transcript