Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods First Quarter 2023 Earnings Results Conference Call. Today's call is being recorded. With us today are Mr. Steve Miller, President and Chief Executive Officer; and Mr. Officer X Financial Goods. Chief Emerson, of Sporting Big Barry

sir. introductions, opening to Mr. At ahead, for and Miller. I'd go to this time, over remarks like conference turn Please the

Steven Miller

to Thank an the our Today, you, outlook will financial of for first our second for review afternoon, well fiscal operator. everyone. XXXX we XXXX quarter as conference Good first call. the quarter results quarter. Welcome as provide

safe the call over Barry harbor I statement. our will turn now to to read

Barry Emerson

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

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

Steven Miller

of persistence in headwind quarter the a the of and of turned we Barry. only Not weather did tailwind the of quarter, you, despite Thank In half the the the but quarter, challenging of a the over operating environment. macroeconomic course cold achieved quarter. back over midpoint started half wet a that the the first near earnings the first our accelerate very as into guidance range headwind

of million first guidance were range, sales X.X%. end to compared of Same-store in down lower near in for the XXXX. $XXX.X million Our came sales net our the the quarter quarter $XXX

a huge quarter winter a single driver up low were with as mid-single same-store business, January, weather digits. average when In for our basis, transactions digits, down sales On ticket acts year-over-year X.X%. were the the down for

more February and relevant spring XX.X%, in However, activities. cold seasons become we results, overall of respectively. sales softball down other the weather and wet caused to our were to and baseball unusually impacted our and The recreational non-winter and March, widespread delays start when X.X%

it that the our consumer further of Additionally, regional the crisis conditions, course and appeared by us lower including refunds. to over macroeconomic tax quarter, bank was impacted the

Turning performance the categories. our to of merchandise major

strength Our apparel category single-digit of in increased range the sales. the high on winter-related

in the goods, mid-single was rainfall, was Our Hard down range digits. for the category quarter. significant footwear was the category impacted the negatively which mid-teens by down most

the declining healthy on we in generated In margins face merchandise quarter continued focus just points the year. have we first basis XX quarter profit of to Merchandise versus margins top the headwinds, drive first of dollars. record line gross to last in the margins prioritizing remained

that several versus basis put pre-pandemic merchandise context, levels. points To in hundred our margins were up

We continue clearing to be for our to as needed of we not have And sake the a manage promotional product. result, closely overly inventory.

feel is and forward. well very healthy Our a winter going our low to product We level. maintain aged positioned was historically inventory good, margins merchandise sell-through at

We It trends. their XX% environment, monitor discretionary quarter operating carefully soft continuing sales running with a to Turning to remains current last off down is a and to the versus second start, year. spending. are our tough approximately customers believe

spending. rain from has quarter the we While quarter, the it benefited to overcome in in been softness some not in baseball delays following the discretionary second general prior in sales catch-up the certainly enough

although create and of wonders And flooding to quarter Father's that summer. from key this are ahead, look have we footprint. always potential high-volume the revolves we a favorable The done across excess the will hopeful the As our our snow the concern. melt rainfall summer snowpack drought and Day recreational opportunities, periods Day, surrounding for remains around start second Memorial

on our we this on as our inventory which of through healthy we're is challenging expenses. margins clearly traffic sales, We've line kept top summary, pressuring the to managing maintaining in healthy which us with focused and our merchandise impact opportunistic sales working can are environment, to inventory that mitigate In strong be position, operating investments a and at our inflation future drive margins. allows merchandise

remains capitalize positioned well we current on strong, and Our opportunities are improves. balance sheet as environment economy navigate and the believe to the we

over to second outlook. our regarding it quarter I'll details now additional Barry? first quarter performance provide Barry and turn to

Barry Emerson

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

XX last Our of fiscal margin the into basis gross and store profit declined in quarter first first XX.X% profit expense, margin year. the year-over-year of The including percentage net quarter higher gross in occupancy margins capitalized reflected XXXX a merchandise primarily of inventory of lower decrease and points. distribution from in costs a as recorded XX.X% sales

quarter higher our merchandise first year the levels, strategy. reflecting As margins first promotional the pricing XXXX, pre-pandemic of several run and than evolution this versus basis although mentioned, hundred slightly the for points Steve to quarter margins merchandise fiscal decreased continue of

prior and in expense lower performance-based offset the year accruals, came by costs. period, $X.X administrative in slightly selling labor fiscal XXXX quarter favorable decreasing first Overall, versus incentive primarily plan, to million higher the reflecting

XX.X% in expense a percent first sales, As XX.X% lower first the was base. quarter versus the net the XXXX XXXX reflecting in fiscal sales SG&A of quarter

our expenses environment. continue inflation challenging to this economic managing in high on focus We

of the of quarter per to the to million or in million at was diluted Now net $X.X net diluted for million quarter quarter $XX per EBITDA $X.X totaled XXXX. $X.XX first of of the looking $X.X fiscal of bottom our This million income $X.XX or XXXX quarter the for year. first first compared fiscal income line, first XXXX share. fiscal compares in last share

Turning to the balance sheet.

that chain sell-through year, of our offset inventory increase was up the of last level year-over-year and the by feel inventory reflects of the end this first strong inventory quarter supply We winter fiscal merchandise at about partially the Our X.X% season. XXXX. primarily good of disruptions

our capital spending. Reviewing

Our remodeling, computer corporate $X.X distribution store-related million for representing CapEx, hardware improvements equipment, and investments and acquisitions, excluding noncash in purchases. software of first quarter center fiscal primarily totaled the XXXX, leasehold

the XXXX of the expect opening approximately For year, new relocating range full store anticipate and CapEx continue million in X and X $XX approximately $XX stores. stores, fiscal we million to X closing to

activities to our to at fiscal merchandise provided looking year-over-year. improvement our partially performance-based by compares XXXX. period. cash in Net used operating for activities flow accrued million mainly of year compared fiscal million XXXX cash in $XX.X The the year primarily reflected related to accruals, and $XX.X Now flow. cash by first lower the quarter expenses quarter in funding This was the net of of first of offset prior incentive cash operating prior the inventory for reduced income operating

of sheet facility end under the million and borrowings balance year $XX.X up zero from our first which Our fiscal $X.X the quarter of XXXX. of at with of million the credit healthy was XXXX fiscal very cash, was end

working ahead, we to our to further which anticipate should XXXX, in our we As decline capital look liquidity. continue help overall

has condition share. of our three considerably Board financial that dividend a And $X.XX we cash declared today, announced per years. Our past Directors the of quarterly strengthened over

I'll moment a spend Now guidance. on

discretionary the the impact expectation quarter. expected consumer share that to reflects XXXX $X.XX continue range company quarter, quarter. high fiscal company's share headwinds of diluted to XXXX second $X.XX, per quarter same-store earnings XXXX spending in per balance same-store to sales fiscal fiscal which compared range the Fiscal macroeconomic to $X.XX. second will the decrease of of second the over negative earnings the positive quarter an expects compares is single-digit the The XXXX For sales second second to in guidance

That any we prepared Operator, questions. concludes are now ready remarks. our for

Operator

The first Street Capital Lake is have from question Smith from we Markets. Mark

Mark Smith

hear that kind like want I year-to-date to of heard into monthly are Thank right? that running sorry, date, confirm down the you you -- I sounds stuff. to for Did insight XX%. guys quarter comps. just It I

Steven Miller

QX date, yes. Yes. to

Barry Emerson

That's right.

Mark Smith

in deceleration if was as this speak three-year we look much especially consumer can don't or a two-year in quantify you you know how this weather-related then think really at And pressures maybe, on on macro a of or the it, April to in basis, I Okay. versus markets? even maybe your on stack comps,

Steven Miller

Mark. Sure,

overriding markets I the a pent-up sun encouraged the battling our was demand our course March, -- Weather key we April a were discretionary at -- peak us, guess in environment. the in the saw markets the less that least goods factor in to markets macro the of sun in core we're we it over think carry. the our pressures when still we of clearly, and the I macro I headwind that the factor is, certainly, -- discretionary, to think, see the in in But was so shined. to California April, very probably is and the minds than

Mark Smith

And for inventory, feel are guys the at pretty that look of guys know I were you've totally you you period a with longer we comfortable do think, as And inventory holding said Okay. How may season it. you here? time. I you hold Barry, comfortable sell to you discount that have think until there to items, cetera, lost that any is about a or what due you weather, have, maybe items, was softball anything et over next baseball at

Steven Miller

is I not business. baseball is the No. product, business. not about product a fashion-driven good feel very a certainly, mean, core We our it

our with shape baseball. its we generally hold matter whatever in our the possibly. April. comeback of good is value in But that in would I mentioned sports factor We're we So business some baseball critical team did very pleased and in the hold we're got baseball.

marketplace. that prioritizing I parents are families this an think in that's and area

So of concerns no inventory. baseball terms our whatsoever in

Mark Smith

it Or enough the closure this may a that for a added up has sense just close? it against renew? store gone in then looks kind year. doesn't is sense maybe make just And guidance makes the to to that like of additional end one the there we an store outlook where be a lease down Okay. of that issue maybe to Is

Steven Miller

for evaluation lease store evaluate -- always ultimately what an think into make a to believe that We pick in the renewal with, the seeing stores correct openings, Mark, base. I continually of adjacent ultimately to weighed relocations base. we our and -- correct X, is to as up. reflect just it mean I we change for for going it's do, trying the really, to our of enough the store had closing believe was we've I decision and to closures, opportunity our the store -- felt just optimizing sales goal think X year No, from And we closures

Mark Smith

merchandise as as look lean up at call is G&A? you or Okay. like number. trim year-over-year. is look can on And you big question know don't down now can there we pretty well held slightly I G&A, it look you expenses. The running as you me you think kind you last But of that's we just it for picture, margins. G&A But as just as guide feel control this that any, you'll do there you fat, at in out Or right G&A on you're at

Barry Emerson

pressure significant labor expense is all is look carefully -- mean, the costs, are pulling. sheet, again, Mark, a pressure up we're and the after there's broad-based year very our we at It at I certainly gone look pull labor the environment. at no, But is of and labor, this hard in taking and really income expenses we're have but most looking can I that balance we really rates mean, year up, levers after year. statement our when throughout It's, generally, really. our

Certainly, we've doing had as work certainly our angle expense. best can at to and try -- some that's our manage labor hours continue there. that level, So store best we and largest success we to that we're and we our

So hours labor on at we'll to continue work stores.

cost. really on make it's generally dollars, that digital we and rationalize advertising of at those kind to getting just areas the try other our and but some print return Advertising, we're then the ads, at we certainly that looking in have still whether stage minor throughout. this sure but and of look continue game, And

again renegotiate down to doing And and costs things try basis drive with can us try and others we've a I contracts and and whatever to that. try working we're certain and to back try to mean and to manage people to higher expensive, on constantly had coming like consulting we pushing and more and

So over it really all manage our kind of rocks the to expenses. turn

Operator

stage. ahead, this Miller Ladies hand and back to at Please closing remarks. Mr. will gentlemen, questions go now there are no sir. further for I

Steven Miller

at for Big on with Goods thank the in interest and to you today's again We joining second conclusion Have operator, all our appreciate and call. after us forward quarter. the your X of look speaking Sporting you, a afternoon. great -- you Thank

Operator

joining you. then Thank and concludes conference Thank Ladies gentlemen, today's call. you that us. for

your You may lines. now disconnect

Big 5 Sporting Goods (BGFV) 2 May 232023 Q1 Earnings call transcript