BGFV - Earnings call 3 2023 | Big 5 Sporting Goods Corporation

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Operator

Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods Third 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. Barry Emerson, Chief Financial Officer of Big 5 Sporting Goods. At this time, for opening remarks and introductions, I'd like to turn the conference over to Mr. Miller. sir. ahead, go Please

Steven Miller

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

Barry Emerson

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

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

Steven Miller

Thank you, Barry.

our results spending. expectations, quarter slightly consumer the came third on in mounting pressures Our reflecting below discretionary

inventory. of such merchandise the in that benefited of While of quarter. pressures on from student the Beginning July, gas we started we we continued the business managing prices, softened rising orders the aspects increasingly payments. In expenses margins, ongoing these relatively weather our back well persistent can even impacted believe to half to of rates face feel in so have interest the from in heightened over control, more and operating seasonal warm optimizing inflation, September, as resumption consumer focus and our controlling by as and the including challenges, sales began trending the August we loan

compared inventories across the sales team's each metrics, execution positive XXXX drive despite challenges. Net and was of our helped no face of major on quarter the dollars. generate down high headwinds, focused quarter results apparel QX, in an pleased $XXX.X margins the merchandise ticket up hardgoods million footwear, ability optimize our sales profit and our while a improvements remain down same-store ongoing X.X% the to across bottom-line for the key were align single to with of which third $XXX.X efforts and material of prioritizing merchandise sales our end slightly. versus in At with prior XXXX, gross the environment. There the categories, reflecting to differences average we high line single-digit inventory sales. digits, of with the in We Transactions our decrease each quarter managing sales to are inventory down were was year, officially challenging X% range. In the were reflecting million these top our significant for in third

sake which we result, clearing helpful to merchandise margins. has for be a our been to of the promotional have As needed merchandise, overly not

point XX-basis versus year increase in period. a the For generated merchandise the quarter, we margins prior

managing key within expense, operating wage shopping our tailoring store more our is that we despite being and be and this store patterns. we targeted managing pleased Store focus. usage year-over-year persists, to significant control able expense inflation of by As labor in labor to were costs hours area key largest reduce to operating operating are a local continues inflation, diligently

throughout diligently mitigate management marketing reduced organization ever, to spend. Additionally, been our we our of strengths expense significantly benefit inflationary on managing are from Expense our always one pressures. than to continues and now has widespread structure expenses more focused

sales are consumer fourth quarter XX%. to and challenging into persisted down has Turning The October environment current trends. our the approximately sales running

quarter, spending. anticipate shopping the that carefully season shoppers. their season of their will we the will winter and said, compelling wallets discretionary the throughout our be balance holiday watching with to should holiday With that that have and customers resonate being the for assortment continue we squeezed feel Over we product a believe

attractive value-oriented Our points these in price times. should be particularly

turning Barry, like the our Before to on today. that reduction briefly to comment the in call over dividend announced we I'd

our ample While adjusted given quarter with flexibility sheet for have we we of maintained the our macroeconomic the with our we the improved a third we dividend course reduction, healthy the to meaningful the are financial provide duration have our to facing. Even cash headwinds dividend of proactively that debt, continues customers balance the uncertainty position over no that shareholders. ensure believe a return have of our

a As over through maintaining we manage to outlook. additional it Barry now details environment, our performance sheet. I'll quarter third healthy committed we turn economic and quarter Barry? remain to regarding to balance fourth this provide challenging

Barry Emerson

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

gross legal year-over-year of compared inventory basis extinguishment Steve liabilities settlement. net XXXX real the benefit-related reflected and the our sales. Merchandise partially prior XX.X% and with distribution as by XXXX for motional administrative profit to third primarily expense of estate The XX of offset a margin The labor related expense, in by and third lawsuit the that pre-pandemic the fiscal quarter last and occupancy Our expense XXXX of period to supported partially evolution for including selling basis costs expense, higher the store hundred XX.X% third quarter quarter year-over-year several quarter levels, decreased and certain strategy. Overall continue million margin capitalized slight the margins points in percentage versus margins higher reflected and associated offset fiscal noted, third merchandise by into primarily lower the pricing the the of points year run employee profit $X.X decreased change ahead increased versus year. prior in in improvement recorded gross year. fiscal of increase of

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

Now period share. totaled million net versus year. million weeks diluted in the to XX This XXXX, XXXX $XX X first EBITDA or EBITDA in looking in Adjusted compared This the X.X% net year. sales per the fiscal were Same-store adjusted of EBITDA the was third X of or our of million first fiscal of income third per first of XX XXXX. for last share. quarter fiscal to full share $X.XX Net period XXXX our year. of for Net or sales $X.X fiscal compared income to or results, in $X.XX Adjusted XXXX bottom $X.X XXXX in of decreased sales weeks diluted last net million $X.X net per million to $X.XX comparable the compares reviewing period, was quarter of last compares period of at diluted quarter per of line. months first for $XX.X compared EBITDA was of last $XX.X share. the third $XX the the million fiscal to income same year-to-date XXXX $X.XX diluted million $XXX.X XXXX for million the million, third the quarter year. Briefly adjusted million $XXX.X the income for months comparable $X.X

to Turning balance sheet. the

levels computer and third position our This equipment, investments the acquisitions, remodeling, fiscal excluding center feel fiscal spending, totaled into X% computer good and Our decreased leasehold and considering end distribution store-related through capital software soft quarter our our the XXXX, of inventory of XXXX move as merchandise $X.X representing the we for our X environment, fall year-over-year. reflects holiday in inventory hardware the at season. Reviewing about reduction manage efforts of in CapEx million we the purchases. months sales noncash first inventory primarily improvements to

expect the the new at of to fiscal stores XXX $XX in million million anticipate the of opening in stores, X $X For and relocation, CapEx full and we stores XXXX year, operation X X the year. closing end resulting range including in now

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

Our third of consistent quarter. fiscal sheet the a of facility credit of $XX.X our cash balance XXXX under at the quarter the with end borrowings cash be X the end third million largely our quarter to end and currently of of balance at had expect remains balance the fourth the the we healthy. cash at We and balance

an amid per maintain challenged an to decision Steve dividend As quarter capital a reflects $X.XXX from to the in quarter reduce $X.XX per to mentioned, backdrop. macroeconomic effort financial our prudent healthy condition approach the management to increasingly

Now on guidance. I'll spend moment a

compared sales fourth fourth quarter, For decrease the high to to in double-digit same-store fiscal the the range fiscal single-digit quarter. to XXXX XXXX expect we low

Our guidance balance which an share share per to same-store earnings consumer continue expected Fiscal over per the headwinds the reflects that range expectation of will the net fourth to of $X.XX. of loss macroeconomic spending fourth discretionary compares $X.XX quarter diluted is XXXX impact XXXX quarter sales quarter. in to $X.XX, fiscal

as of briefly results volume our first of earnings quarter lower to be sales up for as cause from Finally, prepared quarter dynamic until the fourth promotional quarter. That to well now combination on that expenses I'd earnings. a the higher touch the our and concludes than activity factors fourth This our seasonality Thanksgiving like half Operator, lower sales questions. fourth third heightened seasonally labor ramp typically in for we are advertising ready holiday after any and increased hours during quarter when remarks.

Operator

first from with Street [Operator Lake of Instructions] question line Our Smith Mark Capital. the comes

Mark Smith

me. for question First

for quarter, potential on Just and you in as QX? look at promotional environment we are your what -- expectations guys what's discounting here fourth

Steven Miller

to shape. -- are inventories going we're our in great Mark,

will we we the I we we're overly reasonably that and to So going step watch take. consistent to feel and the react compelled sense if correct year, that accordingly to would be last don't marketplace the expect the promotional. that's with

Mark Smith

kind of then were range expecting in? comp basis. or additional you segments on a like regions QX during And segments, look single-digit weakness said sounded that down a that falloff kind in especially any or QX into that of maybe of Any all high your you're as different Okay. you all

Steven Miller

fourth quarter any our that various the or there's categories. product of lot we're most positive always always category weather that revolves favorable in and A weather know aspect to the our material influence anticipating winter can any apparel around category. falloff The that is how weakness. don't I

obviously be So carefully. and we'll watching for hoping that weather

Mark Smith

And Okay. me. then question the for last

As the of to dividend sheet. maintain kind a we about, here healthy just balance think you cut

I pull some going back expect even As guided on in but this new next maybe store or growth? towards we units we capital you know haven't and relocations growth expenditures new look year, at any should

Steven Miller

material change couple we took a anticipate over of really wouldn't years. year from the the No. last direction I Again, that this

pipeline, over stores that have We this that several in have have we the into next. few stores rolled year anticipated honestly, opened would a

rationalizing we'll the closures opening some count So store with stores as be well. and some

Operator

no I'd queue. back are like Miller for in to the Steve further remarks. There call questions to closing the hand

Steven Miller

for thank on We operator, look X to quarter. in you fourth you, and appreciate Thank you right. All of care. Take forward call. again all conclusion interest Goods and your speaking joining with to after Big the our us Sporting today's -- you

Operator

Ladies you for does conclude Thank today's this your teleconference. and gentlemen, participation.

disconnect may wonderful a lines and day. time, have your this You at

Big 5 Sporting Goods (BGFV) 31 Oct 232023 Q3 Earnings call transcript