A second quarter earnings warning from Hibbett Sports (HIBB 15.40, -0.05, -0.3%) last month put investors in sporting goods retailers on notice that industry conditions are challenging. A disappointing second quarter earnings report from Big 5 Sporting Goods (BGFV 9.07, -1.88, -17.1%) last night did the same, and like HIBB, shares of BGFV are down big in the wake of that disappointment.
For its fiscal second quarter, Big 5 reported net sales of $243.7 million, up 1.0% from last year, on a same-store sales increase of 0.8%. Its net sales came in below analysts' average expectation, as did its diluted earnings per share of $0.13.
The sporting goods retailer said it benefited in the period from market share gains stemming from the closure of certain major competitors last year, but that sales comparisons were negatively affected by the calendar shifts related to the Easter and Fourth of July holidays. Big 5 added, too, that it saw lower demand for certain hardgoods products categories, primarily related to firearms, camping, and water sports.
The latter was a concerning admission given that the second quarter should be a seasonally strong period for items like camping and water sports equipment. Apparently, that wasn't the case this time around, although Big 5 did say that it saw strength in its apparel and footwear categories, which posted same-store sales increases in the high single-digit range and low single-digit range, respectively.
That good news was overshadowed by the added acknowledgment that overall same-store sales momentum waned as the quarter progressed. Following low mid-single-digit increases in April and May, same-store sales in June decreased in the low single-digit range.
The third quarter outlook didn't help matters either. Big 5 expects same-store sales in the negative low single-digit range, pressured by a tough sales comparison to the prior-year period that is being compounded by what Big 5 describes as a "challenging retail environment." In the third quarter a year ago, Big 5 registered a 6.8% same-store sales increase.
Similarly, Big 5 dialed down its earnings expectations, saying it expects third quarter earnings per diluted share to be in the range of $0.22 to $0.32, compared to $0.38, including $0.03 per diluted share for store closing costs, in the third quarter of fiscal 2016. The third quarter guidance for fiscal 2017 reflects a small benefit, too, as a result of the calendar shift to the Fourth of July holiday.
The sporting goods retailer didn't mention any impact from online competition in its press release, but when combined with the warning from Hibbett Sports, it will be implied that smaller competitors in the industry -- and even larger ones like Dick's Sporting Goods (DKS 36.67, +0.01, +0.03%) -- are feeling the e-commerce heat from Amazon (AMZN 993.88, -2.31, -0.2%).
With today's loss, BGFV is down 48% since the start of the year.