Big 5 Sporting Goods (BGFV) is up sharply (+10%) this morning after the company reported strong Q4 earnings/guidance last night. In case you're not familiar, Big 5 is a sporting goods retailer primarily in the western US. BGFV is huge in California as it's based near Los Angeles and over half of its 432 stores are in California. Washington (11% of stores) and Arizona (9%) are its next biggest states.
Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5's product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, winter and summer recreation and roller sports.
Turning to the Q4 results, GAAP EPS came in at $0.35, at the high end of prior guidance of $0.34-0.35. Note, there was a $0.02 tax benefit related to share-based compensation. Revenues fell 3.2% YoY to $266.3 mln, which was a bit below market expectations. In terms of EPS guidance for Q1, BGFV expects EPS of $0.12-$0.18, which is well above market expectations.
Same store sales is always a key metric for retailers and Q4 came in at +3.1%, down from +6.8% in Q3 but still quite good in a tough holiday retail environment. BGFV had actually reported the +3.1% result in mid-January, so this was not new information. Looking ahead to Q1, BGFV expects same store comps in the positive mid-single digit range.
As previously reported, its Q4 results benefited from the competitive rationalization in the retail sporting goods sector. Specifically, BGFV is benefitting from Sports Authority and Sport Chalet closing many stores in BGFV's markets. This helped BGFV to increase customer transactions and average sale as well as improved merchandise margins.
For Q1, BGFV is guiding to same store comps up in the mid-single-digit range, largely driven by strong demand for winter products as a result of very favorable winter weather conditions throughout most of its Western markets. BGFV also continues to benefit from the competitive store closures, both from a sales and margin standpoint. BGFV feels it's well positioned with its merchandise assortment for the spring selling season.
In sum, many retailers have been struggling recently, just look at what happened to Target (TGT) yesterday (stock fell 12%). Online giants likes Amazon (AMZN) keep taking market share from brick-and-mortar retailers. And retailers are having difficulty figuring out how to respond. With that as context, investors are pleased with BGFV's Q4 results but especially the Q1 guidance with EPS coming in well above market expectations and Q1 same store comp guidance remaining quite robust. BGFV is clearly being helped by some competitive store closings.