Soft firearm and ammo sales affect Big 5’s Q2
Big 5 Sporting Goods’ second-quarter results were affected by a continued reduction in demand for firearms and ammunition. The company also pointed to general softness in the overall consumer environment, adding that the calendar shift of the Easter holiday had a small but unfavorable impact on sales.
The company reported net sales of $231.2 million, down 3.8% from $239.9 million for the second quarter of fiscal 2013. Same-store sales declined 4.9% for the quarter. For the second quarter last year, the company posted a same-store sales increase of 4.4% compared to the second quarter of fiscal 2012.
Gross profit for the quarter was $75.6 million, compared to $79.7 million in the second quarter of the prior year. The company's gross profit margin was 32.7% in the quarter versus 33.2% in the second quarter of the prior year, reflecting a decrease in merchandise margins of 19 basis points and an increase in store occupancy costs resulting primarily from the opening of new stores. Merchandise margins in the second quarter last year increased by 34 basis points versus the second quarter of fiscal 2012.
Net income for the quarter was $2.5 million, or $0.11 per diluted share, including a non-cash impairment charge of $0.02 per diluted share and expenses associated with the development of the company's e-commerce platform of $0.01 per diluted share, compared to net income of $6.1 million, or $0.28 per diluted share, for the second quarter of fiscal 2013.
"While disappointed with the results,” chairman, president and CEO Steven G. Miller said, “we are encouraged that year-over-year sales comparisons trended more favorably over the last several weeks of the second quarter and into the third quarter to date. Although third quarter sales comparisons are currently running down in the low single-digit range and continue to be impacted by the reduction in demand for firearm-related products, we believe that our efforts to improve our merchandise and promotional strategies should position us to produce positive same store sales over the balance of the quarter, particularly given that for much of the peak summer selling season in August last year, our sales were impacted by generally unfavorable summer weather conditions in many of our markets."
Looking ahead to the third quarter, the company expects same-store sales comparisons in the slightly negative to low positive single-digit range and earnings per diluted share in the range of $0.24 to $0.32. This guidance reflects the anticipated continued softness in demand for firearms, ammunition and related products and the challenging consumer environment.
During the quarter, the company opened two stores, ending the quarter with 427 stores in operation. During the third quarter, the company has closed two stores as part of relocations and anticipates opening four new stores. For the full fiscal year, the company currently anticipates opening approximately 12 net new stores.