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BGFV Big 5 Sporting Goods

Participants
Steve Miller President and CEO
Barry Emerson CFO
Mark Smith Lake Street Capital Partners
Call transcript
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Operator

Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods Fourth Quarter 2020 Earnings Results Conference Call. Today's call is being recorded. With us today are Mr. Steve Miller, President and Chief Executive Officer; Mr. Officer X Financial Goods. Chief Emerson, of Sporting Big Barry introductions, opening to Mr. At for and I'd to this time over remarks like conference turn the Miller. go sir. Please ahead

Steve Miller

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

Barry Emerson

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

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

Steve Miller

XXXX a Barry. X remarkable was you, Sporting Thank year for Goods. Big

the in expansion, we over growth, enabled margin exceptional reflected strengthen past which performance announced increases our achieved we meaningfully balance merchandise driven improved This an recent topline including in the results which XXXX our strong today. highlight sales quarter dividend is to year, Our fourth record earnings, cost in most us by sheet, year's and structure.

to a navigated environment stay unique convenient value assortment executing challenges, of stores certainly the in they broad a we active focusing Customers the ways offering face recognize of has the of which our and XXXX presented on set and the built goods of as sporting with of on While products evolving and a look convenience our offerings familiarity model, healthy for experience. our pandemic. shopping the by successfully

even with initially pleased more are prove be are the trends prospects excited recreational product driven of in and we We pandemic working XXXX will than in favor by These we fitness sustainable aspects trends continue many believe by and to pandemic even subsides. all other into as and disruption for the accomplished products the that Demand the the we future. are will our once now gyms perhaps and remain golf, many others. many believe other that camping the begins equipment. People to and further have home customers pursue reengaged with significant investments us have make will newly outdoor for activities in these made activities engaged such world in their as to in they normalize, recreational fishing activities to look even continue and strong. as We amongst equipment shop investments home hiking, tennis,

past Importantly, sporting in it and the our year, we forefront we when the customer goods. over of minds comes have very much we base to customers' are believe expanded

note should period. review our said Now, XXXX. of and calendar, sales XXXX quarter our to our our I'll reflect week same-store included the extra each comparable results fourth moment That I year quarter. due that take results to one a to year-over-year compared fourth fiscal full

quarter sales quarter Looking decrease fourth the X.X% the at quarter fourth our were fiscal fourth for fourth $XXX.X of for quarter, fiscal compared XXXX. the increased compared million a XX.X% net to $XXX.X Same-store million, sales to of XXXX. for

door-busting we October, our the create the Sales up and quarter. to in sales category, COVID mid-teens Our with did challenging we recreation. We the quarter, product were low a along in November, related which outdoor were during in for seek From a sales high solid comparatively tremendous products in in were given fitness, up by Friday continue home for environment. up single-digits double-digits. category throughout included standpoint, fourth momentum nearly the the XX%, crowd which not to home goods were to hard demand extraordinary Black increased driven a December see

demand sales impacted Additionally, decreased mid apparel decreased due firearms-related products. our to and goods high category reflect sports suspensions for and hard continued Same-store for ongoing of footwear apparel footwork teens. COVID. seasons strong high to the were sales category the in team single-digits in negatively Both by

then and single-digit to partially are decrease our was traffic in end quarter team in the a to offset COVID-XX by which of with sports price On the approximately due high average both choosing impact to Lower apparel transactions. sale, of by larger weather. sales the by the activity that when per driven with unfavorable customer purchase. product sale, increases less Additionally, per fact trips, we fewer increase weather in reflects impacted customers was fourth but favorable winter-related winter unit, shopping responded that realized XX% negatively along generally make a of number units positively average until the basis, year-over-year the

continue margins drivers points We basis to the XXX up margin quarter, shifts fourth fourth were also compared to the the XXX with favorable of product quarter mix over were the promotional the points merchandise gain. along reduction in year. increasing of basis A activity prior margins expand key and XXXX when

to fourth in performance, record with of margin quarter structure enable non-recurring Our $XX third including which income, was $X.XX an $X.XX us quarter or cost net million our successive for per strong achieve share, benefits. sales along improved and the

we that XXXX are now to momentum strong trends, current has the very continued. Turning pleased

at up year's with approximately have The level. all off Virtually continued first results to very that a is categories sales last strong perform high drove XXXX quarter of XX%. start to running a

Western recreate responded well in Clearly, winter for exceptionally to favorable weather opportunities sales Additionally, markets. products continue winter-related look our outdoors. customers to of have to

a That loss a category impact next which Our is inventory, team fresh that with school openings huge sales. spring and significant excited see programs. these QX sell-through a positive the should are position many very offsetting starting of categories strong to of winter is continued more season. to a to of our assortment which which said, sports of to markets, ease season led contributor should a restrictions has to startup nicely from winter our for lead various Partially baseball, of youth in we particularly sports, historically

to extremely their X the and the Big I provide our Before of balance this call more quarter and to time information over course the focus turn sheet, about Barry over XXXX. the want thankful how first of quarter, take to I am to for guidance, dedication express entire proud team I and

also contributions, record of environment. a their not but earnings With the we only posted we earnings company of in challenging year pandemic, able for to -- weather a very a the year were record

to Looking are our continue our deliver future enthusiastic to Barry? forward, improve very year. another to leverage and banner we about well-positioned and momentum cost product structure feel

Barry Emerson

Steve. Thanks

Let the discuss me moment calendar a the year-over-year differences fiscal take noted that to Steve onset. at

XXXX XXXX the XX Similarly, of our fourth quarter fiscal weeks XXXX and XX included fiscal included included fiscal the XX Our fourth for weeks. year, our included full quarter weeks, while of weeks. fiscal XXXX XX

quarter fiscal to increased basis. However, year. fourth year quarter XX% prior reported for comparisons on million to same-store for compared fourth $XX.X XX-week are quarter full and a sales a are comparable the fourth basis the on XXXX profit comparable for reported in the Gross the $XXX.X million XX-week the

favorable year the as profit warehousing gross reflects merchandise The basis prior Selling distribution lower of in Selling year, quarter. by expense representing the year Steve the due versus costs was profit expense advertising increase period, in quarter XX.X% of in decreased XXX the the offset XXX of versus reduced impact percentage higher fourth performance fourth also improvement impact higher -- year margin fiscal occupancy a last increased settlement, quarter fourth mentioned, net prior was an lower margins and of expense the the capitalized and by a to costs of primarily the to basis settlement, decrease based points combination in compensation XX.X% the due the of gross and XXX period volume. as store gross the XXXX administrative margin insurance the partially administrative insurance XXXX The and sales print $X.X largely fiscal expense which period. favorable to net accruals. partially basis and points percentage quarter for last reflects Our million versus inventory versus prior sales year. and sales margin degree, higher an XX.X%, in profit a lesser points offset of reductions that incentive compared to

quarter bottom-line, including a settlement income Now, $X.X per of to to million deferred of per for and a looking diluted tax asset $X.XX of diluted net XXXX the valuation a related at $X.XX in the diluted $X.XX $XX insurance a XXXX, share share, diluted related fourth income to to share. per included allowance. fiscal net diluted our benefit which in $X.XX share per or per or quarter of charges share of fiscal million This increase compares favorable reduction benefit of $X.XX fourth

reviewing briefly fiscal our results. XXXX full year Now,

As pandemic. significant results these the negative the the COVID-XX impact closures of full of a store periods include associated reminder, year year with during

prior sales Same-store million for full for year or store per fiscal $X.XX share. pandemic-related in compared billion the year. fiscal sales were net fiscal reported, for previously despite versus the $X.XX net As $XXX.X to XXXX of sales XXXX X.X% share, comparison XXXX million income which $XX.X per million of diluted $X.XX Net income XXXX $X.X closures. the diluted was or fiscal increased net

our compared at the the continues supply end our products, fiscal sheet, with year. many to in was product to reflects outpace This balance for the XX.X% prior combined inventory of sell-through that to categories. a inventory of Turning dynamic reduction down the merchandise performing summer of strong demand high XXXX

with supply many retailers, reported key closely managing obtain works the we chain. our are disruptions vendors to like through merchandise. team buying Our widely But other in

our during winter to-date, strong Steve have the had a quarter inventory. we product As sell-through first noted related of

As a on lower year-over-year result, trend levels continue a basis. to our inventory

capital spending, non-cash in excluding our XXXX. totaled million at Looking fiscal our $X.X acquisitions CapEx

of than for spent lower reduced spending year the expenditures maintain the capital was capital to traditionally, at flexibility our onset we Our because XXXX we the pandemic. what

For representing combination of and fiscal investments hardware the in of and store to equipment operating to XXXX, improve computer cash cost expect substantial level expansion, distribution margin sales growth, higher merchandise remodeling, year. generate allowed we primarily flow million CapEx million, of purchases. the range us for stores, and center in $XX new The software related $XX structure a

XXXX. compared $XX.X Our in operations positive from a cash for to XXXX positive a million flow fiscal $XXX.X was million

of Bank the consideration impacted and results fiscal XXX $XX.X representing February of of the Directors share our facility Board loan cash flexibility financial end $XXX.X by last cash improvement balance on of operating new our a an $X.XX The for net stock credit has of paid declared term, week, new dividend has a of as fiscal from million. a aggregate further entering will borrowings compares a committed Also, year, our borrowings cash recently five-year the availability year-over-year record March million $X.X in at enhanced company's under of ended with share, position of per sheet. to our up course, increase our credit to strength revolving outstanding the cash XXXX of with XXXX. positively $X.XX also zero million of balance million. In strong which This of million our America. be common XX% Our maturing We $XX.X stockholders balance and facility announced a XXth, basis. provides XXXX, on and have the in XXXX cash XXth, sheet, we agreement quarterly into business, a XXXX as flow and per March to of to of

a have our business of that invest and in the returning our provides to to momentum continuing of dividend, the business. we to increase financial history pleased flexibility We the are while shareholders capital long

moment a on guidance. spend our we'll Now,

to February. Steve a strong off start our As through discussed, sales quarter-to-date are

to claim in per a first $X.XX XXXX. expected elimination of of first XXXX the compares $X.XX per an for This increase to and related loss of and fiscal employment which fiscal share, quarter, approximately per includes approximately basic a same-store earnings XX.X% $X.XX, of diluted quarter same-store an share the benefits to the to range diluted $X.XX For sales realize insurance XX% share to a and in sales expect agreement. we liability of expect of non-operational decrease

less anticipated guidance compared period of promotional expansion quarter due to reflects continued margins first favorable the with a product activity. prior Our to along mix year merchandise shift,

a to for hours store versus We achieve year. to last leverage our reduce print prepared and That in questions. are expense ready in concludes expect Operator, first we reduction now quarter remarks. to operating also continue operating advertising due significant the any

Operator

At a this we'll Mark is session. you. question-and-answer time, Smith Lake Partners. And [Operator Street Instructions] Thank first be from with our Capital conducting question

Mark Smith

quarter month-to-month walk March versus strong through the kind about to we you right first guys. months. in year at Can look bit two moved little sequential ago. comps year very ask just year? are the a last Hi us through the a how of I obviously comps want the first last now this as quarter, Comps

Steve Miller

quarter? saying You're through the through the

Mark Smith

through the Yes last year. quarter

assume I March. Just that

pretty get comps. easy You

Steve Miller

we Yes, a year compares. weather had essentially last February. we January and difficult add in winter because Well, starts the

So, we were comping down--

Barry Emerson

Minus in X.X% even February in XX% minus January,

Steve Miller

they as And our roughly California back and of whatever In buying the to quarter in end closed slightly we responding potential week around March, closed pre-pandemic rebounded sort think phase, surge the March half so the hoarding those essential, half of February. a there were guess were over of toilet paper that I stores start when remainder in the the sort approximately March with of XXX of of saw year people around a wound closures the reopen we -- while of our half March stores number stores of Then our team stores a positively. then quarter, Then that closed I different business the last in wildly, coming. subsequent buying overnight would than the weather anticipation business was call our first designated store we normalized the -- up in are the into when pandemic period the a of grocery as -- of early were were not and and stores other the our I probably saw, was stores people we or -- then finally of entered second really XXth, than quarter. at of less able snowflake

parts of I quarter. period the were lots of the March to of the last as this there were was think, down parts we certainly we over So, year moving front of us year there's in a lot XX%. moving think the about last we and year, Bottom-line, balance for what's about

Barry Emerson

year. last XX.X down were we Yes,

Steve Miller

XX.X.

Mark Smith

of gave us on five open. you. new that in kind Okay. timing openings us Thank you I you give XXXX. think these? And on you stores potentially Perfect. Any guidance then some said, the guidance will can of

Barry Emerson

best well, second QX the be and Yes. quarter, this fourth, in be it at time think of could distributed No one could the the the be remainder goal. similarly, two the -- evenly through and third or we in our would

Mark Smith

comfort apparel And just these that confirm that inventory, you and your inventory, and cleared about little was on inventory you've us it it of the kind getting well walk bit today sounds kind And of Steve, really soft categories? about for you're then talked Okay. goods you through a some shipments pretty high like stores that driven? into then in if just how commentary, on but your through in of today and much winter you how of feel demand can

Steve Miller

Sure, sure.

there's And significant and largest winter, as component has an well but hard the footwear a winter those In categories. is as in terms of I product. had extraordinary our winter and our a the sell-through of the goods winter, product, apparel been mean, all of we've component of our sell-through component,

I So, we're we clean perhaps products as think course ever bodes from of next have well a as season, a when can for and, coming play. out, we -- bring as all into new that winter

it's the the supply of been inventory There's categories, think disruptions. certainly significant the of chain I chasing of hot in terms some In categories. some still other reported we're widely

from certainly We're getting shortages it's that categories, lots factory issues are significant number ideal. inventory, without vessel seeing issues whether through a deliveries of positive with of flow a the uneven generating raw So, later sales a we're products materials number -- rather than or of or getting obviously, port. we're issues, in its be inventory. couldn't been we the But issues

hard we're managing our So, conditions improve and months. over the and working with vendors will this optimistic that through certainly coming

Mark Smith

for one last the then And Okay. me.

any stimulus benefited given curious, that bump out look we and consumers? checks for stimulus your as checks you out, like packages got you at to round prior coming were much maybe Just feel of how in views another potential

Barry Emerson

difficult been, Honestly, many strong so quantify. have categories, to yet, sales how us to be in stimulus, first to It's to of as I out It's as positive weather helping related and certainly have can't of strong very it obviously certainly as got Mark, our but hard start that much but can't it the mean, parse somewhat. quarter. it's hurt, we hurt. is

Mark Smith

Okay, perfect. guys. you Thank

Steve Miller

Thank you, Mark.

Barry Emerson

Thanks Mark.

Operator

to Thank you. to the end Steve closing Ladies remarks. session. I and gentlemen, reached the call back we've for of over like question-and-answer the turn would Miller

Steve Miller

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