Sporting-goods retailer Big 5 Sporting Goods Corp. produced fourth quarter earnings and sales that surpassed Wall Street’s estimates, but those numbers may not have been enough for investors. The firm’s share price had slid more than 17 percent in aftermarket trading at press time, on the heels of the earnings release.
Big 5 said its reported net income, for the fourth quarter ending Jan. 3, 2016, totaled $4.3 million, or 20 cents per diluted share, a 54 percent rise over the comparable quarter’s income of $2.8 million, or 13 cents per diluted share. Analysts had predicted diluted EPS of 19 cents.
Q4 net sales totaled $275 million, a 9.9 percent rise over the comparable quarter’s net sales of $250.3 million and a $2 million beat on market watchers’ forecast for net sales of $273.4 million.
“We are pleased to have achieved earnings per share slightly above the high end of our guidance range for the fourth quarter, driven by growth in average sale and expansion of merchandise and operating margins,” said Steven Miller, the company’s chairman, president and CEO, in a release. “As previously reported, we delivered positive same-store sales in a highly competitive and promotional retail environment as we benefited from a positive ‘Black Friday’ week and very strong sales over the weeks of Christmas and New Year’s as a result of favorable winter weather conditions in most of our Western markets.”
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Miller added that the firm ended fiscal 2015 with per-store product inventories down 2.7 percent from the prior year.
For the full year, net sales were $1.03 billion, compared to net sales of $977.9 million in the prior year. Same-store sales increased 1.3 percent in fiscal 2015 from the prior year. Net income for fiscal 2015 was $15.3 million, or 70 cents per diluted share, a 2.7 percent gain over 2014, when net income was $14.9 million, or 67 cents per diluted share.
One possible explanation for the company’s aftermarket stock slide could be the CEO’s announcement of potentially soft sales in Q1.
“For the first quarter to date, our sales are comping up in the low-single-digit range. While we experienced very strong sales in January on the strength of favorable winter weather conditions, sales over most of February were disappointing as winter business decelerated when weather conditions turned unseasonably warm in several of our major markets and we also experienced softness in non-winter product categories,” Miller said. “We believe that the recent softness in our sales is reflective of the challenging retail environment along with highly promotional competitive activity in our sector. Although these headwinds could persist, we feel our product assortments are well positioned as we transition to the spring selling season.”