QUOTE AND NEWS
SeekingAlpha  Jul 30  Comment 
Big 5 Sporting Goods Corporation (NASDAQ:BGFV) Q2 2014 Earnings Conference Call July 29, 2014, 05:00 PM ET Executives Steven Miller - Chairman, President and Chief Executive Officer Barry Emerson - Senior Vice President, Chief...
SeekingAlpha  Jul 29  Comment 
The following audio is from a conference call that will begin on July 29, 2014 at 17:00 PM ET. The audio will stream live while the call is active, and can be replayed upon its completion. Listen now Complete Story »
TheStreet.com  Jul 29  Comment 
NEW YORK (TheStreet) -- Big 5 Sporting Goods Corp. reported a decline in net income for the 2014 second quarter to $2.5 million, or 11 cents per diluted share, compared to $6.1 million, or 28 cents per diluted share for the 2013 second...
SeekingAlpha  May 21  Comment 
By Gordon Tam: The share price of Big 5 Sporting Goods (BGFV) has declined to $11.34. Investors might wonder whether BGFV is a bargain now since it trades at a 9x forward P/E and 5.26x EV/EBITDA. Short term traders might expect a dead cat bounce...
TheStreet.com  May 12  Comment 
NEW YORK (TheStreet) -- Shares of Big 5 Sporting Goods Corp. are up 2.94% to $12.59 "The fortunes of Big 5 Sporting Goods...retailer with 425 stores... waned in the past year, but could turn positive soon," wrote Barron's over the weekend. "At...
Benzinga  May 12  Comment 
In a report published Monday, Credit Suisse analyst Seth Sigman reiterated an Underperform rating on Big 5 Sporting Goods (NASDAQ: BGFV), but lowered the price target from $14.00 to $11.00. In the report, Credit Suisse noted, “We are lowering...
SeekingAlpha  May 3  Comment 
By Signal To Noise: Big 5 Sporting Goods (BGFV) operates a chain of 425 retail stores, most of them located in the Western US market. The stock corrected this following an earnings miss, providing an opportunity to buy a sporting goods retailer...
SeekingAlpha  Apr 30  Comment 
Inphi Corporation (IPHI) Q1 2014 Results Earnings Conference Call April 29, 2014, 02:30 AM ET Executives Steven G. Miller - Chairman, President and Chief Executive Officer Barry D. Emerson, Chief Financial Officer Analysts ...
SeekingAlpha  Feb 26  Comment 
Big 5 Sporting Goods Corporation (BGFV) Q4 2013 Earnings Conference Call February 25, 2014, 05:00 PM ET Executives Steven Miller - Chairman, President and Chief Executive Officer Barry Emerson - Senior Vice President, Chief Financial...
StreetInsider.com  Feb 25  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Big+5+Sporting+Goods+Corp.+%28BGFV%29+Tops+Q4+EPS+by+1c/9214559.html for the full story.




 

Big 5 Sporting Goods Corporation (NASDAQ: BGFV) sells sporting goods through its network of 363 stores in 11 states in the western U.S.A. On average, each store covers approximately 11,000 square feet, which is smaller than other superstores (such as Dick's Sporting Goods that average over 35,000 square feet). This lets Big Five open stores in relatively small metropolitan and suburban areas, especially important in the sparsely populated western states that are Big 5's focus.

Big 5 carries the standard sporting goods brand names (Nike, Adidas, Under Armour), but it earns the highest margins from branded sporting goods made exclusively for its stores and sold at a discount, and by selling private label, closeout, and discontinued products.[1]

Big 5 tries to gain an competitive advantage over Dick's Sporting Goods (DKS) and other competitors by strategically advertising its exclusive and discounted products in newspapers and by building vendor relationships that give Big 5 consistent flow of discontinued and closeout products. Although it focuses on providing cheap options for its customers, Big 5 depends on discretionary spending to build its sales - its products are not necessities. As such, the company is exposed to a hurting U.S. economy, the credit crunch, and seasonal fluctuations. In addition, a declining trend in newspaper readership impedes Big 5's sales and undermines its traditional method of advertising.

Business Overview

Big 5 Sporting Goods sells soft goods (athletic and sport apparel/footwear) and hard goods (durable items such as fishing rods, golf clubs, snowboarding equipment, etc.) through its physical stores and its website, big5sportinggoods.com. With an average store space of 11,000 square feet, Big 5 is smaller than superstores that typically average over 35,000 square feet, and consequently has more flexibility regarding new store locations. For example, the company can target small metropolitan areas with as few as 50,000 people--something its larger competitors cannot do.[2]

Key Trends and Forces

New store openings drive Big 5's revenue

Since Big 5's stores are smaller than its competitors, new store openings require relatively low investment and typically a short amount of time before generating profits. A newly opened Big 5 store typically garners store-level return on investment of about 35% and sales of $1.9 million in its first full fiscal year. [3]

Big 5's business has steadily expanded, by an average of 19 stores annually for the past five years. [4]

Newspaper advertisements drive BGFV's sales and strengthens its brand awareness, but newspapers have declining audiences

The company estimates that half its customers come from four-page sunday newspaper inserts and mailers that reach 20 million people every week.[5] Big 5 relies on professional in-house advertising, rather than an outside advertising agency, to reach its customers.

Declining newspaper circulation hurts Big 5's brand awareness and hinders its sales. Additionally, any change in the cost of print advertising impacts Big 5's operating costs

The declining economy is hurting the disposable income of BGFV's core customers

As a retailer of non-necessary goods, BGFV is one of the first to get hit by a declining economy because consumers lack the disposable income to purchase its products as before (department stores like Target and Wal-Mart, who offer goods such as food and household necessities, are not as threatened in such a situation). Not only does the poor economy force BGFV's core customers to spend more money for gasoline and heating costs, but the subprime mortgage fallout and resulting credit crunch contracts their consumer spending even further, weakening Big 5's sales.[6]

Strong vendor relationships boost Big 5's earnings

Big 5's relationships with vendors - which give it exclusive branded apparel, closeout and discontinued lines - are the source of Big 5's higher margin percentage. Vendor-related products represent approximately 45% of Big 5's sales.[7]

Seasonal fluctuations impact Big 5's sales

Seasonality affects Big 5 in two ways:

  • As a retailer, Big 5 generally has a boost in sales during the fourth fiscal quarter, which coincides with the holiday months.[8]
  • The fourth fiscal quarter includes the winter months, which is the peak season for cold-weather sports such as snowboarding and skiing.

Competition

Sporting goods retail is quite fragmented. The top six sporting goods retailers comprise only 20.6% of the $53.7 billion market. The company directly or indirectly competes with:

Presently, there are only four major, publicly traded sporting goods retailers: Dick's Sporting Goods, Hibbett Sports, Sport Chalet, and Big 5. Big 5's main competitors in the sporting goods market are:

  • Dick's Sporting Goods: Dick's Sporting Goods is the nation's top sporting goods retailer and operates 340 stores in 36 states. The company sells a wide range of sporting equipment and apparel, and also runs Golf Galaxy and Chick's Sporting Goods chains.[10]
  • The Sports Authority: The Sports Authority boasts over 400 stores in 45 states and offers a large spectrum of athletic equipment and gear.[11]
  • Academy Sports & Outdoors: Academy operates just under 100 stores throughout the South and Southwest regions of the U.S. The company offers apparel and equipment for outdoor activities such as camping, hunting, fishing and boating.[12]
  • Recreational Equipment, Inc. (REI): REI operates about 90 stores and, like Big 5, runs mostly in the Western half of the U.S. The company sells mostly apparel and equipment used for hiking, climbing, kayaking and other outdoor activities.[13]
  • Hibbett Sports: Hibbett Sports operates over 600 small-format stores, usually situated in strip malls and based primarily in the Southeast region of the US. The company sells a variety of sporting equipment and apparel.[14]



Notes

  1. BGFV 2007 10k, Item 6:Selected Financial Data, pg. 19
  2. BGFV 2006 10K, Item 1:Business, pg. 4-5
  3. Nollenberger Initiate 07/31/07:BGFV
  4. BGFV 2007 10k, Item 1:Business, pg. 3
  5. BGFV 2007 10K, Item 1:Business, pg. 5
  6. Big 5 Sporting Goods Corporation Announces Fiscal 2008 Fourth Quarter and Full-Year Results
  7. BGFV 2007 10K
  8. BGFV 2006 10K, Item 1A:Risk Factors, pg. 13
  9. BGFV 2006 10k, Item 1A:Risk Factors, pg. 13
  10. Dick's Sporting Goods (DKS)
  11. The Sports Authority:About us
  12. Dick's Sporting Goods (DKS)
  13. Dick's Sporting Goods (DKS)
  14. Dick's Sporting Goods (DKS)
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