Big 5 Sporting Goods(BGFV) - 2026 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, providing a detailed financial overview Unaudited Condensed Consolidated Balance Sheets Total assets increased, liabilities rose due to debt, and stockholders' equity decreased | Metric | June 29, 2025 (in thousands) | December 29, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Total assets | $617,188 | $609,366 | | Total liabilities | $482,298 | $433,755 | | Total stockholders' equity | $134,890 | $175,611 | | Long-term debt | $71,414 | $13,756 | | Merchandise inventories, net | $283,271 | $260,307 | Unaudited Condensed Consolidated Statements of Operations Net losses increased for both periods, driven by decreased sales, lower gross profit, and widened operating losses | Metric (in thousands) | 13 Weeks Ended June 29, 2025 | 13 Weeks Ended June 30, 2024 | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $184,894 | $199,824 | $360,541 | $393,251 | | Gross profit | $52,165 | $58,724 | $106,493 | $119,122 | | Operating loss | $(23,202) | $(13,503) | $(39,639) | $(24,484) | | Net loss | $(24,540) | $(10,004) | $(41,790) | $(18,290) | | Basic loss per share | $(1.11) | $(0.46) | $(1.89) | $(0.84) | Unaudited Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased significantly due to a net loss, with no cash dividends paid in the current period | Metric (in thousands) | June 29, 2025 | December 29, 2024 | | :-------------------- | :------------ | :---------------- | | Total Stockholders' Equity | $134,890 | $175,611 | | Retained Earnings | $56,609 | $98,384 | Changes for 26 Weeks Ended June 29, 2025: * Net loss: $(41,790) thousand * Dividends on common stock: $15 thousand (reflecting annual payments to employees for nonvested share awards) * Share-based compensation: $1,145 thousand - Dividends on common stock were $0.00 per share for the 13 and 26 weeks ended June 29, 2025, compared to $0.05 and $0.10 per share for the comparable periods in 2024, respectively[13] Unaudited Condensed Consolidated Statements of Cash Flows Operating cash flows significantly decreased to negative $50.08 million, offset by increased financing activities | Cash Flow Activity (in thousands) | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(50,080) | $(2,927) | | Net cash used in investing activities | $(2,250) | $(6,266) | | Net cash provided by financing activities | $51,768 | $4,930 | | Net decrease in cash | $(562) | $(4,263) | | Cash at end of period | $4,856 | $4,938 | - Operating cash flow decreased significantly due to increased funding of merchandise inventory and a higher net loss year over year[15] - Financing cash flows increased primarily due to $120.15 million in borrowings under the revolving credit facility in 2025, compared to none in 2024[15] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures and explanations for the unaudited condensed consolidated financial statements (1) Description of Business Big 5 Sporting Goods operates 414 stores and an e-commerce platform in the western U.S., offering a full line of sporting goods - The Company operates 414 stores and an e-commerce platform as of June 29, 2025[17] - Product mix includes athletic shoes, apparel, accessories, and outdoor/athletic equipment for various sports and recreation[17] - The Company operates as one reportable segment[17] (2) Proposed Merger The Company entered a merger agreement to be acquired by Worldwide Sports Group Holdings LLC for $1.45 per share in cash - The Company entered into a Merger Agreement on June 29, 2025, to be acquired by Worldwide Sports Group Holdings LLC[20] - Each share of common stock will be converted into the right to receive $1.45 per share in cash[20] - The Merger is expected to close in the second half of 2025, subject to customary closing conditions, including stockholder approval[20] - Termination fees: Company pays Parent $2.0 million in certain circumstances; Parent pays Company $3.0 million in certain specified circumstances[20] (3) Summary of Significant Accounting Policies This section outlines key accounting policies, including consolidation, reporting periods, and valuation methods Consolidation The financial statements consolidate Big 5 Sporting Goods Corporation and its 100%-owned subsidiaries - The Interim Financial Statements include the accounts of Big 5 Sporting Goods Corporation, Big 5 Corp., and Big 5 Services Corp[21] Reporting Period The Company uses a 52-53 week fiscal year ending on the Sunday nearest December 31, with interim periods of 13 weeks - Fiscal year 2025 is 52 weeks, ending December 28, 2025[22] - Fiscal year 2024 was 52 weeks, ending December 29, 2024[22] - Interim periods in fiscal 2025 and 2024 are each comprised of 13 weeks[22] Recently Issued Accounting Updates The Company is evaluating the impact of recent FASB ASUs, with ASU 2023-06 not expected to have a material impact - ASU No. 2023-06 (Disclosure Improvements) is not expected to have a material impact[24] - ASU No. 2023-09 (Improvements to Income Tax Disclosures) is effective for public entities for annual periods beginning after December 15, 2024; the Company is evaluating its future impact[25] - ASU No. 2024-03 (Disaggregation of Income Statement Expenses) is effective for public entities for annual periods beginning after December 15, 2026; the Company is evaluating its future impact[26] General Concentration of Risk The Company faces supply chain concentration risk, with 39.3% of purchases from its top 20 suppliers and significant foreign manufacturing - The Company's 20 largest suppliers accounted for 39.3% of total purchases in fiscal 2024, with one vendor representing 5.1%[28] - A substantial amount of inventory is manufactured abroad, particularly in China, exposing the Company to tariff risks[29] - Risks include increased tariffs, shipping port disruptions (capacity constraints, labor strikes), and geopolitical conflicts (Ukraine, Middle East) impacting supply chain and costs[29] Use of Estimates