Big 5 Incurs Wider Y/Y Loss in Q2 Amid Weak Sales, Plans Buyout

Core Insights - Big 5 Sporting Goods Corporation reported a net loss of $1.11 per diluted share for Q2 fiscal 2025, wider than the loss of $0.46 per share in the same quarter last year [2] - Net sales decreased by 7.5% to $184.9 million from $199.8 million year-over-year, primarily due to a 6.1% decline in same-store sales [2] - The company incurred a total net loss of $24.5 million, compared to a net loss of $10 million in the prior year [3] Financial Performance - Gross profit fell to $52.2 million from $58.7 million, with gross margin contracting from 29.4% to 28.2% [2] - Adjusted EBITDA for the quarter was negative $14.7 million, worsening from negative $8.7 million a year earlier [3] - Operating loss widened to $23.2 million from $13.5 million in the prior year quarter [4] Cost and Expenses - Selling and administrative expenses remained flat at $75.4 million compared to $72.2 million, indicating insufficient cost controls [4] - Interest expense rose significantly to $1.3 million from $0.1 million in Q2 2024, contributing to the net loss [5] - The company reported $2.8 million in merger-related expenses and a $1.3 million non-cash impairment charge for underperforming stores [5] Balance Sheet and Inventory - Big 5 ended the quarter with $71.4 million in borrowings under its $150 million credit facility and $4.9 million in cash [6] - Merchandise inventories increased to $283.3 million from $260.3 million at the end of 2024 [6] Management Commentary - CEO Steven G. Miller acknowledged the disappointing results, attributing them to macroeconomic and geopolitical headwinds affecting consumer discretionary spending [7] - Management noted the absence of an income tax benefit this quarter, which had previously helped offset losses [8] Strategic Developments - Big 5 entered into a definitive merger agreement on June 30, 2025, with Worldwide Golf and Capitol Hill Group, resulting in an all-cash transaction for all outstanding shares [12] - The merger is expected to lead to Big 5's delisting from Nasdaq in the second half of 2025, transitioning the company into a private entity [12]