Big 5 Sporting Goods(US:BGFV)2022-05-04 01:19Financial Data and Key Metrics Changes - The company reported net sales of $242 million for Q1 2022, down from $272.8 million in Q1 2021, reflecting a decrease of 11.4% in same-store sales compared to the previous year, but flat compared to 2019 [8][15] - Gross profit for Q1 2022 was $85.9 million, with a gross profit margin of 35.5%, slightly down from 35.9% in Q1 2021, but significantly up from 30.9% in Q1 2019 [16] - Net income for Q1 2022 was $9.1 million or $0.41 per diluted share, compared to $21.5 million or $0.96 per diluted share in Q1 2021, but higher than $0.08 in Q1 2019 [18] Business Line Data and Key Metrics Changes - Merchandise margins for Q1 2022 were up 119 basis points compared to Q1 2021 and up 461 basis points compared to Q1 2019, indicating strong performance across product categories [9][15] - Selling and administrative expenses increased by $5.2 million year-over-year, primarily due to inflation impacting labor and benefits, with SG&A as a percentage of net sales rising to 31.1% in Q1 2022 from 25.7% in Q1 2021 [17] Market Data and Key Metrics Changes - The company faced headwinds in January and March due to unfavorable weather and the Omicron surge, with January sales down in the low 20% range and March down in low double digits compared to a strong March 2021 [10][11] - In Q2 2022 to date, same-store sales are running down in the mid-20% range compared to last year, but up approximately 10% compared to 2019 [12] Company Strategy and Development Direction - The company aims to capitalize on favorable product trends and expanded merchandise margins while maintaining a strong balance sheet with no debt, providing financial flexibility [6][7] - The company plans to open approximately 4 new stores and close about 2 stores in fiscal 2022, with capital expenditures expected to be between $14 million and $18 million [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to continue capitalizing on recent drivers of success, including favorable product trends and reduced advertising spend [13] - The company anticipates challenging year-over-year comparisons in Q2 2022 due to last year's record sales but expects higher net income than any pre-pandemic second quarter [22] Other Important Information - The company ended Q1 2022 with a cash balance of $62 million and zero borrowings under its credit facility, down from $97.4 million at the end of fiscal 2021 [21] - A quarterly cash dividend of $0.25 per share was declared by the Board of Directors [21] Q&A Session Summary Question: What is the expected tax rate for Q2? - The expected tax rate for Q2 is 26% [24] Question: Can you discuss margins and trends in soft goods versus hard goods? - Management noted strong margins across all product categories, with Q1 margins up significantly compared to previous years [25] Question: Are there any inventory concerns or stock shortages? - Management indicated that winter gear is the primary carryover, and while there are some supply chain issues, overall inventory levels are normalized and well-positioned for the summer season [27][28]