The Big 5 Sporting Goods Corp.’s holiday sales period “is off to a solid start,” according to the company’s management, picking up on the momentum from merchandise margin gains achieved in the prior quarter.
And should the weather cooperate as it did last winter, prompting shoppers to rush in and buy snow gear, 2019 could be a good year for the El Segundo-based retailer.
But what does “good” mean for Big 5 these days? The company’s stock price has been teetering in the $2- to $3-per-share range since summer, a far cry from three years ago when it traded at just under $20.
That dip has prompted some investors to question the retailer’s viability in the saturated sporting goods sector where it competes with the likes of Walmart Inc. and Target Corp.
The company, founded in 1955, sells private-label and name-brand athletic shoes, apparel, and equipment for sports, fitness, camping, hunting and fishing, sourced from some 700 vendors.
It operates 433 stores, a 1.1-million-square-foot distribution center in Riverside, and a 12,000-square-foot distribution hub in Oregon to help mitigate fuel costs. Big 5 employs 8,700 full- and part-time workers, including the founder’s son, Steven Miller, who took over the company in 2002 and now serves as president and chief executive.
The retailer reported a $3.5 million loss on $987.6 million in revenue last year, but its last couple of quarters looked promising — Big 5 posted net income of $6.4 million on $266.2 million in sales for the third quarter of 2019, doubling earnings from the year-earlier period.
“A huge contributor to the strong earnings performance was the 94 basis-point expansion of our merchandise margins, which marked our strongest margin performance of any third quarter since we became a publicly traded company in 2002,” Miller said in a statement. “The increase reflects a shift in sales mix toward higher-margin products along with the successful impact of our efforts to optimize pricing and promotions.”
Big 5 sales for the nine-month period that ended Sept. 29 are up 1.6% to $752.4 million, while net income for the same period is up 80% to $8.1 million.
“The keys to the fourth quarter will be the holiday period and the start of the winter selling season across our markets,” Miller said. “We feel well positioned from a promotional standpoint for the holiday season and believe that our fresh seasonal inventory will resonate well with our customers when winter weather arrives.”
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