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Bear of the Day: Big Five Sporting Goods (BGFV)

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Big Five Sporting Goods (BGFV - Free Report) is a sporting goods retailer in the western US, operating 436 stores in 11 states. Their product lines include athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment.

Disappointing Results

Big 5 Sporting reported poor results for second-quarter 2018 and further, the management’s third-quarter guidance was also below the street consensus.

The retailer incurred loss of 1 cent per share against the Zacks Consensus Estimate of earnings of 11 cents and earnings of 13 cents per share in the prior-year quarter.

Net sales fell 1.5% to $240 million and were also below the Zacks Consensus Estimate of $250 million. Further, comps decreased 2.1% compared with an increase of 0.9% in the Q2 2017.

“While our sales comped positively for the first half of the quarter, sales softened significantly over the back half of the period, which led to results that were below our expectations,” said the CEO.

“Much of the softness resulted from weak sales of camping and water sports products, which were negatively impacted by unfavorable weather conditions in key markets around the high-volume selling periods of Memorial Day, Father’s Day and the start of summer.”

Falling Estimates

Analysts have lowered their estimates significantly after disappointing results and guidance. Zacks Consensus Estimates for the current and next fiscal year have plunged to $0.27 per share and $0.50 per share from $0.68 and $0.74 respectively, before the results.

The Bottom Line

Most retailers are going through a lot of pain thanks to the rising trend for online shopping, particularly on Amazon. While this retailer was doing quite well earlier last year as it seemed to have also benefited from liquidation of Sports Authority and Sport Chalet, their recent quarters reveal rising challenges.

The stock is now down about 20% year-to-date but a rebound doesn’t appear likely anytime soon given Zacks stock rank of #5 (Strong Sell) and industry in the bottom 24%.

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