Big 5 Sporting Goods Corporation (BGFV - Free Report) stock is gaining momentum backed by its unique merchandising strategy, growth initiatives, impressive shareholder-friendly moves and performances.
A glance at the company’s price performance shows that it has surged 38% in the past three months, substantially outperforming the industry’s increase of 7.3%. Let’s delve deep to know about the factors contributing to this robust performance.
Big 5 Sporting’s unique strategy of offering exclusive branded merchandise sourced from leading manufacturers provides it with a competitive edge over the company’s rivals. Further, Big 5 Sporting leverages its strong vendor relationships to source overstock and closeout merchandise at substantial discounts. The company’s merchandise strategy also helped it retain a solid inventory position. This strategy boosts the company’s sales and overall profitability.
Big 5 Sporting remains well on track to widen its footprint besides introducing technological advancements. It leverages an extensive network of stores to effectively penetrate into its target markets, which helps the company to generate healthy sales and expand market share. In 2018, Big 5 Sporting expects to open nearly eight stores and close three. Additionally, it intends to open two stores while simultaneously shutting down two, including relocation, in the second quarter of 2018. We believe that these strategic moves will place it well for future growth.
Also, Big 5 Sporting regularly enhances shareholder returns in the form of dividends and share buybacks. In the first quarter of 2018, the company repurchased 75,748 shares for a total of $0.4 million. As of Apr 1, 2018, it had $15.3 million shares outstanding under its $25 million share repurchase program. Management also announced a quarterly cash dividend of 15 cents per share, payable on Jun 15.
Quarterly Performance & Outlook
Though Big 5 Sporting incurred loss per share in first-quarter 2018, it was narrower than the Zacks Consensus Estimate and the management’s loss per share guided range. Also, quarterly loss improved sequentially. This marked the company’s second straight bottom-line beat. For the second quarter, management expects to report earnings in the band of 4-12 cents, reflecting an improvement from loss per share incurred in the last two quarters. The Zacks Consensus Estimate for the impending quarter is pegged at 11 cents.
Further, management notes that the improving sales trend witnessed from January to March along with enhanced product margins continued in the second quarter as well. Also, Big 5 Sporting expects to gain from the key spring selling season in the same period. Consequently, comparable store sales (comps) are now projected to be flat to up low-single digits.
Despite these tailwinds, Big 5 Sporting is witnessing softness across its hard goods category for a while now. This has also impacted the company’s revenues, which dipped 7.3% year over year in the last reported quarter. Nevertheless, we believe that this Zacks Rank #1 (Strong Buy) company will be able to offset this hurdle with its robust strategic actions and continue to remain as investors’ favorite.
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