Big 5 Sporting Goods Corporation (BGFV) has reported a 33.56 percent jump in profit for the quarter ended Oct. 02, 2016. The company has earned $8.19 million, or $0.38 a share in the quarter, compared with $6.13 million, or $0.28 a share for the same period last year.
Revenue during the quarter grew 3.29 percent to $279.02 million from $270.13 million in the previous year period. Gross margin for the quarter expanded 69 basis points over the previous year period to 32.22 percent. Total expenses were 95.13 percent of quarterly revenues, down from 96.19 percent for the same period last year. This has led to an improvement of 106 basis points in operating margin to 4.87 percent.
Operating income for the quarter was $13.59 million, compared with $10.30 million in the previous year period.
"We are very pleased to deliver an exceptionally strong third quarter performance, with earnings meaningfully above the prior year as well as the high end of our guidance range," said Steven G. Miller, the Company's chairman, president and chief executive officer. "Results were driven by strong sales growth, including increases in both customer transactions and average sale, as well as improved merchandise margins, and clearly reflected the benefit from the closure of over 200 Sports Authority and Sport Chalet store locations in our markets. Additionally, our strong cash flow enabled us to reduce borrowings under our credit facility in the third quarter by $42.4 million, or 65%, from the third quarter of the prior year, while continuing to return cash to our shareholders through share repurchases and our dividend. The 20% increase in our dividend that we announced today, which is our second dividend increase this year and represents a 50% increase from the beginning of 2016, reflects the health of our financial condition and our confidence in our ability to continue to perform through economic and competitive cycles."
For the fourth-quarter 2016, The company forecasts diluted earnings per share to be in the range of $0.25 to $0.35.
Working capital declines
Big 5 Sporting Goods Corporation has witnessed a decline in the working capital over the last year. It stood at $143.96 million as at Oct. 02, 2016, down 24.04 percent or $45.55 million from $189.52 million on Sep. 27, 2015. Current ratio was at 1.85 as on Oct. 02, 2016, down from 2.18 on Sep. 27, 2015. Cash conversion cycle (CCC) has decreased to 20 days for the quarter from 113 days for the last year period. Days sales outstanding were almost stable at 3 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 70 days for the quarter compared with 161 days for the previous year period. At the same time, days payable outstanding went up to 53 days for the quarter from 51 for the same period last year.
Debt comes down significantly
Big 5 Sporting Goods Corporation has recorded a decline in total debt over the last one year. It stood at $26.57 million as on Oct. 02, 2016, down 61.70 percent or $42.80 million from $69.37 million on Sep. 27, 2015. Total debt was 6.30 percent of total assets as on Oct. 02, 2016, compared with 15.28 percent on Sep. 27, 2015. Debt to equity ratio was at 0.13 as on Oct. 02, 2016, down from 0.35 as on Sep. 27, 2015. Interest coverage ratio improved to 42.08 for the quarter from 23.50 for the same period last year.
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