Big 5 Sporting Goods Q2 Fiscal 2025: Revenue Down 7.4%, EPS -$1.11, Merger Proposal Announced

Big 5 Sporting Goods Corp reported Q2 FY25 net sales of $184.9 million, a 6.1% decline from the same period last year, and a net loss of $24.5 million, or $1.11 per basic share. The company attributed the decline in sales to the ongoing challenges in the macroeconomic and geopolitical environment impacting consumer discretionary spending. Despite this, Big 5 maintains its merchandise inventories consistent with the prior year period, a positive indicator of inventory management. The company is progressing with a definitive merger agreement, expected to close in the second half of 2025.

Big 5 Sporting Goods Corp (NASDAQ: BGFV) reported its second quarter fiscal year 2025 (Q2 FY25) financial results, reflecting a challenging macroeconomic and geopolitical environment. The company's net sales declined to $184.9 million, representing a 7.5% decrease compared to the same period last year [1]. This drop was driven by a 6.1% decline in same-store sales, which exceeded the low- to mid-single digit decrease that management had anticipated.

The company's net loss for the quarter widened to $24.5 million, or $1.11 per basic share, compared to a net loss of $10.0 million in the same period last year. This deterioration was primarily attributed to elevated costs, a heavier mix of promotions, and higher fixed expenses. Gross profit (GAAP) fell by 11.2% to $52.2 million, and the gross margin narrowed from 29.4% to 28.2%.

Adjusted EBITDA, a non-GAAP metric used to gauge core profitability by removing certain non-cash and one-time expenses, declined to negative $14.7 million. The company incurred $2.8 million in merger-related costs and a $1.3 million impairment charge for underperforming stores, adding further pressure to the results. The expense base proved difficult to reduce, with overall selling and administrative costs increasing by $3.2 million, primarily due to legal and other expenses related to the announced merger, along with higher employee benefit costs.

Inventory levels for merchandise remained consistent with the prior year period, standing at $283.3 million. Cash on hand decreased to $4.9 million, down about 10% compared to December 29, 2024. The company's outstanding borrowing under the revolving credit facility climbed sharply to $71.4 million, reflecting pressures on cash flow.

Big 5 Sporting Goods Corp also announced a definitive merger agreement, with a partnership acquiring all outstanding shares for $1.45 per share in cash. This represents a 36% premium over the recent 60-day trading average. The company expects the deal to close in the second half of 2025, pending shareholder approval. The transaction effectively puts a cap on Big 5's public company journey.

Looking forward, investors should focus on how efficiently Big 5 manages its store footprint, inventory, and costs in the interim. The company has signaled that it will continue to close underperforming stores, with at least four closures expected in Q3 FY2025 and no new stores planned.

References:
[1] https://www.nasdaq.com/articles/big-5-bgfv-q2-revenue-drops-75
[2] https://www.tradingview.com/news/reuters.com,2025-07-29:newsml_PLX50496B:0-brief-big-5-sporting-goods-q2-sales-usd-184-894-million/