Big 5 shares sink on earnings, forecast

Shares of Big 5 Sporting Goods Corp., the third-largest U.S. athletic-gear retailer, fell the most since 2002 on Friday after fourth-quarter profit dropped and its profit forecast failed to meet analysts’ estimates.

The El Segundo-based company’s stock dropped $2.57, or 22%, to $9.28, the highest percentage decline in one day since June 2002. The shares are down 36% year to date.

Net income fell to $6.18 million, or 28 cents a share, from $9.64 million, or 42 cents, a year earlier, the company announced Thursday. A Bloomberg survey of 12 analysts had an average estimate of 30 cents a share.

For fiscal 2008, per-share earnings will be 75 cents to $1, the company said, compared with an average analyst estimate of $1.32.

The stock decline “comes from the sheer drop in profitability,” said David Schick, an analyst with Stifel, Nicolaus & Co. in Baltimore. “Pressure on both revenue and, perhaps more importantly, the margins combined to bring down earnings by a big-enough clip.”

Sales in the fourth quarter slipped 1% to $232.1 million. Same-store sales, a key measure of a retailer’s business because new or closed stores aren’t included, fell 4.7%.

In its statement, Big 5 attributed results to a “challenging consumer environment” and a “significant deterioration in the performance of the roller-shoe product category,” accounting for about 45% of the same-store-sales decline.

The 2008 forecast “assumes that sales will continue to be impacted by a challenging consumer environment throughout the year,” Big 5 said.

Separately, Big 5’s board approved a quarterly cash dividend of 9 cents a share of outstanding common stock, which will be paid March 14 to stockholders of record as of Feb. 29.