Big 5 (BGFV) Q2 Revenue Drops 7.5%

Big 5 Sporting Goods (BGFV), a western U.S. sporting goods retailer known for its mix of athletic footwear, apparel, and outdoor equipment, reported results for its fiscal second quarter after the bell on July 29, 2025. The company missed both its own lowered targets for sales and earnings. Revenue slipped to $184.9 million, a 7.5% drop compared to the second quarter of fiscal 2024. Diluted loss per share (GAAP) deteriorated to $1.11, much wider than the previously expected GAAP net loss of $0.75 to $0.90 per share. The quarter underscores the business’s pressured position, as shrinking sales and higher costs weighed heavily on performance. Leadership declared the results “reflect the challenging macroeconomic and geopolitical environment affecting consumer discretionary spending.” With few signs of stabilization, Big 5 also announced a go-private transaction, signaling a likely exit from public markets.

About the Business and Current Focus

Big 5’s core business revolves around retailing sporting goods, with locations concentrated in the western United States. Its product assortment includes athletic shoes, sports apparel, accessories, and a wide range of outdoor equipment. It offers both leading national brands and its own private label goods, though private label sales typically make up a modest share of overall revenue.

The company’s recent strategy has focused on managing its store footprint, optimizing underperforming locations, and maintaining stable inventory levels in response to uncertain demand. Big 5 has prided itself on vendor relationships and the ability to provide value pricing, but rising expenses and falling sales have shifted attention to cost control and cash preservation. The move toward closing stores and pausing new openings reflects a retrenchment strategy. Key success factors remain the ability to adapt to evolving retail trends, engage customers in-store and online, and manage expenses as margins face persistent pressure.

Quarter in Review: Financial and Operational Highlights

Net sales ended below the previous year. Revenue fell 7.5% to $184.9 million compared to the second quarter of fiscal 2024, with same-store sales declining by 6.1%. This drop exceeded the low- to mid-single digit decrease management had anticipated. The company pointed to elevated costs, a heavier mix of promotions, and higher fixed expenses as reasons for downward pressure on profits and margins.

Profitability eroded on several fronts. Gross profit (GAAP) dropped 11.2% from the same period last year, and gross margin (GAAP) 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, fell to negative $14.7 million. The net loss (GAAP) widened to $24.5 million from $10.0 million a year ago. The company incurred $2.8 million in merger-related costs and a $1.3 million impairment charge for underperforming stores, both of which added further pressure to already deteriorating results.

The expense base proved difficult to reduce. Overall selling and administrative costs increased by $3.2 million, mostly due to legal and other expenses related to the announced merger, along with higher employee benefit costs. Store asset impairment charges also contributed. Employee labor costs fell, providing some offset, but these cuts were not enough to counterbalance the expense increases elsewhere. Additionally, Big 5 benefited from a tax credit in Q2 FY2024, which was not repeated this year due to a “valuation allowances on deferred tax assets,” in effect removing a one-time buffer from the current results.

Inventory levels for merchandise were $283.3 million, flat compared to the prior year period, following a period of earlier increases as the company prepared for seasonal demand and potential supply disruptions. Cash on hand stood at $4.9 million, down about 10% compared to December 29, 2024, and borrowing under the revolving credit facility climbed sharply to $71.4 million (compared to $13.8 million at FY2024 year-end), reflecting pressures on cash flow. No new stores were opened, and four additional closures are scheduled for Q3 FY2025, underscoring an ongoing downsizing effort. Big 5 did not provide a breakdown of private label sales, e-commerce results, or category-level product performance in the release. The lack of digital channel commentary leaves questions around how well the business is adapting as an increasing share of sporting goods sales shift online.

No material change in the company’s competitive position was described. Management reiterated the “challenging macroeconomic and geopolitical environment” and noted intensified competition from superstores, specialty shops, mass merchandisers, and digital players.

A key event was the announcement of a go-private transaction in which a partnership will acquire all outstanding shares for $1.45 per share in cash, representing 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. This step effectively puts a cap on Big 5’s public company journey.

Looking Forward: Guidance and Implications

Investors must therefore look to trends in the existing results, particularly the sharp fall in sales, margins, and cash flow, as clues about what lies ahead up to the transaction’s close.

Big 5 has signaled that it will continue to close underperforming stores, with at least four closures expected in Q3 FY2025 and no new stores planned. Outstanding borrowing has jumped. Analysts and shareholders may focus their attention on how efficiently the company manages its store footprint, inventory, and costs in the interim.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.