Big 5 Sporting Goods Corp (BGFV)

Big Things Expected from Big 5!!!

Big 5 Sporting Goods operates as a sporting goods retailer offering athletic shoes, apparel and accessories, as well as a selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding, and in-line skating. The company operates 334 stores across 10 U.S states.

The $19 billion US athletic sport shoe market is the world’s largest and constitutes 47% of the global market. Footwear market is expected to increase 10.2% in value by 2008 and Athletic footwear comprises 35% of the total footwear purchases. This denotes a good picture for the company, which derives over 30% of its revenues from athletic and sport footwear. The third quarter performance of the company has been good with about 8% rise in the top-line and positive same-store sales across all their lines of business. Impressively, same-store sales, have been positive since past 43 consecutive quarters. On the expansion front, they have opened 10 stores in this fiscal and expect to increase its store base by roughly 6% annually, by opening 9 new stores in the next quarter. The company has maximum stores in California with further plans to explore opportunities there.

Additionally, the company earns the best returns on equity in the industry.   Driven by the results, management expects over 7% rise in full year net earnings. Furthermore, management has been able to reduce its debt level despite store openings and dividend payouts. Also, company has achieved consistent revenue growth over the years. In future, company expects to enhance their operating efficiencies from the Californian distribution centre. In the light of all these facts, the stock price is expected to surge.