Big 5 Sporting Goods

California Flavor Combined with a Cautious and Value-oriented Approach.
A Wide Variety: Big 5 stores are known for being packed with product, from team sports gear to hiking shoes.

HEADQUARTERS
El Segundo, CA

DIGITAL FOOTPRINT
Our quick scan of Big 5’s digital presence: Website in mid-March features baseball as the top category and “free shipping” on orders online of $50+. A “1 Day Deal” is promoted strongly as well – sign up with your email and get info on the “deal of the day.” Social media channels highlight deals on products and highlight the chain’s sponsorship of events such as the Big5k road race in LA. Big 5’s YouTube videos include “How to Choose a Baseball Glove.”

SOCIAL FOLLOWING
Facebook: 688K
Instagram: 32K
Twitter: 14K


IN-STORE REPORT
We visited a Big 5 store in Solana Beach, CA.
Top takeaways: Front windows promote incentive programs for teams, leagues and schools. Brands such as Nike, Under Armor, Asics, Bearpaw, Smith, bolle, Easton and Wilson also have window signage. A friendly salesman greets us. Prominent categories to the left are hunting and camping; in the middle of the store is apparel, with swim featured prominently. Big selection of camping and hunting gear (guns, fishing rods, sleeping bags, tents, inflatable mattresses). Merch is jam packed – walls covered and floors filled with displays. Not a lot of “sale” signs, but discount tags on merch are apparent on closer look. Footwear is in the back. Massive offerings of bats, balls and team equipment. Overall in the store, Nike, Adidas and Under Armor all have a strong presence.  

The Rundown: Big 5 operates 436 stores with a full-line product offering in a store format that averages approximately 11,000 square feet. For the fiscal 2018 full year, net sales were $987.6 million, compared to net sales of $1.01 billion for the fiscal year 2017. Same store sales decreased 2.7 percent in fiscal 2018 versus the comparable period in the prior year.  Currently 227 of its 436 stores are in CA. Big 5 is in 11 states total.

Background: Robert W. Miller co-founded the company in 1955 with five retail locations in California, originally selling World War II surplus items. In 1963 the retailer began focusing exclusively on sporting goods. Full-line product mix at the stores includes a keen focus on value-priced goods.

Major 2018 Developments: Big 5 opened four new stores in California in 2018, closed two stores and relocated one store. Over the past four years, the chain has reduced its store openings to an average of five new stores annually, maintaining a cautious approach. Sales were slightly down in 2018, but Big 5 had a strong finish, with sales up in Q4 of 2018 vs. 2017. In December, Big 5 benefited from solid sales of winter products following Christmas, when winter weather conditions turned favorable across many of its markets. Steven G. Miller, the Company’s chairman, president and CEO, stated that Big 5’s “model is well-positioned to capitalize on seasonal demand.”

Product  Mix: As a percentage of net sales Big 5’s merch breakdown is 50 percent hard goods, 29 percent footwear and 21 percent apparel. Private label merch is 2 percent. Private label items include shoes, apparel, camping equipment, fishing supplies and snowsport equipment.

Marketing: Big 5 advertises predominantly through weekly print advertisements and also promotes through digital marketing programs including e-mail marketing (customers sign up to receive emails from the “E-Team”) and social media.

E-commerce: Big 5 began selling online in 2014, but the chain reports that sales from its e-commerce channel “are not material” to its operations. The retailer’s website focuses on showcasing product and providing visibility of store inventory to customers, to see what is in-stock at specific store locations.

Minimum Wage’s Impact: Wages in California, where over 50 percent of Big 5’s stores are located, are rising. Legislation enacted in CA means minimum wage rate increases up to $15 per hour will be implemented in annual increments through fiscal 2022. Big 5 estimates that the impact of minimum wage rate increases caused its overall labor expense to increase by approximately $1.1 million for fiscal 2018.

Outlook: Big 5 anticipates opening five new stores and closing four stores this year. As of December 30, 2018, the aggregate amount of Big 5’s outstanding indebtedness, including capital lease obligations, was $72.1 million. Big 5 attributed its lower net sales in fiscal 2018 to lower demand for winter-related products during the first quarter of fiscal 2018 resulting from unseasonably dry and warm weather conditions in most of its major markets. Big 5 also reported that although it experienced decreased customer transactions in its retail stores this year, the average sale per transaction increased in fiscal 2018 compared to fiscal 2017.