Big 5 Sporting Goods Corporation, a leading sporting goods retailer, reported financial results for the fiscal 2008 second quarter ended June 29, 2008.
For the fiscal 2008 second quarter, net sales were $209.0 million, compared to net sales of $217.8 million for the second quarter of fiscal 2007. Same store sales declined 7.6% for the second quarter, primarily due to a mid-single digit decrease in customer traffic and continued weakness in the roller shoe product category, which accounted for approximately 140 basis points of the same store sales decline during the second quarter.
Gross profit for the fiscal 2008 second quarter was $68.4 million, compared to $74.8 million in the second quarter of the prior year. The Company's gross profit margin was 32.7% in the fiscal 2008 second quarter versus 34.3% in the second quarter of the prior year. The Company achieved an 11 basis-point increase in product selling margins and lowered overall distribution center expenses versus the prior year despite operating 22 more stores and experiencing increased freight costs due to higher fuel prices.
These benefits were offset by higher store occupancy costs and a $1.5 million one-time pre-tax charge to correct an error in the Company's previously recognized straight-line rent expense, substantially all of which pertained to prior periods and accumulated over a period of 15 years. This charge accounted for approximately 75 basis points of the decline in gross profit margin during the second quarter.
Selling and administrative expense as a percentage of net sales was 30.8% in the fiscal 2008 second quarter versus 29.1% in the second quarter of the prior year, primarily due to lower sales levels and higher store-related expenses reflecting an increased store count.
Net income for the second quarter of fiscal 2008 was $1.7 million, or $0.08 per diluted share, compared to net income of $5.9 million, or $0.26 per diluted share, for the second quarter of fiscal 2007.
For the 26 week period ended June 29, 2008, net sales decreased $13.0 million, or 3.0%, to $421.9 million from net sales of $434.9 million for the same period last year. Same store sales decreased 6.4% in the first 26 weeks of fiscal 2008 versus the same period last year. Net income was $5.8 million, or $0.27 per diluted share, for the first 26 weeks of fiscal 2008, compared to net income of $13.5 million, or $0.59 per diluted share, for the same period last year.
Results for the second quarter and first 26 weeks of fiscal 2008 include a one-time pre-tax charge of $1.5 million, or $0.04 per diluted share, to correct an error in the Company's previously recognized straight-line rent expense, substantially all of which pertained to prior periods and accumulated over a period of 15 years. The Company has determined this charge to be immaterial to its prior year and current year financial statements.
"Given the challenging sales environment, we are pleased with our second quarter earnings results, which came in at the high end of our expectations on an operational basis, but were impacted by the one-time charge relating to lease accounting," said Steven G. Miller, the Company's Chairman, President and Chief Executive Officer.
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