Big 5 Sporting to take conservative approach to new store growth

28 Feb '09

5 min read

Big 5 Sporting Goods Corporation, a leading sporting goods retailer, reported financial results for the fiscal 2008 fourth quarter and full year ended December 28, 2008.

As the Company previously reported, for the fiscal 2008 fourth quarter, net sales were $219.6 million, compared to net sales of $232.1 million for the fourth quarter of fiscal 2007. Same store sales declined 8.6% for the fourth quarter, due to a decrease in customer traffic as a result of the continuation of the challenging consumer environment.

Gross profit for the fiscal 2008 fourth quarter was $71.3 million, compared to $79.2 million in the fourth quarter of the prior year. The Company's gross profit margin was 32.5% in the fiscal 2008 fourth quarter versus 34.1% in the fourth quarter of the prior year. The decrease in gross profit margin was driven primarily by a decline of approximately 50 basis points in product selling margins and deleveraging of store occupancy costs due to lower sales levels.

Selling and administrative expense as a percentage of net sales was 29.3% in the fiscal 2008 fourth quarter versus 28.8% in the fourth quarter of the prior year, primarily reflecting deleveraging of expenses as a result of lower sales volume. Overall selling and administrative expense declined $2.6 million during the quarter from the fourth quarter of the prior year, due to lower advertising, store-related and administrative expenses.

Net income for the fourth quarter of fiscal 2008 was $3.6 million, or $0.17 per diluted share, compared to net income of $6.2 million, or $0.28 per diluted share, for the fourth quarter of fiscal 2007.

For the fiscal 2008 full year ended December 28, 2008, net sales decreased $33.6 million, or 3.7%, to $864.7 million from net sales of $898.3 million for fiscal 2007. Same store sales decreased 7.0% in fiscal 2008 versus the prior year. Net income was $13.9 million, or $0.64 per diluted share, for fiscal 2008, compared to net income of $28.1 million, or $1.25 per diluted share, in fiscal 2007.

Results for fiscal 2008 include a previously reported non-recurring pre-tax charge of $1.5 million, or $0.04 per diluted share, recorded in the second quarter to correct an error in the Company's previously recognized straight-line rent expense, substantially all of which pertained to prior periods.

"In an increasingly difficult economic environment, we are pleased to report fourth quarter and full year earnings at the upper end of the guidance that we issued last November," said Steven G. Miller, the Company's Chairman, President and Chief Executive Officer.

"We believe these results reflect our operating discipline and ability to provide consumers with compelling values on quality products without significantly compromising our merchandise margins. During fiscal 2008 we focused on increasing operating efficiencies and managing our costs effectively as sales volume declined. As an example, through carefully managed attrition, we reduced our full-time company-wide headcount by approximately nine percent while operating 18 additional stores over the course of fiscal 2008 and continued to align our part-time store labor to sales levels."

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