Big 5 Sporting Goods posts strong earnings performance

04 May '07

4 min read

Big 5 Sporting Goods Corporation a leading sporting goods retailer, reported financial results for the fiscal 2007 first quarter ended April 1, 2007. For the fiscal 2007 first quarter, net sales increased $9.8 million, or 4.7%, to $217.0 million from net sales of $207.2 million for the first quarter of fiscal 2006.

Same store sales increased 1.0% for the first quarter, representing the Company's 45th consecutive quarter of positive same store sales comparisons. Gross profit for the fiscal 2007 first quarter increased 6.3% to $78.0 million from $73.4 million in the first quarter of the prior year. The Company's gross profit margin improved to 36.0% in the fiscal 2007 first quarter from 35.4% in the first quarter of the prior year.

The margin improvement was driven by an increase of approximately 80 basis points in product selling margins, which benefited from sales of winter-related products earlier in the quarter at higher margins than the prior year, and a $2.2 million decrease in distribution center costs due to facility transition costs incurred in the prior year. These improvements were partially offset by a $2.4 million reduction in inventory cost capitalization from the first quarter of the prior year.

Selling and administrative expense as a percentage of net sales improved to 27.6% in the fiscal 2007 first quarter from 27.7% in the first quarter of last year. This improvement was driven primarily by a $1.3 million decrease in audit and legal fees due to additional expenses incurred in the prior year to complete the Company's financial statement and internal control audits, and the Company's leveraging of store-related expenses.

These benefits were partially offset by a $1.1 million increase in advertising expense primarily to support the Company's sales and store growth. Net income for the first quarter of fiscal 2007 increased to $7.6 million, or $0.33 per diluted share, from net income of $5.9 million, or $0.26 per diluted share, for the first quarter of fiscal 2006.

The Company's Board of Directors has declared a quarterly cash dividend of $0.09 per share of outstanding common stock, which will be paid on June 15, 2007 to stockholders of record as of June 1, 2007. For the second quarter of fiscal 2007, the Company expects to realize same store sales growth in the flat to low single-digit range and earnings per diluted share in the range of $0.25 to $0.33.

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