Big 5 Sporting to take conservative approach to new store growth

28 Feb '09

5 min read

Mr. Miller continued, "Recognizing that the economy is likely to remain challenging throughout 2009, we remain comfortable with our financial condition as we continue to take the steps we believe are necessary to effectively manage through this recessionary environment. We expect to further reduce our cost structure and manage our cash flow as business conditions warrant. We remain highly disciplined in our inventory management and are taking a conservative approach to new store growth. While we continue to explore opportunities for new locations, we expect to be very cautious in opening new stores until we have greater visibility of a broader economic turnaround."

Quarterly Cash Dividend:
Due to the nearly unprecedented downturn in the economy, the Company's Board of Directors has determined to reduce the Company's quarterly cash dividend to $0.05 per share of outstanding common stock, for an annual rate of $0.20 per share. This decision is consistent with the Company's objective to utilize its capital to maintain a healthy financial condition during these challenging economic times. The quarterly cash dividend of $0.05 per share of outstanding common stock will be paid on March 20, 2009 to stockholders of record as of March 6, 2009.

Share Repurchases:
During the fiscal 2008 fourth quarter, the Company repurchased 25,000 shares of its common stock for a total expenditure of $0.2 million. As of the end of fiscal 2008, the Company had approximately $14.2 million available for future stock repurchases under its $20.0 million share repurchase program authorized in the fiscal 2007 fourth quarter. Due to the current challenging economic environment, the Company currently expects to reduce or discontinue share repurchases in fiscal 2009.

Guidance:
Given the degree of uncertainty in the current economic environment, the Company will not at this time provide annual same store sales guidance or annual earnings per share guidance for fiscal 2009. The Company will currently provide forward quarter same store sales and earnings per share guidance.

The Company's guidance for the first quarter of fiscal 2009 assumes that sales will continue to be impacted by the challenging consumer environment. For the fiscal 2009 first quarter, the Company expects a decline in same store sales in the high-single digit range and earnings per diluted share in the range of $0.01 to $0.07. A material improvement or decline in the overall consumer environment could materially impact the Company's performance relative to this guidance.

Store Openings:
The Company opened nine new stores during the fourth quarter of fiscal 2008, bringing its store count at the end of fiscal 2008 to 381 stores, from 363 stores at the end of fiscal 2007. The Company expects the number of new store openings in fiscal 2009 to be substantially lower than fiscal 2008 due to the continued challenging consumer environment.

Big 5 Sporting Goods Corporation

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