Big 5 Sporting delivers outstanding second quarter performance
August 06, 2009 - United States Of America
Big 5 Sporting Goods Corporation, a leading sporting goods retailer reported financial results for the fiscal 2009 second quarter ended June 28, 2009.
For the fiscal 2009 second quarter, net sales were $216.0 million, compared to net sales of $209.0 million for the second quarter of fiscal 2008. Same store sales increased 0.3% for the second quarter, reflecting a reversal of the trend of same store sales declines for the past several quarters. As anticipated, second quarter sales comparisons to the prior year were negatively affected by a shift in the timing of the Easter holiday, during which the Company's stores are closed, out of the first quarter and into the second quarter in 2009.
Gross profit for the fiscal 2009 second quarter was $71.3 million, compared to $68.4 million in the second quarter of the prior year. The Company's gross profit margin was 33.0% in the fiscal 2009 second quarter versus 32.7% in the second quarter of the prior year.
The higher gross margin was primarily due to lower store occupancy costs as a result of a nonrecurring pre-tax charge of $1.5 million, recorded in the second quarter of fiscal 2008, to correct an error in the Company's previously recognized straight-line rent expense. The year-over-year improvement was partially offset by a decline in merchandise margins of approximately 85 basis points due mainly to a shift in the Company's product sales mix and inflationary pressures.
Selling and administrative expense as a percentage of net sales improved to 29.2% in the fiscal 2009 second quarter versus 30.8% in the second quarter of the prior year. The Company continued to leverage selling and administrative costs through higher sales and reduced expenses despite operating 18 more stores than the prior year. Overall selling and administrative expense declined $1.4 million during the quarter from the same period last year due primarily to lower advertising expenses.
Net income for the second quarter of fiscal 2009 was $4.7 million, or $0.22 per diluted share, compared to net income of $1.7 million, or $0.08 per diluted share, for the second quarter of fiscal 2008. Results for the second quarter of fiscal 2008 include the nonrecurring pre-tax charge of $1.5 million, or $0.04 per diluted share.
For the 26-week period ended June 28, 2009, net sales increased $4.4 million, or 1.1%, to $426.3 million from net sales of $421.9 million for the same period last year. Same store sales decreased 2.1% in the first 26 weeks of fiscal 2009 versus the same period last year. Net income was $7.4 million, or $0.35 per diluted share, for the first 26 weeks of fiscal 2009, compared to net income of $5.8 million, or $0.27 per diluted share, including the nonrecurring charge of $0.04 per diluted share, for the same period last year.
"We are pleased to deliver an outstanding second quarter performance as we experienced an improvement in customer traffic, returned to positive same store sales and significantly increased our operating income from the prior year," said Steven G. Miller, the Company's Chairman, President and Chief Executive Officer.
"Our positive results underscore the strength of our business model and ability to execute during these challenging economic times. We continue to maintain tight control of our expenses and conservatively manage our inventory and balance sheet. Our inventory levels were 6% lower on a per-store basis at the end of the second quarter compared to the prior year, and our operating cash flow increased 34% to $28.5 million for the first half of the year. As a result, we continued to reduce our debt levels, to $73 million at quarter end, which is a $31 million decrease compared to the end of the second quarter last year."
Mr. Miller continued, "We are encouraged that the positive trends in customer traffic and sales have continued into the third quarter. Customers are clearly recognizing and responding to the tremendous values that we provide on quality merchandise. While the timing of an economic recovery is uncertain, we believe that we are in a strong competitive and financial position to drive bottom line performance in today's consumer environment."
Quarterly Cash Dividend
The Company's Board of Directors has declared a quarterly cash dividend of $0.05 per share of outstanding common stock, which will be paid on September 15, 2009 to stockholders of record as of September 1, 2009.
For the fiscal 2009 third quarter, the Company expects same store sales in the flat to positive low-single digit range and earnings per diluted share in the range of $0.27 to $0.34. For comparative purposes, the Company's earnings per diluted share for the third quarter of fiscal 2008 were $0.21.