Big 5 Sporting Goods reported first quarter sales fell 1.9% to $212.9 million from $217 million. Same store sales declined 5.1% for the first quarter. Big Five said sales results reflect weakness in the consumer environment, which contributed to a decrease in customer traffic, as well as the continued deterioration in the performance of the roller shoe product category over the prior year.
The retailer said the decline in roller shoe performance accounted for approximately 40% of the same store sales decline during the first quarter. The decline was partially offset by strong sales of winter-related products due to favorable weather conditions in many of the company's markets.
Gross profit for the fiscal 2008 first quarter was $71.6 million, compared to $75.8 million in the first quarter of the prior year. The company's gross profit margin was 33.6% in the fiscal 2008 first quarter versus 34.9% in the first quarter of the prior year. The decrease in gross profit margin was driven primarily by an 83 basis-point decline in product selling margins and higher store occupancy costs. Product selling margins were impacted primarily by higher sales of winter-related products at lower margins versus the prior year, lower sales and margins in roller shoes and slightly more aggressive promotional pricing in an effort to drive sales and reduce merchandise inventory.
Selling and administrative expense as a percentage of net sales was 29.7% in the fiscal 2008 first quarter versus 28.4% in the first quarter of the prior year, primarily due to lower sales levels and higher store-related expenses reflecting an increased store count.
“Despite a strong first quarter performance by our winter-related product categories, which benefited in part from favorable weather conditions in many of our markets, we were unable to fully offset the general softness in the overall consumer environment and the substantial impact of very negative sales comparisons in our roller shoe category,” said Steven G. Miller, the company's chairman, president and CEO. “Given the difficult consumer climate, we have worked very hard to strengthen the aspects of our business that are within our control, including our inventory position. We improved our total inventory comparisons versus the prior year by approximately $24 million from the end of the fourth quarter of fiscal 2007 to the end of the first quarter of fiscal 2008. These efforts resulted in our inventories being down 5.3% on a per-store basis at the end of the first quarter this year compared to the end of the first quarter last year.”
Miller continued, “Although first quarter results were in line with our expectations, the continuing softness in the consumer environment and the resulting unpredictability of customer traffic and sales make our ability to forecast the remainder of the year challenging. Based on this uncertain economic environment and recent sales trends, we are maintaining a cautious outlook. While the retail environment has remained weak during the second quarter, we believe that our continued focus on improving the execution of our overall business model, including refining our merchandise mix and promotional plans, securing quality new store locations and controlling expenses, will position us well when the consumer climate improves.”
Quarterly Cash Dividend
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 13, 2008 to stockholders of record as of May 30, 2008. Based on the current price of the company's stock, this dividend equates to an annualized dividend yield of approximately 4%.
Share Repurchases
During the fiscal 2008 first quarter, the company repurchased 279,768 shares of its common stock for a total expenditure of $2.8 million. The company has $16.7 million available under its $20.0 million share repurchase program authorized in the fiscal 2007 fourth quarter.
Guidance
The company's guidance for the fiscal 2008 second quarter and full year assumes that sales will continue to be impacted by a challenging consumer environment throughout the year. Based on that assumption, the company is providing the following guidance:
— For the fiscal 2008 second quarter, a decline in same store sales in
the mid-single digit range and earnings per diluted share in the range
of $0.06 to $0.12; and
— For the fiscal 2008 full year, a decline in same store sales in the low
to mid-single digit range. Based on the company's first quarter results
and second quarter guidance, the company now expects earnings per
diluted share for the fiscal 2008 full year in the range of $0.60 to
$0.85.
A material improvement or decline in the overall consumer environment during the remainder of the year could materially impact the company's performance relative to this guidance.
Store Openings
The company opened one new store during the first quarter of fiscal 2008. The company operated 364 stores at the end of the first quarter and anticipates opening three net new stores during the fiscal 2008 second quarter. The company anticipates opening approximately 20 new stores, net of relocations and closures, during fiscal 2008.
