Big 5 Sporting Goods Corporation said net sales for the fiscal 2009 first quarter ended March 29, 2009 were $210.3 million, a 1.2% decline from net sales of $212.9 million for the first quarter of fiscal 2008. Same store sales declined 4.4% for the first quarter. Sales results reflect continued weakness in the consumer environment, which contributed to a decrease in customer traffic during January and February. However, the company experienced an improvement in customer traffic and sales results during March compared to the first two months of the quarter.
As anticipated, first quarter sales comparisons to the prior year benefitted from 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 first quarter was $67.1 million, compared to $71.6 million in the first quarter of the prior year. The company's gross profit margin was 31.9% in the fiscal 2009 first quarter versus 33.6% in the first quarter of the prior year. The decrease in gross profit margin was driven primarily by higher store occupancy costs and a decline of approximately 88 basis points in merchandise margins due to a shift in the company's product sales mix, slightly more promotional pricing and inflationary pressures.
Selling and administrative expense as a percentage of net sales improved to 29.4% in the fiscal 2009 first quarter versus 29.7% in the first quarter of the prior year. The company leveraged selling and administrative expense in the quarter by reducing expenses despite operating 17 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 and administrative expenses. Net income for the first quarter of fiscal 2009 was $2.8 million, or 13 cents per diluted share, compared to net income of $4.1 million, or 19 cents per diluted share, for the first quarter of fiscal 2008. “
We are pleased with our first quarter performance in this challenging economic environment,” said Steven G. Miller, the company's Chairman, President and CEO. “Our operating results exceeded the upper end of our guidance range issued in late February, driven by significantly stronger than anticipated sales in March. We believe this improvement reflects the increasing attractiveness of our value proposition for consumers as well as the benefit of improved weather conditions later in the quarter. We continue to maintain tight control of our expenses and carefully manage our inventory and cash flow. Our inventory levels decreased 8% on a per-store basis during the first quarter compared to the prior year, while operating cash flow increased 33% to $26.6 million for the quarter. This allowed us to achieve a healthy $20 million reduction in our debt levels to approximately $77 million at quarter-end.”
Miller continued, “The positive sales trends that we experienced in March have continued in the second quarter. Although we recognize that the overall consumer environment remains very challenging, we are encouraged by our recent sales performance and remain confident in our strategy to weather the current economic climate. We intend to continue to conservatively manage our business and focus on increasing market share by providing our customers with the compelling values that are the foundation of our business model.”
Quarterly Cash Dividend
The company's Board of Directors has declared a quarterly cash dividend of 5 cents per share of outstanding common stock, which will be paid on June 15, 2009 to stockholders of record as of June 1, 2009. Guidance For the fiscal 2009 second 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 10 cents to 18 cents. For comparative purposes, the company's earnings per diluted share for the second quarter of fiscal 2008 were $0.08, including a non-recurring charge of 4 cents per diluted share.
Store Openings
During the first quarter of fiscal 2009, the company did not open any new stores or close any stores and continued to operate 381 stores. The company anticipates opening one new store during the fiscal 2009 second quarter and continues to expect the number of new store openings in fiscal 2009 to be substantially lower than fiscal 2008.
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
13 Weeks Ended
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March 29, March 30,
2009 2008
——— ———
Net sales $210,291 $212,866
Cost of sales 143,219 141,283
——- ——-
Gross profit 67,072 71,583
Selling and administrative expense 61,838 63,230
—— ——
Operating income 5,234 8,353
Interest expense 713 1,589
— —–
Income before income taxes 4,521 6,764
Income taxes 1,761 2,644
—– —–
Net income $2,760 $4,120
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Earnings per share:
Basic $0.13 $0.19
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Diluted $0.13 $0.19
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Dividends per share $0.05 $0.09
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Weighted-average shares of common
stock outstanding:
Basic 21,414 21,886
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Diluted 21,424 21,926
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