Big 5 Reports Small Loss in Q4

Gross profit for the fiscal 2011 fourth quarter was $70.7 million, compared to $75.8 million in the fourth quarter of the prior year. The company's gross profit margin was 31.2 percent in the fiscal 2011 fourth quarter versus 33.4 percent in the fourth quarter of the prior year. The decrease in gross profit margin was driven primarily by lower merchandise margins of 190 basis points reflecting the largely anticipated impacts of product cost inflation and increased promotional activities, as well as a product sales mix shift away from higher margin winter product categories due to unfavorable winter weather conditions.

Selling and administrative expense as a percentage of net sales was 31.3 percent in the fiscal 2011 fourth quarter versus 30.5 percent in the fourth quarter of the prior year. The increase was primarily due to flat year-over-year net sales combined with higher store-related expenses reflecting an increased store count and increased advertising expense. Selling and administrative expense for the fiscal 2011 fourth quarter includes a non-cash pre-tax impairment charge of $1.5 million, or $0.05 per diluted share, related to certain underperforming stores.

For the fiscal 2011 full year, net sales increased to $902.1 million from net sales of $896.8 million for fiscal 2010. Same store sales decreased 1.2 percent in fiscal 2011 from fiscal 2010. Net income in fiscal 2011 was $11.7 million, or $0.53 per diluted share, including non-cash impairment charges of $0.07 per diluted share, compared to net income in fiscal 2010 of $20.6 million, or $0.94 per diluted share, including the net charge of $0.07 per diluted share for legal matters.

“As we previously reported, our fourth quarter performance was impacted by negative same store sales over the second half of the quarter,” said Steven G. Miller, the company's Chairman, President and Chief Executive Officer. “Although same store sales were positive over the first half of the quarter, the holiday selling period was below expectations as our results were heavily influenced by a lack of favorable winter weather in most of our markets and a highly promotional environment.”

Miller continued, “During the first quarter of 2012, we have continued to experience poor winter weather conditions and reduced demand for winter products in most of our geographic markets. Despite the adverse impact of the weather on our winter product sales, we are encouraged by the positive performance of a number of our other key product categories that have begun to benefit from new merchandise initiatives. We remain focused on refining our merchandise mix and adjusting our promotional and marketing plans to better appeal to today's consumer. We are pleased with the early results of these efforts, and are excited about the potential positive effect on upcoming seasons.”

Quarterly Cash Dividend

The company's Board of Directors has declared a quarterly cash dividend of $0.075 per share of outstanding common stock, which will be paid on March 22, 2012 to stockholders of record as of March 8, 2012.

Share Repurchases

During the fiscal 2011 fourth quarter, the company repurchased 109,550 shares of its common stock for a total expenditure of $1.0 million. As of the end of fiscal 2011, the company had approximately $13.2 million available for future stock repurchases under its $20.0 million share repurchase program authorized in the fiscal 2007 fourth quarter.

Guidance

For the fiscal 2012 first quarter, the company expects same store sales in the negative low single-digit range and earnings per diluted share in the range of $0.00 to $0.06. This guidance reflects anticipated continued pressure on merchandise margins reflecting the impacts of product cost inflation and increased promotional activities, as well as a product sales mix shift away from higher margin winter product categories due to unfavorable winter weather conditions. For comparative purposes, the company's earnings per diluted share for the first quarter of fiscal 2011 were $0.13.

Store Openings

The company opened eight new stores during the fourth quarter, bringing its store count at the end of fiscal 2011 to 406 stores from 398 stores at the end of fiscal 2010. During the fiscal 2012 first quarter, the company anticipates opening one new store, which is a relocation of an existing store that is expected to close later in the year. For the fiscal 2012 full year, the company currently anticipates opening approximately ten new stores and relocating approximately seven stores.