Big 5 Sporting Goods reported last week that same-store sales rose approximately 1.7% for the fiscal first quarter ended April 3, based on preliminary results.
Steven Miller, Big 5's chairman, president and CEO, said that the gain was achieved despite the Easter shift resulting in one less business day in Q1. Miller also said they had to overcome “unusually dry weather in the Pacific Northwest and near-record rainfall in Southern California.”
On a sour note, Big 5 also indicated last week that it would not file its 10-K for the 2004 fiscal year by the expected due date that was previously extended to April 4, 2005. The delay is evidently associated with BGFVs efforts to “most accurately record the correction” of an accounting error disclosed by the retailer in February.
The company and its Audit Committee have decided to restate BGFV's quarterly financial statements for 2002 and 2003, in addition to the fiscal year periods.
Management does not expect that its audited financial statements for the full year periods will be “materially different from the preliminarily restated financial statements” reported in early February, but they will adjust previously reported fiscal 2004 quarterly financial statements to reflect the restatements and the other adjustments. The net impact of all adjustments on fiscal 2004 will be a slight increase in diluted EPS from those previously reported.
Big 5 said in February that the restatement, which is expected to impact net income by $1.2 million for 2001, by $2.1 million for 2002, and by $1.4 million for 2003, was reportedly caused when “certain credits in the accounts payable account related to commercial invoices were not matched on a timely basis with the corresponding letter of credit items.”
In restating the quarterly results, BGFV will also use the opportunity to assess the impact of recently clarified lease accounting procedures. These adjustments are not expected to impact net income by more than $125,000, or 0.5% of net income, for any fiscal year. The adjustments should not affect diluted EPS for fiscal 2002 or 2004, and are expected to reduce fiscal 2003 earnings per diluted share by a penny.
Big 5 also said in February that it anticipates a refund or credit of roughly $3.2 million attributable to an over-payment of income taxes for the affected periods.
Management said they have corrected the internal controls associated with these accounting adjustments. Surprisingly, the companys auditors, KPMG, didnt pick up on the problem over the last four years. BGFV credited a “change in the Supervisory function” in accounts payable for contributing to the discovery of the issue.
Editors Note —
After press time Friday, Big 5 Sporting Goods reported that it had received a notice from the Nasdaq National Market that its shares were subject to delisting as a result of the failure of Big 5 to file their 2004 10-K by the required date. Big 5 will appeal the decision…
