Big 5 Sporting Goods Corporation reported net sales for the fiscal 2009 third quarter ended September 27 increased to $231.6 million from net sales of $223.2 million for the third quarter of fiscal 2008. As the company previously reported, same store sales increased 1.6% for the third quarter, representing the second consecutive quarter of same store sales growth despite a continued challenging consumer environment.
Gross profit for the fiscal 2009 third quarter was $78.5 million, compared to $74.3 million in the third quarter of the prior year. The company's gross profit margin was 33.9% in the fiscal 2009 third quarter versus 33.3% in the third quarter of the prior year. The improvement in gross profit margin was driven primarily by an increase in merchandise margins of 13 basis points and lower distribution costs.
Selling and administrative expense as a percentage of net sales improved to 28.2% in the fiscal 2009 third quarter versus 29.6% in the third quarter of the prior year. Overall selling and administrative expense declined $0.6 million for the quarter from the same period last year due primarily to lower advertising expense, partially offset by higher store-related expenses.
Net income for the third quarter of fiscal 2009 improved to $8.0 million, or 37 cents per diluted share, from net income of $4.5 million, or 21 cents per diluted share, for the third quarter of fiscal 2008.
For the 39-week period ended Sept. 27, 2009, net sales increased to $657.9 million from net sales of $645.0 million for the same period last year. Same store sales decreased 0.8% in the first 39 weeks of fiscal 2009 versus the same period last year. Net income improved by 49.7% to $15.4 million, or 72 cents per diluted share, for the first 39 weeks of fiscal 2009, from net income of $10.3 million, or 48 cents per diluted share, for the same period last year. Results for the first 39 weeks of fiscal 2008 included a nonrecurring charge of 4 cents per diluted share recorded in the second quarter of fiscal 2008.
“We are pleased to deliver a solid third quarter top and bottom line performance, as our customer value proposition and proven business model continue to produce positive results,” said Steven G. Miller, the Company's Chairman, President and Chief Executive Officer. “The commitment and hard work of our dedicated associates have enabled us to successfully weather the difficult economic environment and improve many of our key financial metrics. We increased same store sales for the second consecutive quarter and grew net income by 80%. Through prudent inventory management, we lowered inventory levels on a per-store basis by approximately 8% at the end of the third quarter compared to the prior year and we generated operating cash flow of $47.4 million in the first nine months of fiscal 2009, a 61% increase from the same period last year. We also have continued to reduce debt levels, ending the third quarter with $60 million of long-term debt compared to $100 million at the end of the third quarter last year.”
Mr. Miller continued, “We are encouraged that the positive sales trends we experienced during the third quarter have continued, and actually improved, thus far in the fourth quarter. For the first five weeks of the quarter, we have comped positively in the low single-digit range. While the critical holiday period is still ahead and consumer spending habits remain unpredictable, we are excited about our product assortment and promotional plans and believe that our ability to provide tremendous values on quality merchandise will position us well during the gift-giving season.”
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 December 15, 2009 to stockholders of record as of December 1, 2009.
Guidance
For the fiscal 2009 fourth quarter, the company expects same store sales in the positive low to low-mid single-digit range and earnings per diluted share in the range of 28 cents to 38 cents. For comparative purposes, the company's earnings per diluted share for the fourth quarter of fiscal 2008 were 17 cents. As a result of the fiscal calendar, the fourth quarter of fiscal 2009 will include 14 weeks and the fourth quarter last year included 13 weeks. The company's same store sales guidance above reflects comparable 14-week periods.
Store Openings
During the third quarter of fiscal 2009, the company did not open any new stores or close any stores and continued to operate 382 stores. The company anticipates opening two new stores during the fiscal 2009 fourth quarter. The company expects the number of new store openings in fiscal 2010 to be substantially higher than fiscal 2009.
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
13 Weeks Ended 39 Weeks Ended
————– ————–
September September September September
27, 2009 28, 2008 27, 2009 28, 2008
———- ———- ———- ———-
Net sales $231,582 $223,180 $657,913 $645,041
Cost of sales (1) 153,073 148,925 441,002 430,828
——- ——- ——- ——-
Gross profit (1) 78,509 74,255 216,911 214,213
Selling and administrative
expense 65,327 65,962 190,194 193,585
—— —— ——- ——-
Operating income (1) 13,182 8,293 26,717 20,628
Interest expense 562 1,166 1,883 3,911
— —– —– —–
Income before income
taxes (1) 12,620 7,127 24,834 16,717
Income taxes 4,609 2,669 9,409 6,415
—– —– —– —–
Net income (1) $8,011 $4,458 $15,425 $10,302
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Earnings per share (1):
Basic $0.37 $0.21 $0.72 $0.48
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Diluted $0.37 $0.21 $0.72 $0.48
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Dividends per share $0.05 $0.09 $0.15 $0.27
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Weighted-average shares of
common stock outstanding:
Basic 21,435 21,447 21,426 21,673
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Diluted 21,747 21,464 21,545 21,685
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(1) In the second quarter of fiscal 2008, the Company recorded a
nonrecurring pre-tax charge of $1.5 million to correct an error in its
previously recognized straight-line rent expense, substantially all of
which related to prior periods and accumulated over a period of 15 years.
This charge reduced net income for the 39 weeks ended September 28, 2008
by $0.9 million, or $0.04 per diluted share. The Company determined this
charge to be immaterial to its prior period consolidated financial
statements.