Big 5’s Q1 Comps Dip 2.9 Percent, Hurt by Mild Weather

Gross profit for the fiscal 2012 first quarter was $67.4 million, compared to $72.2 million in the first quarter of the prior year. The company's gross profit margin was 30.9 percent in the fiscal 2012 first quarter versus 32.6 percent in the first quarter of the prior year. The decrease in gross profit margin was driven primarily by lower merchandise margins of 156 basis points reflecting the product sales mix shift away from higher margin winter-related products due to unfavorable winter weather conditions, as well as increased promotional activities and product cost inflation.

Selling and administrative expense as a percentage of net sales was 30.5 percent in the fiscal 2012 first quarter versus 30.4 percent in the first quarter of the prior year. Overall selling and administrative expense decreased $0.7 million during the quarter from the prior year due mainly to a reduction in employee benefit-related costs from higher than normal levels in the prior year period, as well as a reduction in debit card fees as a result of recent federal legislation.

Net income for the first quarter of fiscal 2012 was $156,000, or 1 cent per diluted share. For the first quarter of fiscal 2011, net income was $2.8 million, or 13 cents per diluted share.

“Our results for the first quarter reflect the challenging economic conditions in our western markets and, most significantly, highly unfavorable winter weather conditions in most of our major geographic areas, which led to an over 25 percent decrease in winter-related product sales for the period,” said Steven G. Miller, the company's Chairman, President and Chief Executive Officer. “Excluding winter-related products, our sales performed positively in the first quarter and strength in non-winter merchandise has continued into the start of the second quarter as we move beyond the winter selling season. Our same store sales are currently running in the positive low single-digit range for the second quarter to date. We believe the positive trends in our business reflect the early benefits of our ongoing initiatives to refine our merchandising mix and adjust our promotional and marketing plans to better appeal to today's consumer.”

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 June 15, 2012 to stockholders of record as of June 1, 2012.

Share Repurchases

During the fiscal 2012 first quarter, the company repurchased 172,471 shares of its common stock for a total expenditure of $1.4 million. As of the end of the first quarter, the company had approximately $11.8 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 second quarter, the company expects same store sales in the positive low single-digit range and earnings per diluted share in the range of $0.05 to $0.11. This guidance assumes that merchandise margin comparisons to the prior year will be negative, but significantly improved relative to the year over-year comparisons experienced in the first quarter. Guidance also anticipates a small negative impact from the calendar shift of the July 4th holiday further into the third quarter, as well as an estimated pre-tax charge of approximately $1.2 million, or $0.04 per diluted share, to provide for the closing of three stores. For comparative purposes, the company's earnings per diluted share for the second quarter of fiscal 2011 were $0.14, including a non-cash impairment charge of $0.02 per diluted share.

Store Openings

During the fiscal 2012 first quarter, the company opened one new store, which is a relocation of an existing store that is expected to close in the second quarter, and ended the quarter with 407 stores in operation. During the fiscal 2012 second quarter, the company anticipates opening three new stores, one of which is a relocation of an existing store that is expected to close later in the year, and closing four stores, one of which relates to the relocation that occurred in the first quarter. For the fiscal 2012 full year, the company currently anticipates opening approximately ten new stores, relocating approximately six stores and closing three stores. Of the six stores expected to be relocated in fiscal 2012, the company anticipates closing approximately three stores this year and the remaining three stores in fiscal 2013.