Big 5’s Q3 Profits Improve on 1.4 Percent Comp Gain

As anticipated, third quarter sales comparisons to the prior year reflect a small benefit from the calendar shift of the Fourth of July holiday further into the third quarter this year, which resulted in certain holiday-related sales moving from the second quarter to the third quarter.

Gross profit for the fiscal 2013 third quarter increased to $87.8 million from $83.9 million in the third quarter of the prior year. The company's gross profit margin improved to 33.9 percent in the fiscal 2013 third quarter from 33.3 percent in the third quarter of the prior year. The improvement in gross profit margin primarily reflects lower distribution costs as a percentage of net sales along with an increase in merchandise margins of 12 basis points.

Selling and administrative expense increased $2.0 million for the fiscal 2013 third quarter over the prior year, but was unchanged as a percentage of net sales at 27.9 percent. The increase in overall selling and administrative expense was primarily due to a pre-tax charge for legal settlements of $1.3 million, of which $1.0 million was classified as expense and $0.3 million was classified as a reduction in net sales, and expenses of approximately $0.6 million associated with
the development of the company's new e-commerce platform.

Net income for the third quarter of fiscal 2013 improved to $9.1 million, or 41 cents per diluted share, including 4 cents per diluted share for a charge for legal settlements, from net income of $8.2 million, or 38 cents per diluted share, including 1 cent per diluted share for a store closing charge, for the third quarter of fiscal 2012.

For the 39-week period ended September 29, 2013, net sales increased to $745.3 million from net sales of $696.9 million in the comparable period last year. Same store sales increased 5.3 percent in the first 39 weeks of fiscal 2013 versus the comparable period last year. Net income improved to $22.8 million, or $1.03 per diluted share, including $0.04 per diluted share for a charge for legal settlements, for the first 39 weeks of fiscal 2013, from net income of $10.9 million, or 50 cents per diluted share, including 4 cents per diluted share of store closing and non-cash impairment charges, for the first nine months of last year.

“We are pleased that for the second year in a row, we have delivered the strongest third quarter earnings per share in our history as a public company,” said Steven G. Miller, the company's chairman, president and chief executive officer. “We achieved these strong earnings results despite sales being negatively impacted by unfavorable summer weather in many of our markets during the peak of our summer selling season. Outside of this period of challenging weather, our sales performed solidly during our third quarter. This positive sales trending has continued, and actually accelerated, into the start of our fourth quarter. While the consumer spending environment over the holiday season remains uncertain, we feel well positioned from a product and promotional standpoint for the holidays and the winter selling season.”

Quarterly Cash Dividend

The company's Board of Directors has declared a quarterly cash dividend of $0.10 per diluted share, which will be paid on December 13, 2013 to stockholders of record as of November 29, 2013.

Guidance

For the fiscal 2013 fourth quarter, the company expects same store sales in the positive low single-digit range and earnings per diluted share in the range of 20 to 28 cents a share. This guidance reflects anticipated expenses associated with the development of the company's new e-commerce platform of approximately 2 cents per diluted share. For purposes of comparison to the prior year, the company's same store sales increased 6.5 percent and earnings per diluted share were $0.19 for the fourth quarter of fiscal 2012.

Store Openings

During the third quarter of fiscal 2013, the company opened five new stores, two of which were relocations, and closed one store as part of a relocation, ending the quarter with 420 stores in operation. During the fiscal 2013 fourth quarter, the company anticipates opening nine new stores. For the fiscal 2013 full year, the company anticipates opening 15 net new stores.