Big 5’s Q4 Profits Slide 38%

Results for the fourth quarter of fiscal 2010 include a net pre-tax
charge of $2.3 million, or 7 cents per diluted share, for lawsuits
previously disclosed in the company's filings with the SEC, of which
$1.5 million was classified as selling and administrative expense and
$0.8 million was classified as a reduction in net sales. Results for the
fourth quarter of fiscal 2009 include a net pre-tax charge of
approximately $1.0 million, or 3 cents per diluted share, related to legal
matters.

Gross profit for the 13-week fiscal 2010 fourth quarter was $75.8 million, compared to $80.8 million in the 14-week fourth quarter of the prior year. The company's gross profit margin was 33.4% in the fiscal 2010 fourth quarter versus 34.0% in the fourth quarter of the prior year. The decrease in gross profit margin was driven primarily by lower merchandise margins of 20 basis points and higher store occupancy costs as a percentage of net sales due largely to new store openings.

Selling and administrative expense as a percentage of net sales was 30.5% in the fiscal 2010 fourth quarter versus 29.4% in the fourth quarter of the prior year, primarily due to higher store-related expenses reflecting an increased store count.

As a result of the fiscal year calendar, the fiscal 2010 fourth quarter
included 13 weeks and the fiscal 2010 full year included 52 weeks,
compared to 14 weeks and 53 weeks for the respective reporting periods
in fiscal 2009.

For the 52-week fiscal 2010 full year, net sales increased to $896.8 million from net sales of $895.5 million for the 53-week fiscal 2009 full year. Same store sales in fiscal 2010 increased 0.8% versus the comparable period in the prior year. Net income was $20.6 million, or 94 cents per diluted share, for fiscal 2010, compared to net income of $21.8 million, or $1.01 per diluted share, in fiscal 2009. Results for fiscal 2010 include the net charge of $0.07 per diluted share relating to legal matters. Results for fiscal 2009 include the net charge of $0.03 per diluted share relating to legal matters.

“Our business continues to be challenged by the economy in many of our markets, which, along with extreme variances in weather patterns, has created inconsistency in our recent sales trends,” said Steven G. Miller, the company's chairman, president and chief executive officer. “While we achieved same store sales in the positive low-single-digit range for October and positive mid-single-digit range for November, which included the 'Black Friday' weekend, these gains were offset as our sales turned negative over the key three-week gift shopping period preceding Christmas. Following the holiday season, positive sales trends resumed and continued until mid-January as our markets experienced favorable winter weather conditions. However, sales weakened considerably between mid-January and mid-February, as unseasonably warm and dry weather conditions reduced demand for winter products in many of our markets. Our same store sales are currently running down in the low single-digit range for the quarter to date, compared to a mid-single-digit same store sales increase during the same time period last year.”

Miller continued, “Despite our fourth quarter sales being slightly below expectations, we are pleased to have further strengthened our balance sheet at the end of 2010, as our positive cash flow allowed us to further reduce borrowings under our credit facility by 12% to $48.3 million at year-end compared to the end of fiscal 2009. Our sound financial condition and anticipated continued healthy cash flow has enabled us to enhance shareholder value through the 50 percent dividend increase that we announced today. Although continued uncertainty in the economy and a lack of visibility as to the timing and degree of a recovery has made it difficult to predict consumer demand, we continue to believe that our proven business strategy will positively impact sales, earnings and cash flow, and over the long-term will deliver a solid performance for our shareholders.”

Quarterly Cash Dividend

The company's Board of Directors has approved an increase in the company's quarterly cash dividend to $0.075 per share of outstanding common stock, for an annual rate of $0.30 per share. Previously, the company's quarterly cash dividend was $0.05 per share, for an annual rate of $0.20 per share. The quarterly cash dividend of $0.075 per share of outstanding common stock will be paid on March 22, 2011 to stockholders of record as of March 8, 2011.

Guidance

For the fiscal 2011 first quarter, the company expects same store sales in the negative low single-digit to positive low single-digit range and earnings per diluted share in the range of 15 cents to 22 cents a share. For comparative purposes, the company's earnings per diluted share for the first quarter of fiscal 2010 were 23 cents.

Store Openings

During the fourth quarter of fiscal 2010, the company opened seven new stores, including three relocations of existing stores that have closed in the first quarter of fiscal 2011 or will close later in the year. The company's store count at the end of fiscal 2010 increased to 398 stores from 384 stores at the end of fiscal 2009. During the first quarter to date, the company has opened two new stores, both of which were relocations, and closed two stores that were relocated in late 2010. Excluding stores closed as part of relocations that began last year, the company currently anticipates opening between 10 and 15 net new stores during fiscal 2011.