– Third Quarter Highlights
* Diluted EPS Increases 25% to $0.30 Versus Pro Forma $0.24
* 3.3% Same Store Sales Increase Represents 31st Consecutive Quarterly Increase
* Revenues Grow to $183.3 Million
EL SEGUNDO, Calif., Oct. 29 /PRNewswire-FirstCall/ — Big 5 Sporting Goods Corporation (Nasdaq: BGFV), the leading sporting goods retailer in the western United States, today reported financial results for the fiscal 2003 third quarter that ended on September 28, 2003.
For the 2003 third quarter, net sales increased by $12.4 million, or 7.2%, to $183.3 million from $170.9 million in the third quarter of 2002. Same store sales increased 3.3% versus the third quarter last year, representing the company’s thirty-first consecutive quarterly increase in same store sales over comparable prior periods. Gross profit margin increased 1.0% during the third quarter to 35.6% from gross profit margin of 34.6% for the same period last year. Selling and administrative expenses were 26.4% of net sales for the 2003 third quarter. This compares to 2002 third quarter selling and administrative expense calculated in accordance with generally accepted accounting principles (GAAP) of 26.0% of net sales and 2002 third quarter pro forma selling and administrative expenses of 25.7% of net sales after excluding certain effects related to the company’s initial public offering (IPO) and exercise of the underwriters’ overallotment option in mid-2002.
Net income available to common stockholders for the 2003 third quarter, calculated in accordance with GAAP, was $6.7 million, or $0.30 per diluted share, compared to GAAP net loss to common stockholders of $1.4 million, or $0.07 per diluted share, in the same period last year. Third quarter 2002 pro forma net income available to common stockholders was $5.5 million, or $0.24 per diluted share.
For the nine months ended September 28, 2003, net sales increased by $27.2 million, or 5.5%, to $517.9 million from $490.7 million in the first nine months of 2002. Same store sales increased 1.6% versus the same period last year. Gross profit margin increased 0.4% during the first nine months of 2003 to 35.8% from gross profit margin of 35.4% for the comparable period last year. Selling and administrative expenses were 27.0% of net sales for the first nine months of 2003. This compares to selling and administrative expenses calculated in accordance with GAAP of 27.0% of net sales for the first nine months of 2002 and pro forma selling and administrative expenses of 26.4% of net sales for the first nine months of 2002.
Net income available to common stockholders for the first nine months of 2003, calculated in accordance with GAAP, increased to $16.4 million, or $0.72 per diluted share, compared to GAAP net income available to common stockholders of $2.3 million, or $0.12 per diluted share in the same period last year. Results for the nine months ended September 28, 2003 include $875,000, net of taxes, or $0.04 per diluted share, related to a charge associated with the redemption of $20.0 million face value of the company’s 10.875% senior notes. Excluding this charge, net income available to stockholders for the first nine months of 2003 was $17.3 million, or $0.76 per diluted share. This compares to pro forma net income available to common stockholders for the first nine months of 2002 of $15.8 million, or $0.70 per diluted share.
“We are pleased to report an outstanding quarter. Staying true to our proven business formula, we achieved stronger sales and gross profit margins that enabled us to produce bottom line results that exceeded both our guidance and analysts’ estimates,” said Steven G. Miller, Big 5’s Chairman, President and Chief Executive Officer. “We feel that our 3.3% same store sales increase represents a very solid performance by our company, particularly given that we were up against a strong 2002 third quarter, when we posted a 5.3% same store les gain over the third quarter in the prior year. Our sales trends improved during the 2003 third quarter over the first half of the year, benefiting from the return of more normal weather patterns as well as indications of a healthier consumer environment. This positive momentum bodes well for our business as we move toward the holiday season. We believe we are well positioned for continued strong performance throughout the remainder of this year and into 2004.”
Big 5 reports net income and earnings per diluted share in accordance with GAAP and additionally on a pro forma basis to exclude certain effects of the company’s senior note redemption (as described above) and to exclude certain effects of the company’s IPO, including the exercise of the underwriters’ over-allotment option. The company raised a total of $84.0 million of net proceeds from the IPO, which occurred in June 2002, during the company’s second fiscal quarter, and the exercise of the underwriters’ over-allotment option, which occurred in July 2002, during the company’s third fiscal quarter. During the company’s 2002 third quarter, the company utilized IPO proceeds and borrowings under its credit facility to redeem all of Big 5’s outstanding senior discount notes and preferred stock and to repurchase approximately 500,000 shares of common stock from non-executive employees. The pro forma figures for fiscal 2002 assume that the IPO took place at the beginning of the periods presented and exclude the effects of certain one-time IPO-related and over-allotment expenses, use of funds generated from the reduction of the redemption premium otherwise applicable to the redemption of preferred stock to pay bonuses in connection with the IPO, interest payments and premiums payable on debt redeemed in connection with the IPO, dividends and premiums payable on preferred stock redeemed in connection with the IPO and related income tax effects. Big 5 uses this pro forma reporting internally to evaluate its operating performance without regard to certain non-recurring financial effects of the IPO and the 2003 partial senior note redemption and believes this presentation will provide investors with additional insight into its operating results. A reconciliation of the pro forma adjustments to GAAP appears in the financial statements portion of this release.
Big 5 opened seven new stores during the 2003 third quarter and three additional stores subsequent to the end of the quarter, bringing its current total store count to 285. Big 5 plans to complete its fiscal 2003 store openings with the addition of eight more stores before year-end, resulting in a year-end store count of 293 stores.
Big 5 expects to realize same store sales growth in the low to mid single- digit range for the fourth fiscal quarter of 2003, resulting in earnings per diluted share in the range of $0.44 to $0.48. For the fiscal year ending December 28, 2003, the company’s guidance has been increased from the prior quarter. The company currently expects to realize same store sales growth for the fiscal year in the low single-digit range, resulting in earnings per diluted share of $1.21 to $1.25. The quarterly estimate of earnings per diluted share is calculated in accordance with GAAP. The full-year estimate of earnings per diluted share excludes $0.04 per diluted share, recorded in the fiscal 2003 first quarter, related to the charge associated with the partial redemption of the company’s senior notes.
About Big 5 Sporting Goods Corporation
Big 5 is the leading sporting goods retailer in the western United States, operating 285 stores in 10 states under the “Big 5 Sporting Goods” name. Big 5 provides a full-line product offering of over 25,000 stock keeping units in a traditional sporting goods store format that averages 11,000 square feet. Big 5’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating.ipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating.