DC Move Hurts Profits for Big 5 Sporting Goods

The fourth quarter results of Big 5 Sporting Goods Corp. (El Segundo, Calif.) were negatively impacted by $4.5 million in unexpected costs attributed to the company's transition to its new distribution center in Riverside, Calif. As reported in the company’s year-end statement, these expenses resulted from increased labor costs required to minimize disruption of product flow to the company stores during the holiday period, duplicate facility costs from simultaneously operating two distribution facilities, transition-related trucking and incremental depreciation charges.

“While our results reflect the significant challenges we faced during 2005, we are confident in our overall business model and believe that our investments have placed us in a strong position to grow our business," said Steven G. Miller, chairman, president and CEO. "Our team worked extremely hard to complete the enormous transition to our new distribution center on schedule with as little disruption of product flow to our stores as possible during the busy holiday season and into the first quarter. This effort proved more costly than we had previously anticipated, but we are pleased to have achieved solid sales growth through the transition. We are now making refinements to improve productivity and efficiency at the new distribution center, and we look forward to servicing our growing store base with this facility for years to come."

For the year ended January 1, 2006, net sales for Big 5 increased $32 million to $814 million compared to $782 million in the previous year. Net income for fiscal 2005 was $28 million, compared to a net income of $34 million in 2004. The company opened ten new stores during the fourth quarter of 2005, bringing its total to 324 stores.

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