Item 8.01 Other Events
Relief for Form10-Q Filing
The impact caused by the novel coronavirus(“COVID-19”) pandemic has led to disruptions in theday-to-day activities for Big 5 Sporting Goods Corporation (“we,” “our,” “us” or the “Company”), including reducing our staffing levels and limiting our access to facilities and certain technology systems that we rely on to timely prepare our Quarterly Report on Form10-Q for the quarter ended March 29, 2020 (the “Quarterly Report”). We also anticipate that additional time will be required in order to develop and process our financial information as well as prepare required disclosures related to the impact ofCOVID-19. These circumstances will delay our ability to complete our Quarterly Report. As a result, we will be relying on the Securities and Exchange Commission’s Orders under Section 36 of the Securities and Exchange Act of 1934, as amended, dated March 4, 2020 and March 25, 2020 (Release Nos.34-88318 and34-88465) to delay the filing of our Quarterly Report. We expect to file our Quarterly Report on or about May 28, 2020 (but in any event no later than June 27, 2020, which is 45 days from the Quarterly Report’s original filing deadline of May 13, 2020).
Impact ofCOVID-19
Beginning on March 20, 2020, we closed morethan one-half of our retail store locations in response to state and local shelter orders related tothe COVID-19 outbreak. Although we have since been able to reopen certain store locations based on qualifying as an “essential” business under applicable regulations, approximately 25% of our stores remain closed as of April 23, 2020, in response to state and local shelter orders. We also have implemented reduced store hours for our open stores and we have limited the number of customers in our stores at any one time. These store closures, limited hours of operation and shelter orders in our market areas since theCOVID-19 outbreak have resulted in significantly reduced same store sales volume versus the prior year. Our same store sales for the first quarter ended March 29, 2020 declined 10.8% from the prior year, which includes the impact of sales declines resulting from the store closures that began on March 20, 2020 and impacted the final 10 days of the interim fiscal period.
The decrease in sales caused by theCOVID-19 outbreak has also impacted our liquidity. On March 27, 2020, we increased borrowings under our $140.0 million revolving credit facility to $124.3 million. On March 30, 2020, we exercised the accordion feature under our Credit Agreement, which increased the credit facility to $165.0 million, and we drew down additional amounts under our credit facility. As of April 23, 2020, we have total outstanding indebtedness under the credit facility of $143.3 million compared to $124.3 million and $66.6 million outstanding as of the first quarter ended March 29, 2020 and fiscal year ended December 29, 2019, respectively. As of April 23, 2020, our current cash position, net of outstanding checks, totals approximately $72.8 million compared to $44.2 million and $8.2 million as of the first quarter ended March 29, 2020 and fiscal year ended December 29, 2019, respectively.
Company Actions in Response toCOVID-19
As previously announced in our Current Report on Form8-K dated March 30, 2020, in order to support our liquidity initiatives throughout the organization, our Board of Directors has determined to suspend the Company’s quarterly cash dividend until further notice. Additionally, the Company has taken measures to reduce expense across the organization, including negotiating with landlords to reduce or defer our lease-related payments, reducing merchandise inventory orders and extending payment terms with merchandise vendors, reducing a significant amount of our workforce throughout the Company, suspending normal annual salary increases and reducing advertising and the amount of planned capital spending in fiscal 2020.
Risk Factor Update
We are providing the following additional risk factor to supplement the risk factors contained in Part I, Item 1A,Risk Factors, of our Annual Report on Form10-K for the fiscal year ended December 29, 2019.
The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which could have a material adverse impact on our business, results of operations, liquidity and financial condition for an extended period of time.
During March 2020, the World Health Organization declared the rapidly growingCOVID-19 outbreak to be a global pandemic. TheCOVID-19 pandemic has significantly impacted health and economic conditions throughout the United States, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine. Beginning on March 20, 2020, we closed more thanone-half of our retail store locations in response to state and local shelter orders related to theCOVID-19 outbreak. Although we have since been able to reopen certain store locations based on qualifying as an “essential” business under applicable regulations, approximately 25% of our stores remain closed as of April 23, 2020, in response to state and local shelter orders. The closure of additional stores may be required if additional orders are issued. Additionally, the
