Big5SportingGoodsCorporationNASDAQ_BGFV_202310-K.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2023or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF

2、1934 For the transition period from _ to _Commission file number:000-49850BIG 5 SPORTING GOODS CORPORATION(Exact name of registrant as specified in its charter)Delaware 95-4388794(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)2525 East El Segundo Bou

3、levard El Segundo,California 90245(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(310)536-0611Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registered Common Stock,par

4、value$0.01 per share BGFV The NASDAQ Stock Market LLCSecurities registered pursuant to section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes o No Indicate by check mark if the registrant is not required t

5、o file reports pursuant to Section 13 or Section 15(d)of the Act.Yes o No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registr

6、ant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of thi

7、s chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No oIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth

8、 company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated fileroAccelerated filerNon-accelerated fileroSmaller reporting company Emerging growth companyoIf an emerging growt

9、h company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark whether the registrant has filed a report on and

10、 attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Se

11、ction 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recovery

12、 analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).oIndicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes o No The aggregate market value of t

13、he voting stock held by non-affiliates of the registrant was$182,130,973 as of July 2,2023(the last business day of the registrants most recently completed second fiscal quarter)based upon the closing price of the registrants common stock on the NASDAQ Stock Market LLC reported for June 30,2023.Shar

14、es of common stock held by each executive officer and director and by each 2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm1/107person who,as of such date,may be deemed to have beneficially owned more than 5%of the outstanding voting stock have b

15、een excluded in that such persons may be deemed to be affiliates of the registrant under certain circumstances.This determination of affiliate status is not necessarily a conclusive determination of affiliate status for any other purpose.The registrant had 22,438,892 shares of common stock outstandi

16、ng at February 20,2024.Documents Incorporated by ReferencePart III of this Form 10-K incorporates by reference certain information from the registrants 2024 definitive proxy statement(the“Proxy Statement”)to be filed with the Securities and Exchange Commission no later than 120 days after the end of

17、 the registrants fiscal year.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm2/107TABLE OF CONTENTS PagePART I ITEM 1.BUSINESS 4ITEM 1A.RISK FACTORS 10ITEM 1B.UNRESOLVED STAFF COMMENTS 21ITEM 1C.CYBERSECURITY 21ITEM 2.PROPERTIES 22ITEM 3.LEGAL PR

18、OCEEDINGS 23ITEM 4.MINE SAFETY DISCLOSURES 24 PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 25ITEM 6.RESERVED 25ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 26ITEM 7A.QUANTITATI

19、VE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 34ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 34ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 34ITEM 9A.CONTROLS AND PROCEDURES 35ITEM 9B.OTHER INFORMATION 37ITEM 9C.DISCLOSURE REGARDING FOREIGN JUR

20、ISDICTIONS THAT PREVENT INSPECTIONS 37 PART III ITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 38ITEM 11.EXECUTIVE COMPENSATION 38ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 38ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACT

21、IONS,AND DIRECTOR INDEPENDENCE 38ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES 38 PART IV ITEM 15.EXHIBITS,FINANCIAL STATEMENT SCHEDULES 39ITEM 16.FORM 10-K SUMMARY 39 EXHIBIT INDEX 40SIGNATURES 42INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1 2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/da

22、ta/1156388/000095017024021829/bgfv-20231231.htm3/107 Forward-Looking StatementsThis document includes certain“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995.Such forward-looking statements relate to,among other things,our financial condition,our

23、 results of operations,our growth strategy and the business of our company generally.In some cases,you can identify such statements by terminology such as“may,”“could,”“project,”“estimate,”“potential,”“continue,”“should,”“expects,”“plans,”“anticipates,”“believes,”“intends”or other such terminology.T

24、hese forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause our actual results in current or future periods to change significantly and differ materially from forecasted results.These risks and uncertainties include,among other things,the econom

25、ic impacts of COVID-19,including any potential variants,on our business operations,including as a result of regulations that may be issued in response to COVID-19,global supply chain disruptions resulting from the ongoing conflicts in Ukraine and the Middle East,changes in the consumer spending envi

26、ronment,fluctuations in consumer holiday spending patterns,increased competition from e-commerce retailers,breach of data security or other unauthorized disclosure of sensitive personal or confidential information,the competitive environment in the sporting goods industry in general and in our speci

27、fic market areas,inflation,product availability and growth opportunities,changes in the current market for(or regulation of)firearm-related products,a reduction or loss of product from a key supplier,disruption in product flow,seasonal fluctuations,weather conditions,changes in cost of goods,operati

28、ng expense fluctuations,increases in labor and benefit-related expense,changes in laws or regulations,including those related to tariffs and duties as well as environmental,social and governance issues,public health issues(including those caused by COVID-19 or any potential variants),impacts from ci

29、vil unrest or widespread vandalism,lower than expected profitability of our e-commerce platform or cannibalization of sales from our existing store base which could occur as a result of operating the e-commerce platform,litigation risks,stockholder campaigns and proxy contests,risks related to our h

30、istorically leveraged financial condition,changes in interest rates,credit availability,higher expense associated with sources of credit resulting from uncertainty in financial markets and economic conditions in general.Those and other risks and uncertainties are more fully described in Part I,Item

31、1A,Risk Factors,in this report.We caution that the risk factors set forth in this report and the other reports that we file with the SEC are not exclusive.In addition,we conduct our business in a highly competitive and rapidly changing environment.Accordingly,new risk factors may arise.It is not pos

32、sible for management to predict all such risk factors,nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor,or combination of factors,may cause results to differ materially from those contained in any forward-looking statement.We undertak

33、e no obligation to revise or update any forward-looking statement that may be made from time to time by us or on our behalf.32025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm4/107 PART I ITEM 1.BUSINESSGeneralBig 5 Sporting Goods Corporation(“we,”

34、“our,”“us”or the“Company”)is a leading sporting goods retailer in the western United States,operating 430 stores and an e-commerce platform under the“Big 5 Sporting Goods”name as of December 31,2023.Throughout this section,our fiscal years ended December 31,2023 and January 1,2023 are referred to as

35、 fiscal 2023 and 2022,respectively.We provide a full-line product offering in a traditional sporting goods store format that averages approximately 12,000 square feet.Our product mix includes athletic shoes,apparel and accessories,as well as a broad selection of outdoor and athletic equipment for te

36、am sports,fitness,camping,hunting,fishing,home recreation,tennis,golf,and winter and summer recreation.We supplement our traditional sports merchandise mix with an assortment of other products that we purchase through opportunistic buys of vendor over-stock or close-out merchandise.We believe that o

37、ver our 69-year history we have developed a reputation with the competitive and recreational sporting goods customer as a convenient neighborhood sporting goods retailer that consistently delivers value on quality merchandise.Our stores carry a wide range of products at competitive prices from well-

38、known brand name manufacturers,including adidas,Coleman,Columbia,Everlast,New Balance,Rawlings,Skechers,Spalding,Under Armour and Wilson.We also offer brand name merchandise produced exclusively for us,private label merchandise and specials on quality items we purchase through opportunistic buys of

39、vendor over-stock and close-out merchandise.We reinforce our value reputation through digital marketing programs,print advertising in major and local newspapers,and direct mailers designed to generate customer traffic,drive net sales and maintain brand awareness.We also maintain social media sites t

40、o enhance distribution capabilities for our promotional offers and to enable communication with our customers.Robert W.Miller co-founded our company in 1955 with the establishment of five retail locations in California.We sold World War II surplus items until 1963,when we began focusing exclusively

41、on sporting goods and changed our trade name to“Big 5 Sporting Goods.”In 1971,we were acquired by Thrifty Corporation,which was subsequently purchased by Pacific Enterprises.In 1992,management bought our company in conjunction with Green Equity Investors,L.P.,an affiliate of Leonard Green&Partners,L

42、.P.In 1997,Robert W.Miller,Steven G.Miller and Green Equity Investors,L.P.recapitalized our company so that the majority of our common stock would be owned by our management and employees.In 2002,we completed an initial public offering of our common stock and became a publicly-traded company.Our acc

43、umulated management experience and expertise in sporting goods merchandising,advertising,operations,store development and overall cost management have enabled us to generally produce profitable results.We believe our historical success can be attributed to a value-based and execution-driven operatin

44、g philosophy,a controlled growth strategy and a proven business model.Additional information regarding our management experience is available in Item 1,Business,under the sub-heading“Management Experience,”of this Annual Report on Form 10-K.We are a holding company incorporated in Delaware on Octobe

45、r 31,1997.We conduct our business through Big 5 Corp.,a 100%-owned subsidiary incorporated in Delaware on October 27,1997.We conduct our gift card operations through Big 5 Services Corp.,a 100%-owned subsidiary of Big 5 Corp.incorporated in Virginia on December 19,2003.Our corporate headquarters are

46、 located at 2525 East El Segundo Boulevard,El Segundo,California 90245.Our Internet address is .Our Annual Report on Form 10-K,our Quarterly Reports on Form 10-Q,our Current Reports on Form 8-K and amendments,if any,to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securiti

47、es Exchange Act,are available on our website,free of charge,as soon as reasonably practicable after we electronically file such material with,or furnish it to,the Securities and Exchange Commission.Impact of Global EventsRecent global events,including the novel coronavirus(“COVID-19”)and the ongoing

48、 conflicts in Ukraine and the Middle East,have adversely affected global economies,disrupted global supply chains and contributed to increased inflation and rising interest rates,impacting the cost of products and services.In response to disruptions related to COVID-19 that began in fiscal 2020,we u

49、ndertook measures to reduce expense,preserve capital and enhance our liquidity.Certain of those measures,such as reductions to advertising expense in comparison with historical levels,continued to benefit us in fiscal 2022 and 2023 and we expect to maintain our advertising expense below pre-pandemic

50、 levels in the foreseeable future.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm5/10742025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm6/107 Disruptions related to the ongoing conflicts in Uk

51、raine and the Middle East,regions in which we do not have direct operations,contributed to higher fuel prices and consequently higher product costs.The ongoing conflicts in Ukraine and the Middle East may continue to lead to disruptions in the global supply chain,rising fuel costs,or cybersecurity r

52、isks,and economic instability generally,any of which could materially and adversely affect our business and results of operations.As long as these conflicts continue,we expect these challenges to remain into fiscal 2024.We will continue to monitor these events and take appropriate actions to mitigat

53、e the risk of these global events,or any other global events that arise,as necessary.Expansion and Store DevelopmentThroughout our operating history,we have sought to expand our business with the addition of new stores through a disciplined strategy of controlled growth.Our expansion within the west

54、ern United States has typically been systematic and designed to capitalize on our brand recognition,economical store format and economies of scale related to distribution.Over the past five fiscal years,we have opened 13 stores including relocations,of which 62%were in California.Our store openings

55、over the past five fiscal years reflect our cautious approach toward store expansion in the current retail environment,which includes increasing e-commerce competition and the COVID-19 pandemic in fiscal 2020 and 2021.The following table reflects our store opening,closing and relocation activity dur

56、ing the periods indicated:Stores Opened Stores Stores Number of Stores Year California Other Markets Total Relocated Closed at Period End 2019 2 1 3 (1)(4)434 2020 (4)430 2021 2 3 5 (2)(2)431 2022 2 1 3 (1)(1)432 2023 2 2 (1)(3)430 In the first two months of fiscal 2024,we closed six stores,includin

57、g four underperforming stores and one store that was previously damaged by severe rain,lowering our store count to 424 at the end of fiscal February 2024.Our store format enables us to have substantial flexibility regarding new store locations.We have successfully operated stores in major metropolit

58、an areas and in areas with as few as 30,000 people.Our 12,000 average square foot store format differentiates us from superstores that typically average over 35,000 square feet,require larger target markets,are more expensive to operate and require higher net sales per store for profitability.New st

59、ore openings typically represent attractive investment opportunities due to the relatively low investment required and the relatively short time necessary before our stores typically become profitable.While the required investment has been relatively low,we have recently experienced inflationary pre

60、ssures that have led to increasing costs to open a store.Our store format normally requires investments of approximately$0.9 million in fixtures,equipment and leasehold improvements,net of landlord allowances,and approximately$0.3 million in net working capital with limited pre-opening and real esta

61、te expense related to leased locations that are built to our specifications.We seek to maximize new store performance by staffing new store management with experienced personnel from our existing stores.Our in-house store development and real estate personnel seek new store locations which are analy

62、zed with the assistance of real estate firms that specialize in retail properties.Historically,we look for expansion opportunities to further penetrate our established markets,develop recently entered markets and expand into new,contiguous markets with attractive demographic,competitive and economic

63、 profiles.MerchandisingWe target the competitive and recreational sporting goods customer with a full-line product offering at a wide variety of price points.We offer a product mix that includes athletic shoes,apparel and accessories,as well as a broad selection of outdoor and athletic equipment for

64、 team sports,fitness,camping,hunting,fishing,home recreation,tennis,golf,and winter and summer recreation.We believe we deliver consistent value to consumers by offering a distinctive merchandise mix that includes a combination of well-known brand name merchandise,merchandise produced exclusively fo

65、r us under a manufacturers brand name,private label merchandise and specials on quality items we purchase through opportunistic buys of vendor over-stock and close-out merchandise.(1)(1)2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm7/107Through

66、 our 69 years of experience across different demographic,competitive and economic markets,we have refined our merchandising strategy in an effort to offer a selection of products that meets customer demand.Specifically,we continue to strategically refine our merchandise and marketing strategies in o

67、rder to better align our product mix and promotional efforts with todays consumer.52025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm8/107 The following table illustrates our mix of soft goods,which are non-durable items such as shirts and shoes,an

68、d hard goods,which are durable items such as exercise equipment and baseball gloves,as a percentage of net sales.The change in sales mix for fiscal 2020 reflects the change in consumer demand resulting from the COVID-19 pandemic,including higher sales related to fitness and outdoor recreational acti

69、vities and reduced sales for team sports and back to school products:Fiscal Year 2023 2022 2021 2020 2019 Hard goods 54.0%54.1%55.0%60.2%49.7%Soft goods Athletic and sport footwear 25.0 24.8 24.1 22.0 28.2 Athletic and sport apparel 21.0 21.1 20.9 17.8 22.1 Total soft goods 46.0 45.9 45.0 39.8 50.3

70、Total 100.0%100.0%100.0%100.0%100.0%We sell our popular branded merchandise from an extensive list of major sporting goods equipment,athletic footwear and apparel manufacturers.Below is a selection of some of the brands we carry:adidasColemanFootjoyImpexRawlingsSpaldingAsicsColumbiaFranklinJanSportR

71、azorSpeedoBearpawCrosmanGildanLifetimeRemingtonTimexBushnellDaisyHeadMcDavidRollerbladeTitleistCallawayDickiesHeelysMizunoRussell AthleticUnder ArmourCamp Chef EastonHillerich&BradsbyMossbergSauconyWilsonCarharttEverlastiFit(Proform)Mueller Sports MedicineShimanoWinchesterCasioFilaIgloo New BalanceS

72、kechers We believe we enjoy significant advantages in making opportunistic buys of vendor over-stock and close-out merchandise because of our strong vendor relationships,purchasing volume and rapid decision-making process.Our strong vendor relationships and purchasing volume also enable us to purcha

73、se merchandise produced exclusively for us under a manufacturers brand name which allows us to differentiate our product selection from competition,obtain volume pricing discounts from vendors and offer unique value to our customers.Our advertising highlights our opportunistic buys together with mer

74、chandise produced exclusively for us in order to reinforce our reputation as a retailer that offers attractive values to our customers.In order to complement our branded product offerings,we offer a variety of private label merchandise,which has historically represented approximately 2%of our net sa

75、les.Our sale of private label merchandise enables us to provide our customers with a broader selection of quality merchandise at a wider range of price points and allows us the potential to achieve higher margins than on sales of comparable name brand products.Our private label items include shoes,a

76、pparel,camping equipment,fishing supplies and snowsport equipment.Seasonality influences our buying patterns and we purchase merchandise for seasonal activities in advance of a season and supplement our merchandise assortment as necessary and when possible during the season.We tailor our merchandise

77、 selection on a store-by-store basis in an effort to satisfy each regions specific needs and seasonal buying habits.In the fourth fiscal quarter we normally experience higher inventory purchase volumes in anticipation of the winter and holiday selling season.Our buyers,who average 18 years of experi

78、ence with us,work in collaboration with senior management to determine and enhance product selection,promotion and pricing of our merchandise mix.Management utilizes integrated merchandising,business intelligence analytics,distribution,point-of-sale and financial information systems to continuously

79、refine our merchandise mix,pricing strategy,advertising effectiveness and inventory levels to best serve the needs of our customers.Advertising and MarketingThrough years of targeted advertising,we have solidified our brand reputation for offering quality products at attractive prices through conven

80、ient store locations.We market our products through the effective use of both digital communications as well as print media.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm9/107We built our value-based brand through weekly print advertisements be

81、ginning in 1955,and we provide print advertisements and other targeted promotional offers through carrier delivery and direct mail.Over the last several years we have been reducing our overall advertising spend.In fiscal 2020,we accelerated the reduction of print advertising in response to the COVID

82、-19 pandemic and our print advertising remained substantially reduced(from pre-pandemic levels)in fiscal 2022 and 2023 as we continued to evaluate our advertising programs.62025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm10/107 We promote our pro

83、ducts through digital marketing programs that include sending regular digital communications to our customers(e-mail marketing to our“E-Team”),search engine marketing,social media including Facebook,X(formerly known as Twitter)and Instagram,mobile programs and other website initiatives.Our digital p

84、romotional strategy is designed to provide opportunities to connect with potential customers and enable us to promote the Big 5 brand.Our e-mail marketing program invites our customers to subscribe to our E-Team for daily special deals,weekly advertisements and product information disseminated on a

85、regular basis.We use search engine marketing methods as a means to reach those customers searching the Internet to gather information about our products.Within our social media program,our customers have the opportunity to engage in conversations with other sports-minded people and receive exclusive

86、 information about new products and unique weekly offers.All of these marketing methods are intended to simplify the shopping experience for our customers and further demonstrate our commitment to provide great brands at great values.Our website features a broad representation of our product assortm

87、ent and provides visibility of store inventory to our customers,thereby enabling them to determine if items featured on our website are in-stock in one or more of our store locations.Our e-commerce platform delivers an online shopping experience to our customers,and we continue to develop our online

88、 capabilities to meet customer expectations of being able to shop at their convenience.We have developed a strong cause marketing platform through our support of the American Red Cross annual fundraising campaign and numerous other charities and organizations throughout our marketplace.We also build

89、 brand awareness by providing sponsorship support of established,high-profile events that benefit our customers active lifestyles,such as the“LA Marathon”in Los Angeles,California,and the“Duke City Marathon”in Albuquerque,New Mexico,for which we are the title sponsor.Vendor RelationshipsWe have deve

90、loped strong vendor relationships over the past 69 years.We currently purchase merchandise from over 600 vendors.In fiscal 2023,only one vendor represented greater than 5%of our total purchases,at 5.1%.We believe current relationships with our vendors are good.We benefit from the long-term working r

91、elationships with vendors that our senior management and our buyers have carefully nurtured throughout our history.Information Technology SystemsWe have fully integrated information technology(“IT”)systems that support critical business functions,such as sales reporting,inventory management and dist

92、ribution functions and provide pertinent information for financial reporting,as well as robust business intelligence and retail analytics tools.We manage IT solutions for e-commerce,e-mail and networks that connect our employees to appropriate technology solutions and tools.This includes connecting

93、our stores via a managed wide area network connection for purchasing card(i.e.,credit and debit card)encryption,tokenization,authorization and processing,as well as providing access to valuable tools such as collaboration,online training,workforce management,online hiring,Company website functions a

94、nd corporate communications.Our cloud-based disaster recovery solution provides redundancy and availability-redundant networks and applications to be used in the event of an emergency or unplanned outage.We believe our IT systems are effectively supporting our current operations and provide a founda

95、tion for future growth and new business initiatives.The protection of our customer,employee and business data is critical to us.Our business,like that of most retailers,involves the receipt,storage and transmission of customers personal information,consumer preferences and payment card information,a

96、s well as confidential information about our employees,our suppliers and our Company.We rely on commercially available systems,software,tools and monitoring to provide security for processing,transmission and storage of all such data,including confidential information.Despite the security measures w

97、e have in place,our facilities and systems,and those of our third-party service providers,may be vulnerable to security breaches,acts of vandalism,computer viruses,data theft,misplaced or lost data,programming or human errors,or other similar events.Unauthorized parties may attempt to gain access to

98、 our systems or information through fraud or other means,including deceiving our employees or third-party service providers.The methods used to obtain unauthorized access,disable or degrade service,or sabotage systems are also constantly changing and evolving,and may be difficult to anticipate or de

99、tect for long periods of time.We have implemented and regularly review and update our control systems,processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss.72025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/0000950170240218

100、29/bgfv-20231231.htm11/107 DistributionWe operate a 953,000 square-foot distribution center located in Riverside,California,that includes storage and office space and services all of our stores.In January 2024,as part of our effort to consolidate operations and manage our expense structure,we moved

101、out of an additional 172,000 square-foot distribution space adjacent to our distribution center that we used for additional capacity.The distribution center warehouse management system is fully integrated with our enterprise-level IT systems and provides comprehensive warehousing and distribution ca

102、pabilities.We regularly distribute merchandise from our distribution center to our stores using our fleet of leased tractors,as well as contract carriers.Industry and CompetitionThe retail market for sporting goods is highly competitive.We operate as a traditional sporting goods chain with stores th

103、at average 12,000 square feet and are frequently located in multi-store shopping centers.We carry a broad assortment of merchandise and position ourselves as convenient neighborhood stores.In general,competition tends to fall into the following five basic categories:Sporting Goods Superstores.Stores

104、 in this category typically are larger than 35,000 square feet and tend to be free-standing locations.These stores emphasize high volume sales and a large number of stock-keeping units.Examples include Academy Sports&Outdoors and Dicks Sporting Goods.Specialty Sporting Goods Stores.Specialty sportin

105、g goods retailers are stores that typically carry a wide assortment of one specific product category or brand,such as athletic shoes,golf,or outdoor equipment.Examples of these retailers include Bass Pro Shops,Cabelas,Foot Locker,Sportsmans Warehouse and REI.This category also includes pro shops tha

106、t often are single-store operations.Mass Merchandisers.This category includes discount retailers such as Walmart and Target and department stores such as JC Penney and Kohls.These stores range in size from 50,000 to 200,000 square feet and are primarily located in regional malls,shopping centers or

107、on free-standing sites.Sporting goods merchandise and apparel represent a small portion of the total merchandise in these stores and the selection is often more limited than in other sporting goods retailers.E-commerce Retailers.This category consists of many retailers that sell a broad array of new

108、 and used sporting goods products via e-commerce,including A.The types of retailers mentioned above may also sell their products through e-commerce.E-commerce has been a rapidly growing sales channel,particularly with younger consumers,and an increasing source of competition in the sporting goods re

109、tail industry.Athletic and Sporting Goods Brands.This category consists of athletic and sporting goods brands that engage in direct-to-consumer sales through traditional retail channels,e-commerce or a combination of both.These brands may also sell their products to us and other competitors.Examples

110、 of brands that sell directly to consumers include Nike,adidas and Under Armour.In competing with the retailers discussed above,we focus on what we believe are the primary factors of competition in the sporting goods retail industry,including breadth,depth,price and quality of merchandise offered;ad

111、vertising;purchasing and pricing policies;experienced and knowledgeable personnel;customer service;effective sales techniques;direct involvement of senior officers in monitoring store operations;enterprise-level IT systems;and convenience of store location and format.Human CapitalWe believe the expe

112、rience and tenure of our professional staff in the retail industry contributes to enhanced performance and gives us a competitive advantage.The table below indicates the tenure of our professional staff in some of our key functional areas as of December 31,2023:Number ofEmployees AverageNumber ofYea

113、rs With Us Executive Management 7 37 Vice Presidents 24 23 Buyers 19 18 Store District/Regional Supervisors 48 25 Store Managers 431 12 2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm12/10782025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/da

114、ta/1156388/000095017024021829/bgfv-20231231.htm13/107 As of December 31,2023,we had approximately 7,900 active employees,of which approximately 2,300 were full-time.The General Teamsters,Airline,Aerospace and Allied Employees,Warehousemen,Drivers,Construction,Rock and Sand;Airline Employees,Local Un

115、ion No.986,affiliated with the International Brotherhood of Teamsters(“Local 986”)represents approximately 380 hourly employees in our distribution center and select stores.In December 2022,we entered into a five-year collective bargaining agreement with Local 986 for the covered distribution center

116、 employees,and in June 2023 we entered into a five-year collective bargaining agreement with Local 986 for a smaller number of covered store employees.Both collective bargaining agreements are retroactive to September 1,2022,and expire on August 31,2027.We have not had a strike or work stoppage in o

117、ver 40 years,although such a disruption could have a significant negative impact on our business operations and financial results.We believe we provide working conditions and wages that are comparable to those offered by other retailers in the sporting goods industry and that employee relations are

118、good.We utilize an automated Learning Management System(“LMS”)and have developed comprehensive training that can be expressly tailored for store and corporate positions.Our LMS allows us to rapidly convey and track the dissemination of important information as it develops,such as product merchandisi

119、ng strategies,policy changes,safety rules,cash handling procedures,systems resolution and utilization,loss prevention updates and inventory control guidelines.All new store employees are assigned introductory LMS learning material as well as provided with a live orientation highlighting basic polici

120、es and responsibilities and our expectation that each employee strives to deliver excellence in customer service,product knowledge and salesmanship.New full-time store salespeople,cashiers and manager trainees receive supplementary training and evaluations specific to their job responsibilities and

121、their ongoing development.The versatility of the LMS provides us with the ability to track and monitor many different types of training and the flexibility we need to deliver our message to widely dispersed personnel within the structure of our on-the-go work environment.Our employee training progra

122、ms include self-directed online courses,live webinars,production of soft and hard copy reference materials,one-on-one training,hands-on training and progressive developmental training.In the stores,manager trainees are expected to complete a progressive series of outlines and evaluations in order to

123、 be considered for each successive level of advancement.Experienced store management training includes advanced merchandising,delegation,personnel management,scheduling,payroll control,harassment and discrimination prevention and loss prevention.On a yearly basis,we require all employees to complete

124、 workplace anti-discrimination and harassment training in order to foster a heightened awareness and help eliminate biases that may adversely impact the corporate,distribution center and store spaces.Our overall training strategy and LMS enable us to efficiently manage,monitor,assign and report empl

125、oyee training results online and in real time.During the COVID-19 pandemic,to provide for the safety of our employees and customers,we have taken many actions in our stores,corporate office and distribution center spaces based on the needs,risks,and regulations present in each community and facility

126、.We continue to monitor the business and regulatory environment and expect to continue to adapt our operations to address federal,state,and local requirements,as well as to implement standards or processes that we determine to be in the best interest of our employees and customers.Description of Ser

127、vice Marks and TrademarksWe use the“Big 5”and“Big 5 Sporting Goods”names as service marks in connection with our business operations and have registered these names as federal service marks.The renewal dates for these service mark registrations are in 2025 and 2033,respectively.We have also register

128、ed the names Golden Bear,Harsh,Pacifica and Rugged Exposure as federal trademarks under which we sell a variety of merchandise.The renewal dates for these trademark registrations range from 2026 to 2028.We intend to renew these service mark and trademark registrations if we are still using the marks

129、 in commerce and they continue to provide value to us at the time of renewal.92025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm14/107 ITEM 1A.RISK FACTORSAn investment in the Company entails risks and uncertainties including the following.You shou

130、ld carefully consider these risk factors when evaluating any investment in the Company.Any of these risks and uncertainties could cause our actual results to differ materially from the results contemplated by the forward-looking statements set forth herein,and could otherwise have a significant adve

131、rse impact on our business,prospects,financial condition or results of operations or on the price of our common stock.Risks Related to Our Business and IndustryDisruptions in the overall economy and the financial markets may adversely impact our business and results of operations.The retail industry

132、 can be greatly affected by macroeconomic factors,including changes in national,regional and local economic conditions,as well as consumers perceptions of such economic factors.In general,sales represent discretionary spending by our customers.Discretionary spending is affected by many factors,inclu

133、ding general business conditions,interest rates,inflation,consumer debt levels,the availability of consumer credit,currency exchange rates,taxation,gasoline prices,income,unemployment trends,home values and other matters that influence consumer confidence and spending.Many of these factors are outsi

134、de of our control.We are experiencing,and may continue to experience,increased inflationary pressure on the cost of certain products.Our customers purchases of discretionary items,including our products,generally decline during periods when disposable income is lower,when prices increase in response

135、 to rising costs,or in periods of actual or perceived unfavorable economic conditions.Deterioration of the consumer spending environment could be harmful to our financial condition and results of operations,could adversely affect our ability to comply with covenants under our credit facility and,as

136、a result,may negatively impact our ability to continue payment of our quarterly dividend,to repurchase our stock and to open additional stores in the manner that we have in the past.During fiscal 2022 and into fiscal 2023,competition for labor and broad-based inflation has caused us to pay higher wa

137、ge rates and contributed to increased operating expenses.Our quarterly net sales and operating results,reported and expected,can fluctuate substantially,which may adversely affect the market price of our common stock.Our net and same store sales and results of operations,reported and expected,have f

138、luctuated in the past and will vary from quarter to quarter in the future.These fluctuations may adversely affect our financial condition and the market price of our common stock.A number of factors,many of which are outside our control,have historically caused and will continue to cause variations

139、in our quarterly net and same store sales and operating results,including changes in consumer demand for our products,competition in our markets,inflation,increases in operating expense,changes in pricing or other actions taken by our competitors,weather conditions in our markets,natural disasters,l

140、itigation,political events,government regulation,changes in accounting standards,changes in managements accounting estimates or assumptions and economic conditions,including those specific to our western United States markets.Intense competition in the sporting goods industry could limit our growth

141、and reduce our profitability.The retail market for sporting goods is highly fragmented and intensely competitive.We compete directly or indirectly with the following categories of companies,through traditional retail and e-commerce channels:sporting goods superstores,such as Academy Sports&Outdoors

142、and Dicks Sporting Goods;specialty sporting goods shops and pro shops,such as Bass Pro Shops,Cabelas,Foot Locker,Sportsmans Warehouse and REI;mass merchandisers,discount stores and department stores,such as Walmart,Target,Kohls and JC Penney;e-commerce retailers,such as A;andathletic and sporting go

143、ods brands that engage in direct-to-consumer sales,such as adidas and Under Armour.Some of our competitors have a larger number of stores,greater e-commerce capabilities or greater financial,distribution,marketing and other resources than we have.If our competitors reduce their prices,it may be diff

144、icult for us to retain market share without reducing our prices,which could impact our margins.As a result of this competition,we may also need to spend more on advertising and promotion than we anticipate.Increased competition in our current markets or the adoption or proliferation by competitors o

145、f innovative store formats,aggressive pricing strategies and retail sales methods,such as e-commerce,could cause us to lose market share and could have a material adverse effect on our business.While e-commerce has been a rapidly growing sales channel and an increasing source of competition in the r

146、etail industry,sales from our e-commerce channel are not material to our operations.We have no assurance that our e-commerce efforts will prove profitable,whether due to product preferences of online buyers,ability to compete with other(often more established)2025/1/18 07:4410-Khttps:/www.sec.gov/Ar

147、chives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm15/107online retailers,or for other reasons,such as the cannibalization of sales from our existing store base.If we are unable to compete successfully,our operating results may suffer.102025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar

148、/data/1156388/000095017024021829/bgfv-20231231.htm16/107 A reduction or loss of product from a key supplier could cause our net sales and profitability to suffer.In fiscal 2023,we purchased merchandise from over 600 vendors,and our 20 largest vendors collectively accounted for 39.3%of our total purc

149、hases.One vendor represented greater than 5%of total purchases in fiscal 2023,at 5.1%.If there are disruptions in supply from a principal supplier or distributor,we may be unable to obtain merchandise that we desire to sell and that consumers desire to purchase.A vendor could discontinue or restrict

150、 selling products to us at any time for reasons that may or may not be within our control.The increased development of direct-to-consumer initiatives by athletic and sporting goods brands could result in additional restrictions on the products available for us to purchase and sell.Our net sales and

151、profitability could decline if we are unable to promptly replace a product vendor that is unwilling or unable to satisfy our requirements with a vendor providing equally appealing products.Moreover,many of our key suppliers provide us with incentives,such as return privileges,volume purchase allowan

152、ces and co-operative advertising.A decline or discontinuation of these incentives could reduce our profits.If we fail to anticipate changes in consumer preferences,we may experience lower net sales,higher inventory,higher inventory markdowns and lower margins.Our products must appeal to a broad rang

153、e of consumers whose preferences cannot be predicted with certainty.These preferences are also subject to change and can be impacted by various factors,including sports participation levels in our market areas,the performance of sports teams for which we sell licensed products,weather conditions in

154、our market areas and regulatory or political changes.Our success depends upon our ability to anticipate and respond in a timely manner to consumer trends and consumers participation in sports and other recreational activities for which we sell products.If we fail to identify and respond in a timely

155、manner to these changes,our net sales and profitability may decline.In addition,because we often make commitments to purchase products from our vendors up to nine months in advance of the proposed delivery,if we misjudge the market for our merchandise or conditions change after we have committed to

156、purchase products,we may overstock unpopular products and be forced to take inventory markdowns that could have a negative impact on profitability.If we are unable to effectively and efficiently connect with our customers through our advertising and marketing programs,our operating results may suffe

157、r.We historically utilized print advertising programs that included newspaper inserts,direct mailers and courier-delivered inserts in order to effectively deliver our message to our targeted markets.Newspaper circulation and readership has been declining,and in 2020,in response to the novel coronavi

158、rus(“COVID-19”)pandemic,we accelerated the reduction of our print advertising programs.The consumer preferences for certain of our product categories that have driven positive sales during the COVID-19 outbreak have not continued after the outbreak has subsided,and we may need to increase advertisin

159、g and promotional activity from the current historically low levels in an effort to drive customer traffic and sales,which could impact our profitability.While we expect to continue to benefit from reduced print advertising activity in the foreseeable future,if our efforts to evolve our advertising

160、programs fail or we are unable to develop other effective strategies to reach potential customers within our desired markets,awareness of our stores,products and promotions could decline and our net sales could suffer.The COVID-19 pandemic has disrupted and could in the future disrupt our business,w

161、hich could have a material adverse impact on our business,results of operations,liquidity and financial condition for an extended period of time.As COVID-19 continues to evolve,we may be further required to restrict the operations of our stores or our distribution facility if recommended or mandated

162、 by authorities.If the classification of what is an“essential”business changes in jurisdictions where our stores are located,or the restrictions on retail operations in our markets are reinstituted,or other government regulations are adopted pertaining to how we may operate our stores,we may be requ

163、ired to temporarily close or restrict operations at more,if not all,of our stores,or incur additional expense to operate our stores,which would significantly impact our sales and results of operations.Additionally,if we do not respond appropriately to the pandemic,or if customers do not perceive our

164、 response to be adequate for a particular region or our company as a whole,we could suffer damage to our reputation and our brand,which could adversely affect our business in the future.COVID-19 has also impacted our supply chain for products we sell,particularly those products that are sourced from

165、 Asia.To the extent one or more of our vendors or shipping or port facilities are negatively impacted by COVID-19,including due to the closure of its distribution centers or manufacturing facilities,we may be unable to maintain delivery schedules or adequate inventory in our stores.Future prolonged

166、and sustained delays in product reaching our stores from overseas vendors,particularly during the holiday season,could result in our inability to obtain adequate levels of merchandise inventories to meet our consumers needs,which could have an adverse impact on our net sales and profitability.2025/1

167、/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm17/107112025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm18/107 The extent to which the COVID-19 outbreak impacts our business,results of operations,li

168、quidity and financial condition will depend on future developments,which are highly uncertain and cannot be predicted,including,but not limited to the duration,spread,severity and impact of the COVID-19 outbreak,the effects of the outbreak on our customers,employees and vendors,the regulatory respon

169、se and impact of stimulus measures adopted by local,state and federal governments,and to what extent normal economic and operating conditions can resume.Additionally,the consumer preferences for certain product categories that have driven positive sales during the COVID-19 outbreak have not continue

170、d after the outbreak has subsided,and any further negative change in consumer preferences could negatively impact our results of operations.We may need to increase advertising and promotional activity from the current historically low levels in an effort to drive customer traffic and sales,which cou

171、ld impact our profitability.Furthermore,the financial condition of our customers and vendors may be adversely impacted by the pandemic,which may result in a decrease in discretionary consumer spending and our store traffic and sales,and an increase in bankruptcies or insolvencies with respect to our

172、 vendors.These events may,in turn,have a material adverse impact on our business,results of operations,liquidity and financial condition.Because our stores are concentrated in the western United States,we are subject to regional risks.Our stores are located in the western United States.Because of th

173、is,we are subject to regional risks,such as the economy,including downturns in the housing market,state financial conditions,unemployment and gas prices.Other regional risks include adverse weather and climate conditions,power outages,earthquakes and other natural disasters specific to the states in

174、 which we operate.For example,particularly in California where we have a high concentration of stores,seasonal factors such as unfavorable weather conditions or other localized conditions including flooding,drought,fires,earthquakes or electricity blackouts could impact our sales and harm our operat

175、ions.State and local regulatory compliance,such as with recent minimum wage increases in our market areas,also can impact our financial results.Economic downturns or other adverse regional events could have an adverse impact upon our net sales and profitability and our ability to open additional sto

176、res in the manner that we have in the past.Additionally,California is subject to a property tax law commonly referred to as Proposition 13,which allows properties to be reassessed only at the time of change in ownership or completion of construction,and annual property reassessments are limited to a

177、 2%increase from previously-assessed values thereafter.As a result,Proposition 13 generally results in significant below-market assessed values over time.From time to time,and recently,lawmakers and political coalitions have initiated efforts to repeal or amend Proposition 13 to eliminate its applic

178、ation to commercial and industrial properties.Since we lease all of our store locations,as well as our corporate offices and distribution center facilities in California,and are required under the terms of our leases to pay property taxes thereon,any repeal of Proposition 13 could substantially incr

179、ease the assessed values and property taxes we pay for our leased properties in California.A significant amount of our sales is impacted by seasonal weather conditions in our markets.Because many of the products we sell are used for seasonal outdoor sporting and recreational activities,our business

180、is significantly impacted by weather and climate conditions in our markets.For example,our winter sports and apparel sales are dependent on cold winter weather and snowfall in our markets and can be negatively impacted by unseasonably warm or dry weather in our markets during the winter product sell

181、ing season.Conversely,sales of our spring products and summer products,such as baseball gear and camping and water sports equipment,can be adversely impacted by unseasonably cold or wet weather in those periods.Accordingly,our sales results and financial condition will typically suffer when weather

182、and climate patterns do not conform to seasonal norms.This dynamic could be amplified if climate change disrupts climate patterns or otherwise increases the volatility of weather in our markets.Uncharacteristic or significant weather conditions or natural disasters and the impacts of climate change

183、could adversely affect our results of operations.Uncharacteristic or significant weather conditions,including the physical impacts of climate change,can affect consumer shopping patterns,particularly for seasonal items,which could lead to lower sales and adversely affect our results of operations.In

184、 addition,we have significant operations in certain states where natural disasters are more prevalent.Natural disasters in those states could result in significant physical damage to or closure of one or more of our stores,distribution center,or key vendors.In addition,weather conditions,natural dis

185、asters,and other catastrophic events in areas where we or our vendors operate,or depend upon for continued operations,could adversely affect the availability and cost of certain products within our supply chain,affect consumer purchasing power,and reduce consumer demand.Any of these events could adv

186、ersely affect our results of operations.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm19/107122025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm20/107 The long-term effects of global climate c

187、hange are expected to be widespread and unpredictable,and potential impacts present a variety of risks.The physical effects of climate change,such as extreme weather conditions,drought,and rising sea levels,could adversely affect our results of operations,including by increasing our energy costs,dis

188、rupting our supply chain,negatively impacting our workforce,damaging our stores,distribution center,and inventory,and threatening the habitability of the locations in which we operate.In addition to physical risks,the potential impacts of climate change also present transitional risks,including regu

189、latory and reputational risks.Our business is subject to seasonal fluctuations,and unanticipated changes in our customers seasonal buying patterns can impact our business.We experience seasonal fluctuations in our net sales and operating results.Seasonality influences our buying patterns which direc

190、tly impacts our merchandise and accounts payable levels and cash flows.We purchase merchandise for seasonal activities in advance of a season and supplement our merchandise assortment as necessary and when possible during the season.Our efforts to replenish products during a season are not always su

191、ccessful.In the fourth fiscal quarter,which includes the holiday selling season and the start of the winter selling season,we normally experience higher inventory purchase volumes and increased expense for staffing and advertising.If we miscalculate the consumer demand for our products generally or

192、for our product mix in advance of a season,our net sales can decline,which can harm our financial performance.A significant shortfall from expected net sales,particularly in the fourth fiscal quarter,can negatively impact our annual operating results.All of our stores rely on a single distribution c

193、enter.Any disruption or other operational difficulties at this distribution center could reduce our net sales or increase our operating expense.We rely on a single distribution center facility located in Riverside,California to service our business.Any natural disaster or other serious disruption to

194、 the distribution center due to fire,earthquake or any other cause could damage a significant portion of our inventory and could materially impair both our ability to adequately stock our stores and our net sales and profitability.The lease for our distribution center is scheduled to expire in 2030

195、with no extension options.Extensions of such lease would likely be at significantly increased rents and our inability to extend such lease could materially impair both our ability to adequately stock our stores and our net sales and profitability.If the security measures used at our distribution cen

196、ter do not prevent inventory theft,our gross profit may significantly decrease.Our distribution center is staffed in part by employees represented by Local 986.We have not had a strike or work stoppage in over 40 years,although such a disruption could have a significant negative impact on our busine

197、ss operations and financial results.Further,in the event that we are unable to grow our net sales sufficiently to allow us to leverage the costs of this distribution center in the manner we anticipate,our financial results could be negatively impacted.Additionally,because we rely on a single distrib

198、ution center,our store growth could be limited to the geographic areas to which we can efficiently distribute products from this facility.Our store growth also could be limited if our distribution center reaches full capacity.Such constraints could result in a loss of market share and our inability

199、to execute our business plan,which could have a material adverse effect on our financial condition and results of operations.If we are unable to successfully implement our controlled growth strategy or manage our growing business,our future operating results could suffer.One of our strategies includ

200、es opening profitable stores in new and existing markets.Our ability to successfully implement and capitalize on our growth strategy could be negatively affected by various factors including:a slowdown of our expansion efforts,or close underperforming stores,as a result of challenging conditions in

201、the retail industry and the economy overall;increased difficulty in finding suitable sites available for leasing within our existing market areas,and our distribution capabilities may limit our ability to expand beyond our current market areas;increased difficulty in negotiating acceptable lease ter

202、ms;increased difficulty in hiring and retaining qualified store personnel;andincreased difficulty in securing the financial resources necessary to fund our expansion plans.In recent years,we have slowed our store openings and strategically closed certain stores as we maintained a cautious approach t

203、oward store expansion in the current retail environment,which includes increasing e-commerce competition.If we are unable to resume our store expansion efforts for any of the reasons discussed above,our operating results could suffer.132025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/115638

204、8/000095017024021829/bgfv-20231231.htm21/1072025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm22/107 In addition,our expansion in new and existing markets may present competitive,merchandising,marketing and distribution challenges that differ from

205、our current challenges.These potential new challenges include competition among our stores,added strain on our distribution center,additional information to be processed by our information technology(“IT”)systems,diversion of management attention from ongoing operations and challenges associated wit

206、h managing a larger enterprise.We face additional challenges in entering new markets,including consumers lack of awareness of us,difficulties in hiring personnel and problems due to our unfamiliarity with local real estate markets and demographics.New markets may also have different competitive cond

207、itions,consumer tastes,responsiveness to advertising and discretionary spending patterns than our existing markets.To the extent that we are not able to meet these new challenges,our net sales could decrease and our operating expense could increase.Because many of the products that we sell are manuf

208、actured abroad,we may face delays,increased cost or quality control deficiencies in the importation of these products,which could reduce our net sales and profitability.Like many other sporting goods retailers,a significant portion of the products that we purchase for resale,including those purchase

209、d from domestic suppliers,is manufactured abroad in Asia.In addition,we believe most,if not all,of our private label merchandise is manufactured abroad.Foreign imports subject us to the risks of changes in,or the imposition of new,import tariffs,duties or quotas,new restrictions on imports,loss of“m

210、ost favored nation”status with the United States for a particular foreign country,antidumping or countervailing duty orders,retaliatory actions in response to illegal trade practices,work stoppages,delays in shipment,freight expense increases,product cost increases due to foreign currency fluctuatio

211、ns or revaluations,public health issues that could lead to temporary closures of or delays at facilities or shipping ports,such as the COVID-19 pandemic,and other economic uncertainties.If any of these or other factors were to cause a disruption of trade from the countries in which the suppliers of

212、our vendors are located or impose additional costs in connection with the purchase of our products,we may be unable to obtain sufficient quantities of products to satisfy our requirements and our results of operations could be adversely affected.To the extent that any foreign manufacturers which sup

213、ply products to us directly or indirectly utilize quality control standards,labor practices or other practices that vary from those legally mandated or commonly accepted in the United States,we could be hurt by any resulting negative publicity or increases in operating costs or,in some cases,face po

214、tential liability.In addition,instability in the political and economic environments of the countries in which our vendors or we obtain our products,or general international instability,could have an adverse effect on our operations.In the event of disruptions or delays in supply due to economic or

215、political conditions in foreign countries,such disruptions or delays could adversely affect our results of operations unless and until alternative supply arrangements could be made.In addition,merchandise purchased from alternative sources may be of lesser quality or more expensive than the merchand

216、ise we currently purchase abroad.Disruptions in transportation,including disruptions at shipping ports through which our products are imported,could prevent us from timely distribution and delivery of inventory,which could reduce our net sales and profitability.A substantial amount of our inventory

217、is manufactured abroad.From time to time,shipping ports experience capacity constraints,labor strikes,work stoppages or other disruptions that may delay the delivery of imported products.A contract dispute at the ports through which our products travel,particularly the Ports of Los Angeles and Long

218、Beach,could lead to protracted delays in the movement of our products,which could further delay the delivery of products to our stores and impact net sales and profitability.In addition,other conditions outside of our control,such as adverse weather conditions,acts of terrorism or public health issu

219、es that could lead to temporary closures of or delays at facilities or shipping ports,such as the COVID-19 pandemic,could significantly disrupt operations at shipping ports or otherwise impact transportation of the imported merchandise we sell.While we have generally been able to sufficiently stock

220、product in our stores to meet most consumer demand,future prolonged and sustained delays in product reaching our stores from overseas vendors,particularly during the holiday season,could result in our inability to obtain adequate levels of merchandise inventories to meet our consumers needs,which co

221、uld have an adverse impact on our net sales and profitability.Our costs may change as a result of currency exchange rate fluctuations or inflation in the purchase cost of merchandise manufactured abroad.We and our suppliers source goods from various countries,including Asia,and thus changes in the v

222、alue of the U.S.dollar compared to other currencies,or foreign labor and raw material cost inflation,may affect the cost of goods that we purchase.If the cost of goods that we purchase increases,we may not be able to similarly increase the retail prices of goods that we charge consumers without impa

223、cting our sales and our operating profits may suffer.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm23/107142025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm24/107 Increases in transportation

224、costs due to volatile fuel costs,climate change regulation and other factors may negatively impact our operating results.We rely upon various means of transportation,including ship and truck,to deliver products from vendors to our distribution center and from our distribution center to our stores.Co

225、nsequently,our results can vary depending upon the price of fuel.The price of oil has fluctuated drastically over the last few years,creating volatility in our fuel costs.In addition,efforts to combat climate change through reduction of greenhouse gases may result in higher fuel costs through taxati

226、on or other means.Any such future increases in fuel costs would increase our transportation costs for delivery of product to our distribution center and distribution to our stores,as well as our vendors transportation costs,which could decrease our operating profits.In addition,labor shortages or ot

227、her factors in the transportation industry could negatively affect transportation costs and our ability to supply our stores in a timely manner.In particular,our business is highly dependent on the trucking industry to deliver products to our distribution center and our stores.Our operating results

228、may be adversely affected if we or our vendors are unable to secure adequate trucking resources at competitive prices to fulfill our delivery schedules to our distribution center or stores.Risks Related to Our Capital StructureOur future cash flows may not be sufficient to meet our obligations and w

229、e might have difficulty obtaining more financing or refinancing any existing indebtedness on favorable terms.As of December 31,2023,our long-term revolving credit borrowings outstanding were zero.However,we have historically maintained a leveraged financial position.This means:our ability to obtain

230、financing in the future for working capital,capital expenditures and general corporate purposes might be impeded;we are more vulnerable to economic downturns and our ability to withstand competitive pressures is limited;andwe are more vulnerable to increases in interest rates,which may affect our in

231、terest expense and negatively impact our operating results.If our business declines,our future cash flows might not be sufficient to meet our obligations and commitments.If we fail to make any required payment under our revolving credit facility,our debt payments may be accelerated under this agreem

232、ent.In addition,in the event of bankruptcy,insolvency or a material breach of any covenant contained in our revolving credit facility,our debt may be accelerated.This acceleration could also result in the acceleration of other indebtedness that we may have outstanding at that time.The level of our i

233、ndebtedness,and our ability to service our indebtedness,is directly affected by our cash flows from operations.If we are unable to generate sufficient cash flows from operations to meet our obligations,commitments and covenants of our revolving credit facility,we may be required to refinance or rest

234、ructure our indebtedness,raise additional debt or equity capital,sell material assets or operations,delay or forego expansion opportunities,or cease or curtail our quarterly dividends or share repurchase plans.These alternative strategies might not be effected on satisfactory terms,if at all.The ter

235、ms of our revolving credit facility impose operating and financial restrictions on us,which may impair our ability to respond to changing business and economic conditions.The terms of our revolving credit facility impose operating and financial restrictions on us,including,among other things,covenan

236、ts that require us to maintain a fixed-charge coverage ratio of not less than 1.0 to 1.0 in certain circumstances,restrictions on our ability to incur liens,incur additional indebtedness,transfer or dispose of assets,change the nature of the business,guarantee obligations,pay dividends or make other

237、 distributions or repurchase stock,and make advances,loans or investments.For example,our ability to engage in the foregoing transactions will depend upon,among other things,our level of indebtedness at the time of the proposed transaction and whether we are in default under our revolving credit fac

238、ility.As a result,our ability to respond to changing business and economic conditions and to secure additional financing,if needed,may be significantly restricted,and we may be prevented from engaging in transactions that might further our growth strategy or otherwise benefit us and our stockholders

239、 without obtaining consent from our lenders.In addition,our revolving credit facility is secured by a perfected security interest in our assets.In the event of our insolvency,liquidation,dissolution or reorganization,the lenders under our revolving credit facility would be entitled to payment in ful

240、l from our assets before distributions,if any,were made to our stockholders.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm25/107152025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm26/107 Disru

241、ptions in the economy and financial markets may adversely impact our lenders.Volatility in capital and credit markets can impact the ability of financial institutions to meet their lending obligations.Based on information available to us,Bank of America,National Association,the lender under our revo

242、lving credit facility is currently able to fulfill its commitments thereunder.However,circumstances could arise that may impact its ability to fund its obligations in the future.Although we believe the commitments from our lender under the revolving credit facility,together with our cash on hand and

243、 anticipated operating cash flows,should be sufficient to meet our near-term borrowing requirements,if Bank of America,National Association,or any other lender under the credit facility from time to time,is for any reason unable to perform its lending or administrative commitments under the facility

244、,then disruptions to our business could result and may require us to replace this facility with a new facility or to raise capital from alternative sources on less favorable terms,including higher rates of interest.Risks Related to Regulatory,Legislative and Legal MattersCurrent and future governmen

245、t regulation may negatively impact demand for our products and increase our cost of conducting business.The conduct of our business,and the distribution,sale,advertising,labeling,safety,transportation and use of many of our products are subject to various laws and regulations administered by federal

246、,state and local governmental agencies in the United States,as well as regulations administered by various youth sports leagues and organizations.These laws and regulations may change,sometimes dramatically,as a result of political,economic or social events,such as the state and local stay-at-home o

247、rders issued in our markets in response to the COVID-19 pandemic.Changes in laws,regulations or governmental policy may alter the environment in which we do business and the demand for our products and,therefore,may impact our financial results or increase our liabilities.Some of these laws and regu

248、lations include:laws and regulations governing the manner in which we advertise or sell our products;laws and regulations that prohibit or limit the sale,in certain localities,of certain products we offer,such as firearm-related products;laws and regulations governing the activities for which we sel

249、l products,such as hunting and fishing;laws and regulations governing consumer products generally,such as the federal Consumer Product Safety Act and Consumer Product Safety Improvement Act,as well as similar state laws;labor and employment laws,such as minimum wage or living wage laws,paid time off

250、 and other wage and hour laws;laws requiring mandatory health insurance for employees,such as the Affordable Care Act;U.S.customs laws and regulations pertaining to duties and tariffs,including proper item classification,quotas and payment of duties and tariffs;laws and regulations governing consume

251、r privacy,such as the California Consumer Privacy Act;andlaws and regulations designed to address climate change,including measuring,reporting and mitigating greenhouse gas emissions.Changes in these and other laws and regulations or additional regulation could cause the demand for and sales of our

252、products to decrease.Moreover,complying with increased or changed regulations could cause our cost of obtaining products and our operating expense to increase.This could adversely affect our net sales and profitability.We may be subject to periodic litigation that may adversely affect our business a

253、nd financial performance.From time to time,we may be involved in lawsuits and regulatory actions relating to our business,certain of which may be maintained in jurisdictions with reputations for aggressive application of laws and procedures against corporate defendants.Due to the inherent uncertaint

254、ies of litigation and regulatory proceedings,we cannot accurately predict the ultimate outcome of any such proceedings.An unfavorable outcome could have a material adverse impact on our business,results of operations and financial condition.In addition,regardless of the outcome of any litigation or

255、regulatory proceedings,these proceedings could result in substantial costs and may require that we devote substantial resources to defend against these claims,which could impact our results of operations.In particular,we may be involved in lawsuits related to employment,advertising and other matters

256、,including class action lawsuits brought against us for alleged violations of the Fair Labor Standards Act,state wage and hour laws,state or federal advertising laws and other laws.An unfavorable outcome or settlement in any such proceeding could,in addition to requiring us to pay any settlement or

257、judgment amount,increase our operating expense as a consequence of any resulting changes we might be required to make in employment,advertising or other business practices.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm27/107162025/1/18 07:4410-

258、Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm28/107 In addition,we sell products manufactured by third parties,some of which may be defective.Many such products are manufactured overseas in countries which may utilize quality control standards that vary from th

259、ose legally allowed or commonly accepted in the United States,which may increase our risk that such products may be defective.If any products that we sell were to cause physical injury or injury to property,the injured party or parties could bring claims against us as the retailer of the products ba

260、sed upon strict product liability.In addition,our products are subject to the federal Consumer Product Safety Act and the Consumer Product Safety Improvement Act,which empower the Consumer Product Safety Commission to protect consumers from hazardous products.The Consumer Product Safety Commission h

261、as the authority to exclude from the market and recall certain consumer products that are found to be hazardous.Similar laws exist in some states and cities in the United States.If we fail to comply with government and industry safety standards or reporting requirements,we may be subject to claims,l

262、awsuits,product recalls,fines and negative publicity that could harm our results of operations and financial condition.We also sell firearm-related products,which may be associated with an increased risk of injury and related lawsuits.We may incur losses due to lawsuits relating to our compliance wi

263、th firearm and ammunition laws as mandated by city,municipality,state and federal law,or the performance of background checks in connection with firearms or ammunition purchases,or the improper use of firearms sold by us.This may include,for example,lawsuits by individuals,government entities or oth

264、er organizations attempting to recover damages or costs from firearms manufacturers and retailers relating to the sale,advertisement,misuse,loss,or release of firearms or ammunition.Commencement of these lawsuits against us could reduce our net sales and decrease our profitability.The sale of firear

265、m-related products also may present reputational risks and negative publicity that could affect consumers perception of us or willingness to shop with us,which could harm our results of operations and financial condition.The insurance coverage under policies that we maintain or that our product vend

266、ors maintain and under which we may be insured may not be adequate to cover claims that could be asserted against us.If a successful claim was to be brought against us in excess of our insurance coverage,or for which we have no insurance coverage,it could harm our business.Even unsuccessful claims c

267、ould result in the expenditure of substantial funds and management time and could have a negative impact on our business.In addition,the cost of maintaining adequate insurance coverage could increase based on claims asserted against us,the type of products that we sell and market conditions generall

268、y.The sale of firearm-related products is subject to strict regulation,which could affect our operating results.Regulations which took effect January 1,2024 contributed to the discontinuation of firearm sales in our California markets.While this impact is expected to be immaterial,because we continu

269、e to sell firearms in our other markets and firearm-related products in all of our markets,we are required to comply with federal,state and local laws and regulations pertaining to the purchase,storage,transfer and sale of such products.These laws and regulations require us to,among other things,obt

270、ain and maintain federal,state or local permits or licenses in order to sell firearms or ammunition,ensure that certain employees obtain licenses to sell firearms or ammunition,ensure that all purchasers of firearms are subjected to a pre-sale background check and other requirements,record the detai

271、ls of each firearm sale on appropriate government-issued forms,record each receipt or transfer of a firearm at our distribution center or any store location on acquisition and disposition records,and maintain these records for a specified period of time.Additionally,in certain jurisdictions we are r

272、equired to obtain a license to sell ammunition or record the details of each ammunition sale and maintain these records for a specified period of time.We also are required to timely respond to traces of firearms by law enforcement agencies.Over the past several years,the purchase and sale of firearm

273、-related products has been the subject of increased federal,state and local regulation,such as new minimum age restriction laws,ammunition sales laws,and new security laws.These regulatory efforts are likely to continue in our current markets and other markets into which we may expand.If enacted,new

274、 laws and regulations could limit the types of firearm-related products that we are permitted to purchase and sell,impose new restrictions and requirements on the manner in which we purchase,sell and store these products,increase regulatory fees charged to the consumer and impact our ability to offe

275、r these products in certain retail locations or markets.If we fail to comply with existing or newly enacted laws and regulations relating to the purchase and sale of firearm-related products,our permits or licenses to sell firearm-related products at our stores or maintain inventory of firearm-relat

276、ed products at our distribution center may be suspended or revoked.We may also incur losses related to these products if we fail to obtain or timely renew a necessary license.If this occurs,our net sales and profitability could suffer.Further,complying with increased regulation relating to the sale

277、of firearm-related products could cause our operating expense to increase and this could adversely affect our results of operations.172025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm29/107 Risks Related to Investing in Our Common StockThe declara

278、tion of discretionary dividend payments or the repurchase of our common stock pursuant to our share repurchase program may not continue.We currently pay quarterly dividends subject to capital availability and periodic determinations by our Board of Directors that cash dividends are in the best inter

279、est of us and our stockholders.Our dividend policy may be affected by,among other items,business conditions,our financial condition,our views on potential future capital requirements,the terms of our debt instruments,legal risks,changes in federal income tax law and challenges to our business model.

280、Our dividend policy may change from time to time and we may or may not continue to declare discretionary dividend payments.Additionally,we are not obligated to make any purchases pursuant to the share repurchase program authorized by our Board of Directors and we may reduce the amount of purchases w

281、e make under the program or discontinue the program at any time.If we are unable to establish and maintain adequate internal controls over financial reporting,we may not be able to report our financial results in a timely and reliable manner,which could lead to a loss of investor confidence and resu

282、lt in a decline in the market price of our common stock.Adequate and effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud.If we are unable to provide reliable financial reports and effectively prevent fraud,our reputation and operati

283、ng results could be harmed.Even established adequate and effective internal controls have inherent limitations,including the possibility of human error,the circumvention or overriding of controls,or fraud.Therefore,even established adequate and effective internal controls can provide only reasonable

284、 assurance with respect to the preparation and fair presentation of financial statements.In addition,projections of any evaluation of adequate and effective internal controls over financial reporting in future periods are subject to the risk that the control may become inadequate because of changes

285、in conditions or a deterioration in the degree of compliance with the policies or procedures.If we fail to maintain adequate and effective internal controls,including any failure to implement new or improved controls,or if we experience difficulties in their implementation,we may be unable to meet o

286、ur reporting obligations in a timely and reliable manner,and there could be a material adverse effect on our business and financial results.If our current control environment deteriorates,investors may lose confidence which could adversely affect the market price of our common stock.Our anti-takeove

287、r provisions could prevent or delay a change in control of our Company,even if such change of control would be beneficial to our stockholders.Provisions of our amended and restated certificate of incorporation and Second Amended and Restated Bylaws(“Bylaws”)as well as provisions of Delaware law coul

288、d discourage,delay or prevent a merger,acquisition or other change in control of our Company,even if such change in control would be beneficial to our stockholders.The provisions of our amended and restated certificate of incorporation,amended and restated bylaws and Delaware law that could discoura

289、ge,delay or prevent a merger,acquisition or other change in control include:a Board of Directors that is classified such that two or three of the seven directors,depending on classification,are elected each year and each director is elected for a three-year term;limitations on the ability of stockho

290、lders to call special meetings of stockholders;prohibition of stockholder action by written consent and requiring all stockholder actions to be taken at a meeting of our stockholders;a requirement in our certificate of incorporation that stockholder amendments to our bylaws and certain amendments to

291、 our certificate of incorporation must be approved by 80%of the outstanding shares of our capital stock;authorization of the issuance of“blank check”preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares and thwart a takeover attempt;andestablishm

292、ent of advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.In addition,Section 203 of the Delaware General Corporations Law(“DGCL”)limits business combination transactions with 15%s

293、tockholders that have not been approved by the Board of Directors.These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation.These provisions may apply even if the transaction may be considered beneficial by some stockholders.182025/1/18

294、07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm30/1072025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm31/107 Our Bylaws designate certain state or federal courts as the exclusive forum for certain litig

295、ation that may be initiated by our stockholders,which could limit stockholders ability to obtain a favorable judicial forum for disputes with us and may impose additional costs on us and our stockholders.Our Bylaws provide that,unless we consent to the selection of an alternative forum:(a)the Court

296、of Chancery of the State of Delaware(the“Chancery Court”)(or,in the event that the Chancery Court does not have jurisdiction,the federal district court or other state courts located within the State of Delaware)shall be the sole and exclusive forum for(i)any derivative action,suit or proceeding brou

297、ght on our behalf,(ii)any action,suit or proceeding asserting a breach of a fiduciary duty,(iii)any action,suit or proceeding arising pursuant to any provision of the DGCL or our Certificate of Incorporation or Bylaws or(iv)any action,suit or proceeding asserting a claim against us that is governed

298、by the internal affairs doctrine;and(b)subject to the preceding provisions,federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint or cause of action arising under the Securities Act of 1933,as amended,including all causes of action as

299、serted against any defendant to such complaint.We refer to the above provisions as the forum selection provisions and we refer to the bylaw provision governing causes of action under the Securities Act of 1933 as the federal forum selection provision.The Bylaws further enable us to initiate an actio

300、n against a stockholder to enforce the forum selection provisions should the stockholder sue,or threaten to sue,in another jurisdiction.Notwithstanding the foregoing,the forum selection provisions shall not apply to suits brought to enforce any liability or duty created by the Exchange Act or any ot

301、her claim for which the federal courts of the United States have exclusive jurisdiction.Our forum selection provisions do not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder,and our stockholders are not deemed to have waived our compliance

302、 with the same.Any person or entity purchasing or otherwise acquiring any interest in security of our Company is deemed to have notice of and consented to the forum selection provisions.These forum selection provisions may impose additional costs on stockholders pursuing claims described above.They

303、may limit a stockholders ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,officers,other team members or stockholders,which may discourage the filing of lawsuits against our Company and our officers and directors,even though an action,

304、if successful,might benefit stockholders.The Chancery Court and the federal district courts of the United States may also reach different judgments or results than would other courts,including courts where a stockholder considering an action may be located or would otherwise choose to bring the acti

305、on,and such judgments may be more or less favorable to our company than our stockholders.Section 22 of the Securities Act of 1933 creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act of 1933.While the Delaw

306、are Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act of 1933 be brought in federal court are facially valid under Delaware law,there is uncertainty as to whether other courts will enforce that provision.If a court were to

307、 find any forum selection provision contained in our Bylaws to be inapplicable or unenforceable in an action,we may incur additional costs associated with resolving such action in other jurisdictions,which could harm our business,results of operations and financial conditions.The forum selection pro

308、visions may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid.Significant stockholders or potential stockholders may attempt to effect changes or acquire control over our Company,which could adversely affect our results of operations

309、and financial condition.Stockholders may from time to time attempt to effect changes,engage in proxy solicitations or advance stockholder proposals,all of which may increase with the effectiveness of SEC universal proxy rules.Responding to proxy contests and other actions by activist stockholders ca

310、n be costly and time-consuming,disrupting our operations and diverting the attention of our Board of Directors and senior management from the pursuit of business strategies.As a result,stockholder campaigns could adversely affect our results of operations and financial condition.General Risk Factors

311、If we lose key management or are unable to attract and retain the talent required for our business,our operating results could suffer.Our future success depends to a significant degree on the skills,experience and efforts of Steven G.Miller,our Chairman,President and Chief Executive Officer,and othe

312、r key personnel with longstanding tenure who are not obligated to stay with us.The loss of the services of any of these individuals for any reason could harm our business and operations.In addition,as our business grows and evolves,we will need to attract and retain additional qualified management p

313、ersonnel in a timely manner to hire,develop,train and manage an increasing number of middle-level management,sales associates and other employees.2025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm32/107192025/1/18 07:4410-Khttps:/www.sec.gov/Archiv

314、es/edgar/data/1156388/000095017024021829/bgfv-20231231.htm33/107 During fiscal 2022 and continuing into fiscal 2023,competition for qualified employees intensified,requiring us to pay higher wages.In the future,increases in the cost of living in our market areas could require us to pay higher wages

315、and benefits to attract a sufficient number of qualified employees and increases in the minimum wage or other employee benefit costs could increase our operating expense.If we are unable to attract and retain personnel as needed in the future,our net sales growth and operating results may suffer.Our

316、 information technology systems are critical to the functioning of our business and are vulnerable to failure,damage,theft or intrusion that could harm our operations.Our success,in particular our ability to successfully manage inventory levels and process customer transactions,largely depends upon

317、the efficient operation of our IT systems.We use IT systems to track inventory at the store level and aggregate daily sales information,communicate customer information and process purchasing card transactions,process shipments of goods and report financial information.These systems and our operatio

318、ns are vulnerable to damage or interruption from:earthquake,fire,flood and other natural disasters;failed system implementations;power loss,computer systems failures,Internet and telecommunications or data network failures,third-party vendor system failures,operator negligence,improper operation by

319、or supervision of employees;physical and electronic loss of data,security breaches,misappropriation,data theft and similar events;andcomputer viruses,worms,Trojan horses,intrusions,or other external threats.Any failure of our IT systems that causes an interruption in our operations,loss of data,or a

320、 decrease in inventory tracking could result in reduced net sales and profitability.Additionally,if any data intrusion,security breach,misappropriation or theft were to occur,we could incur significant costs in responding to such event,including responding to any resulting claims,litigation or inves

321、tigations,which could harm our operating results.Breach of data security or other unauthorized disclosure of sensitive or confidential information could harm our business,employees and standing with our customers.The protection of our customer,employee and business data is critical to us.Our busines

322、s,like that of most retailers,involves the receipt,storage and transmission of customers personal information,consumer preferences and payment card information,as well as confidential information about our employees,our suppliers and our Company.We rely on commercially available systems,software,too

323、ls and monitoring to provide security for processing,transmission and storage of all such data,including confidential information.Despite the security measures we have in place,our facilities and systems,and those of our third-party service providers,may be vulnerable to security breaches,acts of va

324、ndalism,computer viruses,data theft,misplaced or lost data,programming or human errors,or other similar events.Unauthorized parties may attempt to gain access to our systems or information through fraud or other means,including deceiving our employees or third-party service providers.The methods use

325、d to obtain unauthorized access,disable or degrade service,or sabotage systems are also constantly changing and evolving,and may be difficult to anticipate or detect for long periods of time.We have implemented and regularly review and update our control systems,processes and procedures to protect a

326、gainst unauthorized access to or use of secured data and to prevent data loss.However,the ever-evolving threats mean we must continually evaluate and adapt our systems and processes,and there is no guarantee that they will be adequate to safeguard against all data security breaches or misuses of dat

327、a.Any security breach involving the misappropriation,loss or other unauthorized disclosure of customer payment card or personal information or employee personal or confidential information,whether by us or our vendors,could damage our reputation,expose us to risk of regulatory enforcement,litigation

328、 and liability,disrupt our operations,harm our business and have an adverse impact upon our net sales and profitability.In addition,as the regulatory environment related to information security,data collection and use,and privacy becomes increasingly rigorous,with new and changing requirements appli

329、cable to our business,compliance with those requirements could also result in additional costs.202025/1/18 07:4410-Khttps:/www.sec.gov/Archives/edgar/data/1156388/000095017024021829/bgfv-20231231.htm34/107 Terrorism and the uncertainty of war may harm our operating results.Terrorist attacks or acts

330、of war may cause damage or disruption to us and our employees,facilities,information systems,vendors and customers,which could significantly impact our net sales,profitability and financial condition.The ongoing conflicts in Ukraine and the Middle East may lead to disruption in the global supply cha

331、in,rising fuel costs,or cybersecurity risks,and economic instability generally,any of which could materially and adversely affect our business and results of operations.Terrorist attacks could also have a significant impact on ports or international shipping on which we are substantially dependent f

332、or the supply of much of the merchandise we sell.Our corporate headquarters is located near Los Angeles International Airport and the Port of Los Angeles,which have been identified as potential terrorism targets.The potential for future terrorist attacks,the national and international responses to t

333、errorist attacks and other acts of war or hostility may cause greater uncertainty and cause our business to suffer in ways that we cannot currently predict.Military action taken in response to such attacks could also have a short or long-term negative economic impact upon the financial markets,international shipping and our business in general.Changes in accounting standards and subjective assumpt