10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, 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 January 2, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to ______________________

Commission file number: 000-49850

BIG 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 Boulevard El Segundo, California	90245
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (310) 536-0611

Securities 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 value $0.01 per share	BGFV	The NASDAQ Stock Market LLC

Securities registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate 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 this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate 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 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 filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	

If an emerging growth 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. 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s 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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 

The aggregate market value of the voting stock held by non-affiliates of the registrant was $510,240,815 as of July 4, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter) based upon the closing price of the registrant’s common stock on the NASDAQ Stock Market LLC reported for July 2, 2021. Shares of common stock held by each executive officer and director and by each person who, as of such date, may be deemed to have beneficially owned more than 5% of the outstanding voting stock have been 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 22,219,839 shares of common stock outstanding at February 22, 2022.

Documents Incorporated by Reference

Part III of this Form 10-K incorporates by reference certain information from the registrant’s 2022 definitive proxy statement (the “Proxy Statement”) to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year.

TABLE OF CONTENTS

	Page
PART I
ITEM 1. BUSINESS	4
ITEM 1A. RISK FACTORS	10
ITEM 1B. UNRESOLVED STAFF COMMENTS	21
ITEM 2. PROPERTIES	21
ITEM 3. LEGAL PROCEEDINGS	22
ITEM 4. MINE SAFETY DISCLOSURES	22
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	23
ITEM 6. [RESERVED]	24
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	35
ITEM 9A. CONTROLS AND PROCEDURES	36
ITEM 9B. OTHER INFORMATION	38
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS...............	38
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	39
ITEM 11. EXECUTIVE COMPENSATION	39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	39
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	39
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	39
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	40
EXHIBIT INDEX	41
SIGNATURES	43
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

Forward-Looking Statements

This 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 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. These 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 differ materially from forecasted results. These risks and uncertainties include, among other things, the economic 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, changes in the consumer spending environment, 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 specific 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, operating expense fluctuations, increases in labor and benefit-related expense, changes in laws or regulations, including those related to tariffs and duties, public health issues (including those caused by COVID-19 or any potential variants), impacts from civil 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 historically 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 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 possible 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 undertake no obligation to revise or update any forward-looking statement that may be made from time to time by us or on our behalf.

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PART I

ITEM 1. BUSINESS

General

Big 5 Sporting Goods Corporation (“we,” “our,” “us” or the “Company”) is a leading sporting goods retailer in the western United States, operating 431 stores and an e-commerce platform under the “Big 5 Sporting Goods” name as of January 2, 2022. Throughout this section, our fiscal years ended January 2, 2022 and January 3, 2021 are referred to as fiscal 2021 and 2020, respectively. We provide a full-line product offering in a traditional sporting goods store format that averages approximately 11,000 square feet. Our product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, 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 over our 67-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-known brand name manufacturers, including adidas, Coleman, Columbia, Everlast, New Balance, Nike, 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 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 to 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 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.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 accumulated 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 operating 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 October 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 located at 2525 East El Segundo Boulevard, El Segundo, California 90245. Our Internet address is www.big5sportinggoods.com. 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 Securities 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.

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COVID-19 Update

In March 2020, the World Health Organization declared the rapidly growing novel coronavirus (“COVID-19”) outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine.

Beginning on March 20, 2020 and continuing into the second quarter of fiscal 2020, we temporarily closed more than one-half of our retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. We were subsequently able to gradually reopen all store locations based initially on qualifying as an “essential” business under applicable regulations and later as a result of the easing of regulatory restrictions on retail operations in our market areas. Throughout fiscal 2020, the pandemic and the shelter orders that were in place in our market areas negatively impacted customer traffic into our stores that were operating, and certain stores required additional closures during the remainder of the year. In an effort to promote social distancing protocols, we implemented reduced store hours for our open stores and limited the number of customers in our stores at any one time. While these temporary store closures, limited hours of operation and shelter orders in our market areas related to the initial COVID-19 outbreak had an unfavorable impact on our operations initially, as we began reopening stores we recognized significant shifts in consumer demand in favor of fitness and outdoor recreational products and we rapidly evolved our product assortment, which had a favorable impact on our operating results throughout the remainder of fiscal 2020. In fiscal 2021, as COVID-19 restrictions continued easing in many of our markets, we experienced strong consumer demand across a broad assortment of product categories, including increased consumer demand for team sports products, which was weak during the prior year due to the COVID-19 pandemic.

During fiscal 2020, in response to COVID-19, we initially took measures to reduce expense and preserve capital across the organization, including negotiating lease concessions with landlords that would reduce or defer our lease-related payments, scaling back merchandise inventory orders and extending payment terms with merchandise vendors, implementing temporary and permanent workforce reductions throughout the organization, reducing advertising and the amount of planned capital spending, and suspending our quarterly dividend payment, among other measures. Although a certain portion of the expense reduction initiatives only benefited the second quarter of fiscal 2020, the remainder of fiscal 2020 continued to reflect labor expense savings due primarily to continued reduced store operating hours throughout most of the period, as well as advertising expense savings due to significantly reduced advertising activity. In fiscal 2021, our labor expense gradually increased as we increased wage rates in a tightening labor market and increased our store operating hours compared to the same period in the prior year. While store operating hours were higher in fiscal 2021 compared with the same period in the prior year, store operating hours remain below pre-pandemic levels for the comparable periods, and we expect this trend to continue during fiscal 2022. We continue to maintain reduced advertising expense in comparison to historical levels and expect this trend to continue during fiscal 2022 as we continue to evaluate the impact on our sales. We will continue to evaluate the impact of COVID-19 on our future operations.

Expansion and Store Development

Throughout 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 western United States has typically been systematic and designed to capitalize on our name recognition, economical store format and economies of scale related to distribution and advertising. Over the past five fiscal years, we have opened 18 stores including relocations, of which 56% were in California. Our store openings over the past five fiscal years reflect our cautious approach toward store expansion in the current retail environment, which includes increasing ecommerce competition and the COVID-19 pandemic in fiscal 2020 and 2021. The following table reflects our store opening, closing and relocation activity during the periods indicated:

	Stores Opened						Stores			Stores			Number of Stores
Year	California		Other Markets		Total		Relocated			Closed			at Period End
2017		2		4		6		(1	)		(2	)		435
2018		4		—		4		(1	)		(2	)		436
2019		2		1		3		(1	)		(4	)		434
2020		—		—		—		—			(4	)		430
2021		2		3		5		(2	)		(2	)		431

Our store format enables us to have substantial flexibility regarding new store locations. We have successfully operated stores in major metropolitan areas and in areas with as few as 30,000 people. Our 11,000 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.

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New store 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. Our store format normally requires investments of approximately $0.6 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 estate 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 personnel analyze new store locations with the assistance of real estate firms that specialize in retail properties. Historically, we seek expansion opportunities to further penetrate our established markets, develop recently entered markets and expand into new, contiguous markets with attractive demographic, competitive and economic profiles.

Merchandising

We 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 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 for us under a manufacturer’s brand name, private label merchandise and specials on quality items we purchase through opportunistic buys of vendor over-stock and close-out merchandise.

Through our 67 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 order to better align our product mix and promotional efforts with today’s consumer.

The following table illustrates our mix of soft goods, which are non-durable items such as shirts and shoes, and 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 activities and reduced sales for team sports and back to school products:

	Fiscal Year
	2021			2020			2019			2018			2017
Hard goods		55.0	%		60.2	%		49.7	%		50.4	%		50.7	%
Soft goods
Athletic and sport footwear		24.1			22.0			28.2			28.6			28.7
Athletic and sport apparel		20.9			17.8			22.1			21.0			20.6
Total soft goods		45.0			39.8			50.3			49.6			49.3
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:

adidas	Coleman	Footjoy	Impex	Nike	Skechers
Asics	Columbia	Franklin	JanSport	Rawlings	Spalding
Bearpaw	Crosman	Gildan	Lifetime	Razor	Speedo
Bushnell	Daisy	Head	McDavid	Remington	Timex
Callaway	Dickies	Heelys	Mizuno	Rollerblade	Titleist
Camp Chef	Easton	Hillerich & Bradsby	Mossberg	Russell Athletic	Under Armour
Carhartt	Everlast	iFit (Proform)	Mueller Sports Medicine	Saucony	Wilson
Casio	Fila	Igloo	New Balance	Shimano	Winchester

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 purchase merchandise produced exclusively for us under a manufacturer’s 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 merchandise produced exclusively for us in order to reinforce our reputation as a retailer that offers attractive values to our customers.

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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 sales. 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, apparel, 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 selection on a store-by-store basis in an effort to satisfy each region’s 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 14 years of experience 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 refine our merchandise mix, pricing strategy, advertising effectiveness and inventory levels to best serve the needs of our customers.

Advertising and Marketing

Through years of targeted advertising, we have solidified our reputation for offering quality products at attractive prices. We drive customer traffic through the effective use of both digital communications as well as print media.

We built our value-based brand through weekly print advertisements since 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 shifting our advertising spend away from print media towards digital advertising. In fiscal 2020, we accelerated the reduction of print advertising in response to the COVID-19 pandemic and our print advertising remained substantially reduced (from pre-pandemic levels) in fiscal 2021 as we continued to evaluate our advertising programs. The consistency and reach of our digital and print advertising programs have historically driven sales and create high customer awareness of the name “Big 5 Sporting Goods.”

We promote our products 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, Twitter and Instagram, mobile programs and other website initiatives.

Our digital promotional 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 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 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 assortment 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 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 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 Relationships

We have developed strong vendor relationships over the past 67 years. We currently purchase merchandise from over 700 vendors. In fiscal 2021, only one vendor, Nike, represented greater than 5% of total purchases, at 7.6%, and accounted for 8.7% of our total sales in fiscal 2021. In early fiscal 2021, we were informed of an expansion of Nike’s direct-to-consumer initiatives that will impact certain multi-branded retailers, including us, and which will lead to a significant reduction in our future supply chain relative to this vendor. This transition is not expected to impact our ability to continue to purchase certain Nike branded products from authorized licensees, and did not have a material impact on our sales for fiscal 2021. We have been actively expanding our relationships with other new and existing vendors in an effort to replace the affected Nike product within our product mix. We believe current relationships with our vendors are good. We benefit from the long-term working relationships with vendors that our senior management and our buyers have carefully nurtured throughout our history.

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Information Technology Systems

We have fully integrated information technology (“IT”) systems that support critical business functions, such as sales reporting, inventory management and distribution 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, email and networks that connect our employees to appropriate technology solutions and tools. This includes connecting 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 and corporate communications. Our separate disaster recovery facility and solutions, which we plan to migrate to a cloud-based environment beginning in fiscal 2022, provide 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 foundation 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, as 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 we 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 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 detect 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.

Distribution

We operate a distribution center located in Riverside, California, that services all of our stores. The facility has 953,000 square feet of storage and office space, along with an additional 172,000 square-foot distribution space adjacent to our distribution center that enables us to more efficiently fulfill our expanding distribution requirements. The distribution center warehouse management system is fully integrated with our enterprise-level IT systems and provides comprehensive warehousing and distribution capabilities. We regularly distribute merchandise from our distribution center to our stores using our fleet of leased tractors, as well as contract carriers.

Industry and Competition

The retail market for sporting goods is highly competitive. In general, competition tends to fall into the following six basic categories:

Sporting Goods Superstores. Stores 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 Dick’s Sporting Goods.

Traditional Sporting Goods Stores. This category consists of traditional sporting goods chains, including us. These stores range in size from 5,000 to 20,000 square feet and are frequently located in regional malls and multi-store shopping centers. The traditional chains typically carry a varied assortment of merchandise and attempt to position themselves as convenient neighborhood stores. Sporting goods retailers operating stores within this category include Hibbett.

Specialty Sporting Goods Stores. Specialty sporting 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, Cabela’s, Foot Locker, Sportsman’s Warehouse and REI. This category also includes pro shops that 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 Kohl’s. These stores range in size from 50,000 to 200,000 square feet and are primarily located in regional malls, shopping centers or 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 and used sporting goods products via e-commerce or catalogs, including Amazon.com. 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 retail industry.

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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 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; advertising; 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 Capital

We believe the experience 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 January 2, 2022:

	Number of Employees		Average Number of Years With Us
Executive Management		8		33
Vice Presidents		25		21
Buyers		20		14
Store District / Regional Supervisors		48		25
Store Managers		420		13

As of January 2, 2022, we had approximately 7,800 active employees, of which approximately 2,400 were full-time. The General Teamsters, Airline, Aerospace and Allied Employees, Warehousemen, Drivers, Construction, Rock and Sand, Local Union No. 986, affiliated with the International Brotherhood of Teamsters (“Local 986”) represents approximately 400 hourly employees in our distribution center and select stores. In December 2017, we negotiated a five-year contract with Local 986 for the covered distribution center employees, and in January 2018, we negotiated a five-year contract with Local 986 for the covered store employees. Both contracts were retroactive to September 1, 2017, and expire on August 31, 2022. We have not had a strike or work stoppage in over 30 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 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 merchandising 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 policies 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 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 programs 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 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. Our overall training strategy and LMS enable us to efficiently manage, monitor, assign and report employee 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. Measures we have taken include cleaning facilities professionally on a regular basis, equipping facilities with hand sanitizer stations and signage illustrating how to socially distance, requiring face coverings, limiting the number of people admitted to a facility at one time, installing protective shields at cash registers and other countertops and providing free masks and hand sanitizer. We continue to monitor the rapidly evolving situation 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.

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Description of Service Marks and Trademarks

We 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 2023, respectively. We have also registered 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 in commerce and they continue to provide value to us at the time of renewal.

ITEM 1A. RISK FACTORS

An investment in the Company entails risks and uncertainties including the following. You should 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 adverse 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 Industry

Intense competition in the sporting goods industry could limit our growth 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 and Dick’s Sporting Goods;

•traditional sporting goods stores and chains, such as Hibbett Sports;

•specialty sporting goods shops and pro shops, such as Bass Pro Shops, Cabela’s, Foot Locker, Sportsman’s Warehouse and REI;

•mass merchandisers, discount stores and department stores, such as Walmart, Target, Kohl’s and JC Penney;

•e-commerce retailers, such as Amazon.com; and

•athletic and sporting goods brands that engage in direct-to-consumer sales, such as Nike, 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 difficult 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 of 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 retail 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) online 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.

A reduction or loss of product from a key supplier could cause our net sales and profitability to suffer.

In fiscal 2021, we purchased merchandise from over 700 vendors, and our 20 largest vendors collectively accounted for 36.8% of our total purchases. One vendor, Nike, represented greater than 5% of total purchases, at 7.6%, in fiscal 2021 and accounted for 8.7% of our total sales in fiscal 2021. Early in fiscal 2021, we were informed of an expansion of Nike’s direct-to-consumer initiatives that will impact certain multi-branded retailers, including us, and which will lead to a significant reduction in our future supply chain relative to this vendor. This transition is not expected to impact our ability to continue to purchase certain Nike branded products from authorized licensees, and did not have a material impact on our sales for fiscal 2021. We have been actively expanding our relationships with other new and existing vendors in an effort to replace the affected Nike product within our product mix. If we are unable to develop a suitable alternative to satisfy product demand in fiscal 2022 and beyond, sales could decline which could negatively impact future operating results.

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Additionally, if there are other 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 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 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 allowances 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 range 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 our market areas and regulatory or political changes. During the novel coronavirus (“COVID-19”) pandemic, our product offerings have resonated with consumers who are looking for ways to stay healthy and active to fulfill their fitness and outdoor recreational needs. 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 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 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 suffer.

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 recent years we have been shifting more of our advertising from print to digital. In 2020, in response to the 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 may not continue after the outbreak has subsided, and 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 could impact our profitability. If our efforts to evolve our advertising 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 is expected to continue to disrupt our business, which could have a material adverse impact on our business, results of operations, liquidity and financial condition for an extended period of time.

In March 2020, the World Health Organization declared the rapidly growing COVID-19 outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine. Beginning on March 20, 2020, we temporarily closed more than one-half of our retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. We were subsequently able to gradually reopen all of our store locations based on either qualifying as an “essential” business under applicable regulations or as a result of the easing of regulatory restrictions on retail operations in our market areas. New temporary closures of stores may be required if additional orders are issued in response to changing health conditions. We implemented reduced store hours, limited the number of customers in our stores at any one time and have generally implemented social-distancing guidelines throughout our store operating space. As a result of the reduced customer traffic and sales at the start of the pandemic, and in an effort to preserve capital, we implemented temporary and permanent workforce reductions throughout the Company, reduced advertising and planned capital spending in fiscal 2020 and initially suspended our quarterly dividend payment.

While these temporary store closures, limited hours of operation and shelter orders in our market areas related to the initial COVID-19 outbreak had an unfavorable impact on our operations initially, as we began reopening stores we recognized significant shifts in consumer demand in favor of fitness and outdoor recreational products and we rapidly evolved our product assortment, which had a favorable impact on our operating results throughout the remainder of fiscal 2020. In fiscal 2021, as COVID-19 restrictions continued easing in many of our markets, we experienced strong consumer demand across a broad assortment of product categories, including increased consumer demand for team sports products, which was weak during the prior year due to the COVID-19 pandemic. Additionally, our store operating hours and advertising and promotional activity have been reduced as a result of COVID-19, which has resulted in lower expense and higher profitability.

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As the pandemic continues to evolve, we may be further required to restrict the operations of our stores or our distribution facility if we deem this necessary or if recommended or mandated 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 required 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. For example, the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) announced an emergency temporary standard on November 5, 2021, which would have required COVID-19 vaccinations or weekly COVID-19 testing for all employees of United States employers with 100 or more employees. While OSHA has since withdrawn this emergency temporary standard following review by the United States Supreme Court, similar mandates may be proposed or issued at the state and local level, which if enacted could negatively impact our ability to attract and retain employees, increase expenses, and pose operational issues with respect to testing requirements. Furthermore, certain jurisdictions in which we operate have mandated employer-paid supplemental leave benefits associated with the COVID-19 pandemic, and such programs may be extended into the future. The cost of maintaining such mandated benefits may increase our operating costs and negatively impact our results of operations. Additionally, if we do not respond appropriately to the pandemic, or if customers do not perceive our 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 Asia. To the extent one or more of our vendors is 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. Additionally, during the second half of fiscal 2021, we experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited our ability to obtain desired quantities of inventory for various merchandise categories. While we have generally been able to sufficiently stock product in our stores to meet most consumer demand during the pandemic, 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 could have an adverse impact on our net sales and profitability.

The extent to which the COVID-19 outbreak impacts our business, results of operations, liquidity 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 response and impact of stimulus measures adopted by local, state and federal governments, and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we could experience materially adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future due to a continued erosion in consumer sentiment or the effect of high unemployment on our consumer base. Additionally, the consumer preferences for certain product categories that have driven positive sales during the COVID-19 outbreak may not continue after the outbreak has subsided, and any 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 could impact our profitability. As business conditions evolve, we may need to increase our staffing from the current reduced levels, which could impact 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 vendors. These events may, in turn, have a material adverse impact on our business, results of operations, liquidity and financial condition. In the event of a prolonged material economic downturn, including circumstances that require us to close a large portion of our stores or cause us to experience a further reduction in store traffic, we may not be able to comply with the financial covenants in our credit facility, which could negatively impact our ability to borrow under that facility or with other lenders, negatively impact our liquidity position and may increase our risk of insolvency.

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 this, 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 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 such as flooding, drought, fires (such as the wildfires of 2021 that resulted in the closing of certain national parks and led to a negative impact on various outdoor activities, particularly camping and watersports, and the wildfires of 2018 that destroyed our store located in Paradise, CA), earthquakes or electricity blackouts (such as the rolling blackouts of 2019 that impacted certain California stores) could impact our sales and harm our operations. 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 stores in the manner that we have in the past.

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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 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 application 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 increase 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 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 selling 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 and climate patterns do not conform to seasonal norms.

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 directly 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 successful. 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 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 center. 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 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. If the security measures used at our distribution center 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 30 years, although such a disruption could have a significant negative impact on our business 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 distribution 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 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 includes 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:

•we may slow our expansion efforts, or close underperforming stores, as a result of challenging conditions in the retail industry and the economy overall;

•we may not be able to find 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;

•we may not be able to negotiate acceptable lease terms;

•we may not be able to hire and retain qualified store personnel; and

•we may not have the financial resources necessary to fund our expansion plans.

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In recent years, we have slowed our store openings and strategically closed certain stores as we maintained a cautious approach toward store expansion in the current retail environment, which included increasing e-commerce competition and the COVID-19 pandemic in fiscal 2020 and 2021. If we are unable to resume our store expansion efforts for any of the reasons discussed above, our operating results could suffer.

In addition, our expansion in new and existing markets may present competitive, merchandising, marketing and distribution challenges that differ from 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 with 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 conditions, consumer tastes, responsiveness to print 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 manufactured 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 purchased 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 “most 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 fluctuations 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 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 supply 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 potential 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 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 merchandise 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 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 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 issues 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. During the second half of fiscal 2021, we experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited our ability to obtain desired quantities of inventory for various merchandise categories. While we have generally been able to sufficiently stock product in our stores to meet most consumer demand during the pandemic, 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 could have an adverse impact on our net sales and profitability.

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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 value 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 impacting our sales and our operating profits may suffer.

Increases in transportation costs due to rising 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. Consequently, 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 taxation 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 other 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 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 Structure

Our future cash flows may not be sufficient to meet our obligations and we might have difficulty obtaining more financing or refinancing any existing indebtedness on favorable terms.

As of January 2, 2022, our long-term revolving credit borrowings outstanding were zero. However, we have historically maintained a leveraged financial position. This means:

•our ability to obtain 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; and

•we are more vulnerable to increases in interest rates, which may affect our interest 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 agreement. 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 indebtedness, 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 restructure 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.

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The terms 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, covenants 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 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 facility. 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 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 full from our assets before distributions, if any, were made to our stockholders.

Disruptions 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, the lender under our revolving 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 lenders under the revolving credit facility, together with our cash on hand and anticipated operating cash flows, should be sufficient to meet our near-term borrowing requirements, if Bank of America, National Association, our lender, 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, 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 Matters

Current and future government 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, 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 orders 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 regulations include:

•laws and regulations governing how our stores may operate during the COVID-19 pandemic;

•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 sell 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 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; and

•laws and regulations governing consumer privacy, such as the California Consumer Privacy Act.

Changes in these and other laws and regulations or additional regulation could cause the demand for and sales of our 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.

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We may be subject to periodic litigation that may adversely affect our business and 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 uncertainties 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 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, 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 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.

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 those 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 based 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 has 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, lawsuits, 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 with 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 other 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 firearm-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 vendors 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 could 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 generally.

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The sale of firearm-related products is subject to strict regulation, which could affect our operating results.

Because we sell firearm-related products, 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, obtain 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 details 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 required 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-related products has been the subject of increased federal, state and local regulation, such as requirements related to performing a safe-handling demonstration of firearms in California, 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 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 offer 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-related 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 of firearm-related products could cause our operating expense to increase and this could adversely affect our results of operations.

Risks Related to Investing in Our Common Stock

The declaration 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 interest of us and our stockholders. In fiscal 2021, we also paid two special dividends. 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. In early fiscal 2020, we suspended dividend payments in an effort to preserve capital in response to the initial impact of the COVID-19 pandemic. While we have since reinstated and increased our quarterly dividend and paid special dividends, our dividend policy may change from time to time and we may or may not continue to declare discretionary dividend payments. Additionally, although we repurchased shares in fiscal 2021 pursuant to our share repurchase program authorized by our Board of Directors, we are not obligated to make any purchases under the program and we may reduce the amount of purchases we make under the program or discontinue the program at any time.

Our anti-takeover 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 amended and restated bylaws as well as provisions of Delaware law could 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 discourage, 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 stockholders 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 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; and

•establishment 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.

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In addition, Section 203 of the Delaware General Corporations Law limits business combination transactions with 15% stockholders 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.

Significant stockholders or potential stockholders may attempt to effect changes or acquire control over our Company, which could adversely affect our results of operations and financial condition.

Stockholders may from time to time attempt to effect changes, engage in proxy solicitations or advance stockholder proposals. Responding to proxy contests and other actions by activist stockholders can 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

Disruptions in the overall economy and the financial markets may adversely impact our business and results of operations.

The retail industry 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, including 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 outside of our control. We are experiencing, and may continue to experience, increased inflationary pressure on our product costs. The higher product purchase costs we are experiencing reflect increased labor and freight costs initially resulting from shortages related to COVID-19, as well as strong consumer demand. Shipping capacity constraints and labor shortages at the ports are also contributing to higher freight costs and are adversely impacting our ability to obtain sufficient quantities of certain products in our stores to meet the higher demand. Our customers’ purchases of discretionary items, including our products, generally decline during periods when disposable income is lower, when prices increase in response 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 position and results of operations, could adversely affect our ability to comply with covenants under our credit facility and, as 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.

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 fluctuated 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 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, litigation, political events, government regulation, changes in accounting standards, changes in management’s accounting estimates or assumptions and economic conditions, including those specific to our western United States markets.

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 other 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, we will need to attract and retain additional qualified personnel in a timely manner and develop, train and manage an increasing number of management-level sales associates and other employees. Competition for qualified employees and increases in the cost of living in our market areas could require us to pay higher wages 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.

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Our 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 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 operations 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 or supervision of employees;

•physical and electronic loss of data, security breaches, misappropriation, data theft and similar events; and

•computer 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 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 investigations, 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 business, 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, tools 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 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 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 detect 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. 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 data. 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 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 applicable to our business, compliance with those requirements could also result in additional costs.

Terrorism and the uncertainty of war may harm our operating results.

Terrorist attacks or acts 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. Terrorist attacks could also have a significant impact on ports or international shipping on which we are substantially dependent for 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 terrorist 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.

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Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

Accounting principles generally accepted in the United States of America and related accounting standards, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition; income taxes; the carrying amount of merchandise inventories, property and equipment, lease assets and lease liabilities; valuation allowances for receivables, sales returns and deferred income tax assets; estimates related to stored-value card breakage and the valuation of share-based compensation awards; and obligations related to litigation, self-insurance liabilities and employee benefits are highly complex and may involve many subjective assumptions, estimates and judgments by our management. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Properties

Our primary corporate headquarters are located at 2525 East El Segundo Boulevard, El Segundo, California 90245, with a satellite office located nearby at 2401 East El Segundo Boulevard, El Segundo, California 90245. We lease 55,000 square feet of office and adjoining retail space related to our primary corporate headquarters, and we lease 11,500 square feet related to our satellite office. The lease for the primary corporate headquarters is scheduled to expire on February 28, 2026 and provides us with one five-year renewal option, while the lease for the satellite office is scheduled to expire on February 28, 2026 and provides us with no remaining options.

We own a parcel of land with an existing building adjacent to our corporate headquarters location. We currently lease a portion of the parcel of land, including the building, to a restaurant retailer. The lease is scheduled to expire on February 28, 2030, or earlier by providing the lessee with a one-year written notice. The remaining portion of the parcel of land includes a parking lot that we currently use for our corporate headquarters.

Our distribution facility is located in Riverside, California and has 953,000 square feet of warehouse and office space. Our lease for the distribution center is scheduled to expire on August 31, 2025 and includes one additional five-year renewal option. We lease 172,000 square feet of additional distribution space adjacent to our distribution center in Riverside, California that enables us to more efficiently fulfill our expanding distribution requirements. Our lease for this additional facility is scheduled to expire on August 31, 2025 and includes three additional five-year renewal options.

We lease all of our retail store sites. Most of our store leases contain multiple fixed-price renewal options having a typical duration of five years per option. As of January 2, 2022, of our total store leases, 53 leases are due to expire in the next five years without renewal options. In most cases, as current leases expire, we believe we will be able to obtain lease renewals for existing store locations or new leases for substantially equivalent locations in the same general area.

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Our Stores

Throughout our history, we have focused on operating traditional, full-line sporting goods stores. Our stores generally range from 8,000 to 15,000 square feet and average approximately 11,000 square feet. Our typical store is located in either a free-standing street location or a multi-store shopping center. Our numerous convenient locations and accessible store format encourage frequent customer visits, resulting in approximately 25.2 million sales transactions and an average transaction size of approximately $46 in fiscal 2021. The following table details our store locations by state as of January 2, 2022:

State	Year Entered	Number of Stores		Percentage of Total Number of Stores
California	1955		222		51.5	%
Washington	1984		46		10.7
Arizona	1993		41		9.5
Oregon	1995		29		6.7
Colorado	2001		23		5.3
New Mexico	1995		19		4.4
Nevada	1978		18		4.2
Utah	1997		18		4.2
Idaho	1994		11		2.6
Texas	1995		3		0.7
Wyoming	2010		1		0.2
Total			431		100.0	%

Our same store sales per square foot were approximately $234 for fiscal 2021. Our same store sales per square foot combined with our efficient store-level operations and low store maintenance costs have allowed us to historically generate strong store-level returns.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s results of operations or financial condition.

ITEM 4. MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock, par value $0.01 per share, trades on The NASDAQ Stock Market LLC under the symbol “BGFV.”

As of February 22, 2022, there were 22,219,839 shares of common stock outstanding held by 473 holders of record.

Dividend Policy

Dividends are paid at the discretion of the Board of Directors. In the first quarter of fiscal 2020, we paid a quarterly cash dividend of $0.05 per share of outstanding common stock. In the second quarter of fiscal 2020, our Board of Directors suspended our quarterly cash dividend as a result of COVID-19. In response to the improved strength of our balance sheet, operations and cash flow generation, in the third quarter of fiscal 2020, our Board of Directors reinstated our quarterly cash dividend at the previous rate of $0.05 per share of outstanding common stock and declared a cash dividend of $0.10 per share of outstanding common stock. The $0.10 cash dividend reflected our reinstated quarterly cash dividend of $0.05 per share of outstanding common stock for the third quarter of fiscal 2020, and also included an additional $0.05 per share in recognition that we did not pay a dividend in the second quarter of fiscal 2020. In the fourth quarter of fiscal 2020, first quarter of fiscal 2021, second quarter of fiscal 2021 and third quarter of fiscal 2021, our Board of Directors declared increases in our quarterly cash dividends to $0.10 per share of outstanding common stock, $0.15 per share of outstanding common stock, $0.18 per share of outstanding common stock and $0.25 per share of outstanding common stock, respectively. Additionally, in the second quarter of fiscal 2021, our Board of Directors declared a special cash dividend of $1.00 per share of outstanding common stock, which was paid on June 1, 2021. In the fourth quarter of fiscal 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which was paid on December 15, 2021 to stockholders of record as of December 1, 2021, and also declared a special cash dividend of $1.00 per share of outstanding common stock, which was paid on December 1, 2021 to stockholders of record as of November 17, 2021. In the first quarter of fiscal 2022, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on March 25, 2022 to stockholders of record as of March 11, 2022.

The agreement governing our revolving credit facility imposes restrictions on our ability to make dividend payments. For example, our ability to pay cash dividends on our common stock will depend upon, among other things, our compliance with certain availability and fixed charge coverage ratio requirements at the time of the proposed dividend or distribution, and whether we are in default under the agreement. Our future dividend policy will also depend on the requirements of any future credit or other financing agreements to which we may be a party and other factors considered relevant by our Board of Directors, including the General Corporation Law of the State of Delaware, which provides that dividends are only payable out of surplus or current net profits.

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Issuer Purchases

The following tabular summary reflects our share repurchase activity during the fiscal quarter ended January 2, 2022:

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2)(3)
October 4 – October 31		—	$	—		—	$	13,005,000
November 1 – November 28		—	$	—		—	$	13,005,000
November 29 – January 2		260,825	$	20.43		260,825	$	7,678,000
Total		260,825				260,825	$	7,678,000

(1)	In the first quarter of fiscal 2022, the Company’s Board of Directors authorized a new share repurchase program for the purchase of up to an additional $25.0 million of the Company’s common stock. This program replaced the Company’s previous share repurchase program, under which $7.7 million remained available for repurchase. All share repurchases shown in this table were made under the Company’s previous share repurchase program. Under these programs, the Company may purchase shares from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission. However, the timing and amount of such purchases, if any, would be at the discretion of the Company’s management and Board of Directors and would depend upon market conditions and other considerations. Since the inception of its initial share repurchase program in May 2006 through its previous share repurchase program as of January 2, 2022, the Company repurchased a total of 3,890,295 shares for $49.4 million.
(2)	The Company’s dividends and stock repurchases are generally funded by distributions from its subsidiary, Big 5 Corp. The Company’s Loan Agreement generally permits the Company to declare or pay cash dividends or repurchase stock only if, among other things, no default or event of default then exists or would arise from such dividend or repurchase of stock and, after giving effect to such dividend or repurchase, certain availability and/or fixed charge coverage ratio requirements are satisfied, although the Company is permitted to make up to $5.0 million of dividend payments or stock repurchases per year without satisfaction of the availability or fixed charge coverage ratio requirements, but dividends or stock repurchases made without satisfying the availability and/or fixed charge coverage ratio requirements will require the establishment of an additional reserve that will reduce borrowing availability under the Loan Agreement for 75 days.
(3)	This amount reflects the dollar value of shares remaining available to repurchase under the Company’s previous share repurchase program, which was replaced by a new share repurchase program in the first quarter of fiscal 2022.

ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Throughout this section, the Big 5 Sporting Goods Corporation (“we,” “our,” “us”) fiscal years ended January 2, 2022 and January 3, 2021 are referred to as fiscal 2021 and 2020, respectively. The following discussion and analysis of our financial condition and results of operations for fiscal 2021 and 2020 includes information with respect to our plans and strategies for our business and should be read in conjunction with the consolidated financial statements and related notes, the risk factors and the cautionary statement regarding forward-looking information included elsewhere in this Annual Report on Form 10-K.

Our fiscal year ends on the Sunday nearest December 31. Fiscal 2021 included 52 weeks and fiscal 2020 included 53 weeks.

Impact of COVID-19

In March 2020, the World Health Organization declared the rapidly growing novel coronavirus (“COVID-19”) outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine.

Beginning on March 20, 2020 and continuing into the second quarter of fiscal 2020, we temporarily closed more than one-half of our retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. We were subsequently able to gradually reopen all store locations based initially on qualifying as an “essential” business under applicable regulations and later as a result of the easing of regulatory restrictions on retail operations in our market areas. Throughout fiscal 2020, the pandemic and the shelter orders that were in place in our market areas negatively impacted customer traffic into the stores that were operating, and certain stores required additional closures during the remainder of the year. In an effort to promote social distancing protocols, we implemented reduced store hours for our open stores and limited the number of customers in our stores at any one time. While these temporary store closures, limited hours of operation and shelter orders in our market areas related to the initial COVID-19 outbreak had an unfavorable impact on our operations initially, as we began reopening stores we recognized significant shifts in consumer demand in favor of fitness and outdoor recreational products and we rapidly evolved our product assortment, which had a favorable impact on our operating results throughout the remainder of fiscal 2020. In fiscal 2021, as COVID-19 restrictions continued easing in many of our markets, we experienced strong consumer demand across a broad assortment of product categories, including increased consumer demand for team sports products, which was weak during the prior year due to the COVID-19 pandemic.

During fiscal 2020, in response to COVID-19, we also initially took measures to reduce expense and preserve capital across the organization, including negotiating lease concessions with landlords that would reduce or defer our lease-related payments, scaling back merchandise inventory orders and extending payment terms with merchandise vendors, implementing temporary and permanent workforce reductions throughout the organization, reducing advertising and the amount of planned capital spending, and suspending our quarterly dividend payment, among other measures. Although a certain portion of the expense reduction initiatives only benefited the second quarter of fiscal 2020, the remainder of fiscal 2020 continued to reflect labor expense savings due primarily to continued reduced store operating hours throughout most of the period, as well as advertising expense savings due to significantly reduced advertising activity. In fiscal 2021, our labor expense gradually increased as we increased wage rates in a tightening labor market and increased our store operating hours compared to the same period in the prior year. While store operating hours were higher in fiscal 2021 compared with the same period last year, store operating hours remained below pre-pandemic levels for the comparable periods, and we expect this trend to continue during fiscal 2022. We continue to maintain reduced advertising expense in comparison to historical levels and expect this trend to remain during fiscal 2022 as we continue to evaluate the impact on our sales. We will continue to evaluate the impact of COVID-19 on our future operations.

The initial unfavorable impacts caused by the COVID-19 outbreak also led us to take various actions to enhance our liquidity. We initially increased borrowings and exercised the accordion feature under our previous revolving credit facility, and we drew down additional amounts that resulted in our highest borrowing level of $143.3 million as of March 31, 2020. However, with our favorable operating results throughout the remainder of fiscal 2020, we were able to fully repay our borrowings while increasing our levels of cash and cash equivalents. Our financial condition was further enhanced during fiscal 2021, reflecting our strong sales and operating cash flow for the period. As of January 2, 2022 and January 3, 2021, we had zero revolving credit borrowings and cash and cash equivalents of $97.4 million and $64.7 million, respectively.

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A substantial amount of our inventory is manufactured abroad. COVID-19, and surging consumer demand initially associated with the pandemic, has impacted our supply chain for products sold, particularly those products that are sourced from Asia. To the extent one or more vendors is negatively impacted by continued supply chain disruptions or by COVID-19, including due to interruptions at or closure of those vendors’ distribution centers or manufacturing facilities, or we or our vendors are unable to obtain the necessary shipping capacity to transport products to our distribution center, we may be unable to maintain delivery schedules or adequate inventory in our stores. During the second half of fiscal 2021, we experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited our ability to obtain desired quantities of inventory for various merchandise categories. While we have generally been able to sufficiently stock product in our stores to meet most consumer demand during the pandemic, 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 could have an adverse impact on our net sales and profitability.

Overview

We are a leading sporting goods retailer in the western United States, operating 431 stores and an e-commerce platform under the name “Big 5 Sporting Goods” as of January 2, 2022. We provide a full-line product offering in a traditional sporting goods store format that averages approximately 11,000 square feet. Through our e-commerce platform, we also offer selected products online. E-commerce sales for fiscal 2021 and 2020 were not material. Our product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation.

We believe that over our 67-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-known brand name manufacturers, including adidas, Coleman, Columbia, Everlast, New Balance, Nike, 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 vendor over-stock and close-out merchandise. We reinforce our value reputation through digital marketing and print advertising in major and local newspapers and direct mailers, in an effort to generate customer traffic, drive sales and build brand awareness. We have gradually been decreasing our print advertising over recent years while simultaneously increasing our digital advertising, which we believe allows us to more effectively manage our advertising expense while expanding our consumer outreach. We also maintain social media sites to enhance distribution capabilities for our promotional offers and to enable communication with our customers.

Throughout our history, we have emphasized controlled growth. Our store openings during recent years reflect our cautious approach toward store expansion in the current retail environment, which includes increasing e-commerce competition, especially in response to changing consumer buying habits resulting from concerns surrounding the COVID-19 pandemic. The following table summarizes our store count for the periods presented:

	Fiscal Year
	2021			2020
Beginning of period		430			434
New stores		5			—
Stores relocated		(2	)		—
Stores closed		(2	)		(4	)
End of period		431			430
Stores opened (closed) per year, net		1			(4	)

(1)Stores that are relocated are classified as new stores. Sales from the prior location are treated as sales from a closed store and thus are excluded from same store sales calculations.

For fiscal 2022, we anticipate opening approximately six new stores and closing two stores.

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Executive Summary

Our increased net income for fiscal 2021 compared to fiscal 2020 was mainly attributable to higher net sales and merchandise margins, partially offset by higher selling and administrative expense year over year. Higher net sales in fiscal 2021 primarily reflected strong consumer demand for various sporting goods products as a result of the COVID-19 pandemic and consumers’ desire to recreate and stay active. Merchandise margins increased in fiscal 2021 due primarily to reduced promotional activity, a shift in our product sales mix and higher sales prices in response to increases in product purchase costs. Selling and administrative expense for fiscal 2021 increased over the prior year mainly reflecting higher employee labor and benefit-related expense and higher company performance-based incentive accruals.

•Net sales for fiscal 2021 increased 11.6% to $1,161.8 million compared to $1,041.2 million for fiscal 2020. The increase in net sales was primarily attributable to an increase in sales from same stores and added sales from new stores, partially offset by lower sales from closed stores. As a result of our fiscal calendar, net sales in fiscal 2020 also reflected one extra week of activity compared with fiscal 2021.

•Our same store sales for fiscal 2021, which are computed on a comparable 52-week basis, increased 13.9% versus the prior year. We experienced strong same store sales increases for each of our major merchandise categories of apparel, footwear and hardgoods in fiscal 2021. Same store sales for a period reflect sales from stores that operated throughout the period as well as the full corresponding prior-year period, and same store sales comparisons exclude sales from stores closed during the comparable periods.

•Gross profit for fiscal 2021 represented 37.5% of net sales, compared with 33.5% in the prior year. Merchandise margins were 250 basis points higher than the prior year, while occupancy expense as a percentage of net sales and distribution expense, including costs capitalized into inventory, as a percentage of net sales were lower compared with fiscal 2020.

•Selling and administrative expense for fiscal 2021 increased 8.9% to $299.8 million, or 25.8% of net sales, compared to $275.4 million, or 26.5% of net sales, for fiscal 2020. The increase in selling and administrative expense primarily reflects higher employee labor expense, due in part to store closures in the prior year as a result of COVID-19, and higher company performance-based incentive accruals year over year.

•Net income for fiscal 2021 was $102.4 million, or $4.55 per diluted share, compared to net income of $55.9 million, or $2.58 per diluted share, for fiscal 2020. The increase was driven primarily by increased net sales and merchandise margins, partially offset by increased selling and administrative expense in fiscal 2021.

Our principal liquidity requirements are for working capital, capital expenditures and cash dividends. We fund our liquidity requirements primarily through cash and cash equivalents, cash flows from operations and borrowings from our revolving credit facility.

•Operating cash flow for fiscal 2021 was a positive $115.5 million compared to a positive $148.7 million in the prior year. The decrease in operating cash flow primarily reflected increased funding for merchandise inventory as a result of healthy consumer demand for various products, after reducing inventory in fiscal 2020 in response to COVID-19, partially offset by higher net income in fiscal 2021.

•Capital expenditures for fiscal 2021 increased to $10.9 million from $7.3 million in fiscal 2020, primarily reflecting the opening of new stores in fiscal 2021 compared with fiscal 2020, in which no new stores were opened.

•Borrowings under our credit facility were zero as of January 2, 2022 and January 3, 2021, which reflected a full pay-down of the credit facility since the end of the third quarter of fiscal 2020. We had cash and cash equivalents of $97.4 million and $64.7 million as of January 2, 2022 and January 3, 2021, respectively, which included cash equivalents of $75.0 million and $50.0 million, respectively, related to investments in highly-liquid U.S. Treasury bills.

•We paid cash dividends in fiscal 2021 of $61.8 million, or $2.83 per share, compared with $5.5 million, or $0.25 per share, in fiscal 2020. In response to the improved strength of our balance sheet, operations and cash flow generation, in the first quarter of fiscal 2021, second quarter of fiscal 2021 and third quarter of fiscal 2021, our Board of Directors declared increases in our quarterly cash dividends to $0.15 per share of outstanding common stock, $0.18 per share of outstanding common stock and $0.25 per share of outstanding common stock, respectively. Additionally, in the second quarter of fiscal 2021, our Board of Directors declared a special cash dividend of $1.00 per share of outstanding common stock. In the fourth quarter of fiscal 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock and also declared a special cash dividend of $1.00 per share of outstanding common stock.

•We repurchased 361,323 shares of common stock for $7.6 million in fiscal 2021.

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Results of Operations

The following table sets forth selected items from our consolidated statements of operations by dollar and as a percentage of our net sales, and other financial data, for the periods indicated:

	Fiscal Year (1)
	2021				2020
	(Dollars in thousands)
Statement of Operations Data:
Net sales	$	1,161,820	100.0	%	$	1,041,212		100.0	%
Cost of sales (2)		725,991	62.5			692,041		66.5
Gross profit		435,829	37.5			349,171		33.5
Selling and administrative expense (3)		299,812	25.8			275,406		26.5
Other income		—	—			(2,500	)	(0.2	)
Operating income		136,017	11.7			76,265		7.2
Interest expense		893	0.1			1,880		0.2
Income before income taxes		135,124	11.6			74,385		7.0
Income tax expense		32,738	2.8			18,445		1.8
Net income	$	102,386	8.8	%	$	55,940		5.2	%
Other Financial Data:
Net sales change			11.6	%				4.5	%
Same store sales change (4)			13.9	%				3.0	%

(1)Fiscal 2021 and 2020 included 52 weeks and 53 weeks, respectively.

(2)Cost of sales includes the cost of merchandise, net of discounts or allowances earned, freight, inventory reserves, buying, distribution center expense, including depreciation, and store occupancy expense. Store occupancy expense includes rent, amortization of leasehold improvements, common area maintenance, property taxes and insurance.

(3)Selling and administrative expense includes store-related expense, other than store occupancy expense, as well as advertising, depreciation and amortization, expense associated with operating our corporate headquarters and impairment charges, if any.

(4)Same store sales for a period reflect net sales from stores that operated throughout the period as well as the full corresponding prior-year period and sales from e-commerce. For purposes of reporting same store sales comparisons to the prior year for fiscal 2021, we used comparable 52-week periods. For purposes of reporting same store sales comparisons to the prior year for fiscal 2020, we used comparable 53-week periods.

Net Sales. Net sales increased by $120.6 million, or 11.6%, to $1,161.8 million for fiscal 2021 from $1,041.2 million for fiscal 2020. The change in net sales was primarily attributable to the following:

•Same store sales increased by $139.7 million, or 13.9%, for fiscal 2021 versus the comparable prior-year period. The increase in same store sales reflected the following:

oWe experienced strong same store sales increases for each of our major merchandise categories of apparel, footwear and hardgoods.

oContinued healthy demand for many categories of sporting goods products, particularly winter-related products, was a result of COVID-19 and consumers’ desire to recreate and stay active during the pandemic, and increased consumer demand for team sports products was a result of COVID-19 restrictions easing in many of our markets over the course of the year. Sales were negatively impacted by an active wildfire season in some of our markets during the third quarter of fiscal 2021 that resulted in the closing of certain national parks and affected various outdoor activities, including camping and watersports.

oThe increase in same store sales in fiscal 2021 was based on a 52-week comparison to the prior fiscal year, which reflected temporary store closures related to COVID-19 in the prior year and unfavorable winter weather in the first quarter of fiscal 2020.

oSame store sales for a period normally consist of sales for stores that operated throughout the period and the full corresponding prior-year period, along with sales from e-commerce. Same store sales comparisons exclude sales from stores permanently closed, or stores in the process of permanently closing, during the comparable periods. Sales from e-commerce in fiscal 2021 and 2020 were not material.

•We experienced increased customer transactions and a slightly higher average sale per transaction in fiscal 2021 compared to the prior year.

•The net sales increase in fiscal 2021 was partially offset by a reduction of $19.4 million in sales due to one less week of activity compared with fiscal 2020 as a result of the 53-week fiscal year in 2020.

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Gross Profit. Gross profit increased by $86.6 million to $435.8 million, or 37.5% of net sales, in fiscal 2021 from $349.2 million, or 33.5% of net sales, in fiscal 2020. The change in gross profit was primarily attributable to the following:

•Net sales increased by $120.6 million, or 11.6%, in fiscal 2021 compared to the prior year.

•Merchandise margins, which exclude buying, occupancy and distribution expense, increased by a favorable 250 basis points compared with fiscal 2020, when merchandise margins increased by a favorable 190 basis points over the prior year. The increase primarily reflects lower promotional activities, a shift in our product sales mix and higher sales prices in response to increases in product purchase costs. The higher product purchase costs we are experiencing reflect increased labor and freight costs initially resulting from shortages related to COVID-19, as well as strong consumer demand. Shipping capacity constraints and labor shortages at the ports are also contributing to higher freight costs and are adversely impacting our ability to obtain sufficient quantities of certain products in our stores to meet the higher demand.

•Distribution expense, including costs capitalized into inventory, decreased by $0.3 million, or a favorable 56 basis points, compared to the prior year. The decrease primarily reflected higher costs capitalized into inventory corresponding to the increase in merchandise inventories compared with fiscal 2020, largely offset by higher employee labor and benefit-related expense, as well as higher trucking and fuel expense, in order to meet the increased demand for our products. Higher fuel expense also resulted from gas price inflation, which we experienced over the last three quarters of fiscal 2021.

•Store occupancy expense increased by $1.7 million, but declined by a favorable 83 basis points as a percentage of net sales, year over year in fiscal 2021. Store occupancy expense for fiscal 2020 reflected the favorable impact from lease concessions in the amount of $3.1 million that we negotiated in response to the COVID-19 pandemic.

Selling and Administrative Expense. Selling and administrative expense increased by $24.4 million, or 8.9%, to $299.8 million, or 25.8% of net sales, in fiscal 2021 from $275.4 million, or 26.5% of net sales, in fiscal 2020. The change in selling and administrative expense was primarily attributable to the following:

•Store-related expense, excluding occupancy, increased by $17.1 million, due largely to increased employee labor and benefit-related expense as a result of increased store operating hours compared to the same period in the prior year that reflected temporary workforce reductions and reduced store operating hours in response to the COVID-19 pandemic, and increased wage rates in a tightening labor market, as well as increases in credit card fees and business insurance premiums.

oThe increase in employee labor-related expense included wage pressures that continue to reflect the incremental impact of legislated minimum wage rate increases primarily in California, where over fifty percent of our stores are located. In April 2016, California passed legislation to enact additional state-wide minimum wage rate increases from $10.00 to $15.00 per hour to be implemented in annual increments through fiscal 2022, with annual increases of $1.00 per hour effective in fiscal 2019 through fiscal 2022. Additionally, certain other jurisdictions within California, including Los Angeles and San Francisco, as well as various other states in which we do business, are implementing their own scheduled increases, which may also include interim impacts effective at various points throughout the year. We estimate that the impact of the California state-wide minimum wage rate increase, combined with the impact of the additional minimum wage rate increases in certain other jurisdictions within California and other states, caused our labor expense to increase by approximately $1.9 million for fiscal 2021 compared with fiscal 2020.

oThe increase in employee labor and benefit-related expense included an increase in sick leave expense reflecting a California regulatory requirement that employers provide two weeks of COVID-19-related sick-time benefits to employees while they are self-quarantining.

oThe increase in employee labor and benefit-related expense also reflects an employee retention credit provided by the U.S. Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) to provide relief for employers subject to closure due to the impact of COVID-19, which reduced employee labor and benefit-related expense by $0.9 million for fiscal 2020.

•Administrative expense increased by $6.9 million, primarily attributable to an increase in company performance-based incentive accruals and certain increased staffing-related expenses, as well as comparison to an insurance recovery of $1.7 million recognized in fiscal 2020 related to a store damaged as a result of a fire.

•Advertising expense increased by $0.3 million, due mainly to increased digital advertising in fiscal 2021, partially offset by lower print advertising in the prior fiscal year. Advertising expense in fiscal 2020 was significantly lower than fiscal 2019 as a result of the impact of the COVID-19 pandemic.

Other Income. Other income in fiscal 2020 consisted of a cash condemnation settlement related to eminent domain proceedings, as more fully described in Note 12 to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Interest Expense. Interest expense decreased to $0.9 million in fiscal 2021 compared with $1.9 million in fiscal 2020, primarily reflecting a zero balance in borrowings under our existing credit facility since July 2020.

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Income Taxes. The provision for income taxes increased to $32.7 million for fiscal 2021 compared to $18.4 million for fiscal 2020, primarily reflecting higher pre-tax income in fiscal 2021 compared to fiscal 2020. Our effective tax rate of 24.2% for fiscal 2021 compared with 24.8% for fiscal 2020. Our effective tax rate for fiscal 2021 reflects an increased tax benefit related to the deduction for share-based compensation, a $0.3 million favorable reduction of our previously established valuation allowance related to unused California Enterprise Zone Tax Credits and a $0.2 million disaster recovery credit related to fires in California. Our effective tax rate for fiscal 2020 reflects a $0.4 million favorable reduction of our previously established valuation allowance related to unused California Enterprise Zone Tax Credits and the write-off of deferred tax assets related to share-based compensation of $0.3 million. As a result of the U.S. Coronavirus Aid, Relief and Economic Security Act enacted on March 27, 2020, to provide relief from the impact of COVID-19, we amended our 2018 income tax return and our effective tax rate for fiscal 2020 reflects the carryback of our 2018 net operating loss to a period with a higher statutory income tax rate.

Liquidity and Capital Resources

Our principal liquidity requirements are for working capital, capital expenditures and cash dividends. We fund our liquidity requirements primarily through cash and cash equivalents, cash flows from operations and borrowings from our revolving credit facility. We believe our cash and cash equivalents, future cash flows from operations and borrowings from our revolving credit facility will be sufficient to fund our cash requirements for at least the next 12 months.

We ended fiscal 2021 and 2020 with $97.4 million and $64.7 million of cash and cash equivalents, respectively, and no revolving credit borrowings. The following table summarizes our cash flows from operating, investing and financing activities for each of the past two fiscal years:

	Fiscal Year
	2021			2020
	(In thousands)
Total cash provided by (used in):
Operating activities	$	115,528		$	148,743
Investing activities		(10,615	)		(5,360	)
Financing activities		(72,147	)		(86,952	)
Net increase in cash and cash equivalents	$	32,766		$	56,431

The seasonality of our business historically provides greater cash flows from operations during the holiday and winter selling season. We use operating cash flows and borrowings under our revolving credit facility, if necessary, to fund inventory increases in anticipation of the holidays and our inventory levels are normally at their highest in the months leading up to Christmas. As holiday sales typically reduce inventory levels, this reduction, combined with net income, historically provides us with strong cash flows from operations at the end of our fiscal year.

For fiscal 2021, as COVID-19 restrictions continued easing in many of our markets, we experienced continued strong consumer demand across a broad assortment of product categories, including increased consumer demand for team sports products, which was weak last year due to the COVID-19 pandemic. This strong consumer demand for fiscal 2021 contributed to higher sales and margins and increased net income year-over-year. After reducing merchandise inventory in fiscal 2020 in response to COVID-19, we increased purchases of merchandise inventory in fiscal 2021 to support the strong consumer demand. Although our operating cash flow for fiscal 2021 was healthy, reflecting our higher earnings, the increased funding of merchandise inventory for the year contributed to reduced operating cash flow compared to fiscal 2020.

For fiscal 2020, we experienced weak customer demand for winter-related products in the first quarter as a result of unfavorable warm and dry weather in most of our markets which contributed to higher merchandise inventory and lower operating cash flow compared to the first quarter of 2019. Also beginning on March 20, 2020, we temporarily closed more than one-half of our retail store locations in response to state and local shelter orders related to the COVID-19 outbreak and took measures to reduce expenses across the organization and enhance liquidity, including scaling back merchandise inventory orders and extending payment terms with merchandise vendors, among other measures. We were subsequently able to gradually reopen all store locations during the second quarter and, as we began reopening stores, we recognized significant increases in consumer demand. The combination of increasing sales and margins, reduced expenses and scaled back inventory purchases contributed to substantially higher operating cash flow for the second quarter and first half of fiscal 2020. In the second half of fiscal 2020, strong consumer demand related to COVID-19 continued to drive higher sales and margins which, combined with a reduced cost structure and lower merchandise inventory, produced meaningfully-higher operating cash flow for the year and enabled us to entirely pay down our credit facility borrowings.

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Operating Activities. Operating cash flows for fiscal 2021 and 2020 were a positive $115.5 million and a positive $148.7 million, respectively. While we experienced strong cash flows from operating activities for both periods, the decrease in cash flow from operating activities for fiscal 2021 compared to fiscal 2020 primarily reflects increased funding for merchandise inventory as a result of strong consumer demand for various products, after reducing merchandise inventory in the prior year in response to COVID-19. The lower operating cash flow year over year also reflects decreased accrued expenses primarily related to taxes, partially offset by higher net income and decreased credit card receivables in fiscal 2021.

Investing Activities. Net cash used in investing activities for fiscal 2021 and 2020 was $10.6 million and $5.4 million, respectively. Capital expenditures, excluding non-cash acquisitions, represented substantially all of the cash used in investing activities for each period. In fiscal 2021, capital expenditures of $10.9 million were partially offset by a portion of settlement proceeds related to a civil unrest insurance recovery of $0.2 million, and in fiscal 2020, capital expenditures of $7.3 million were partially offset by proceeds from insurance recoveries of $1.8 million and a portion of settlement proceeds from an eminent domain condemnation of $0.2 million. Our capital spending is primarily to fund store-related remodeling, the opening of new stores, distribution center equipment, and computer hardware and software purchases. Capital expenditures by category for each of the last two fiscal years are as follows:

	Fiscal Year
	2021		2020
	(In thousands)
Store-related remodels	$	5,381	$	4,849
New stores		2,727		169
Computer hardware, software and other		1,579		1,489
Distribution center		1,177		840
Total	$	10,864	$	7,347

Capital expenditures in both fiscal years included investment in existing store remodeling to support our merchandising initiatives and enhancement of information security measures to support our infrastructure. Our capital expenditures included five new stores, including relocations, in fiscal 2021 and, in response to the COVID-19 pandemic, our capital expenditures included no new stores in fiscal 2020.

Financing Activities. Financing cash flows for fiscal 2021 and 2020 were a negative $72.1 million and a negative $87.0 million, respectively. For fiscal 2021, net cash was used primarily to fund dividend payments, treasury stock purchases and finance lease payments, partially offset by proceeds received from the exercise of share option awards. For fiscal 2020, net cash was used primarily to pay down borrowings under the credit facility and fund payments of outstanding checks, dividend payments and finance lease payments. The decreased cash flow used in financing activities for fiscal 2021 compared to the prior year primarily reflects a full pay-down of borrowings under the credit facility during fiscal 2020 to zero, partially offset by substantially higher dividends paid in fiscal 2021, as a result of improved profitability and cash generation.

As of January 2, 2022, we had no revolving credit borrowings and letter of credit commitments of $1.1 million outstanding. These balances compare to no revolving credit borrowings and letter of credit commitments of $2.6 million outstanding as of January 3, 2021.

In the first quarter of fiscal 2020, we paid a quarterly cash dividend of $0.05 per share of outstanding common stock. In the second quarter of fiscal 2020, our Board of Directors suspended our quarterly cash dividend as a result of COVID-19. In response to the improved strength of our balance sheet, operations and cash flow generation, in the third quarter of fiscal 2020, our Board of Directors reinstated our quarterly cash dividend at the previous rate of $0.05 per share of outstanding common stock and declared a cash dividend of $0.10 per share of outstanding common stock. The $0.10 cash dividend reflected our reinstated quarterly cash dividend of $0.05 per share of outstanding common stock for the third quarter of fiscal 2020, and also included an additional $0.05 per share in recognition that we did not pay a dividend in the second quarter of fiscal 2020. In the fourth quarter of fiscal 2020, first quarter of fiscal 2021, second quarter of fiscal 2021 and third quarter of fiscal 2021, our Board of Directors declared increases in our quarterly cash dividends to $0.10 per share of outstanding common stock, $0.15 per share of outstanding common stock, $0.18 per share of outstanding common stock and $0.25 per share of outstanding common stock, respectively. Additionally, in the second quarter of fiscal 2021, our Board of Directors declared a special cash dividend of $1.00 per share of outstanding common stock. In the fourth quarter of fiscal 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock and also declared a special cash dividend of $1.00 per share of outstanding common stock. In the first quarter of fiscal 2022, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on March 25, 2022 to stockholders of record as of March 11, 2022.

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Periodically, we repurchase our common stock in the open market pursuant to programs approved by our Board of Directors. We may repurchase our common stock for a variety of reasons, including, among other things, our alternative cash requirements, existing business conditions and the current market price of our stock. In fiscal 2016, our Board of Directors authorized a share repurchase program for the purchase of up to $25.0 million of our common stock, which was in effect through the fourth quarter of fiscal 2021 and under which a total of $7.7 million remained available for share repurchases as of January 2, 2022. In the first quarter of fiscal 2022, our Board of Directors authorized a new share repurchase program of up to $25.0 million of our common stock, which replaced the previous share repurchase program. Under these programs, we may purchase shares from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission. However, the timing and amount of such purchases, if any, would be at the discretion of our management and Board of Directors, and would depend on market conditions and other considerations. We repurchased 361,323 shares of common stock in fiscal 2021 and no shares of common stock in fiscal 2020. Since the inception of our initial share repurchase program in May 2006 through January 2, 2022, we have repurchased a total of 3,890,295 shares for $49.4 million.

Loan Agreement. As of January 3, 2021, we had a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of other lenders, as amended (the “Prior Credit Agreement”), which was terminated and replaced on February 24, 2021 as discussed below.

On February 24, 2021, we terminated the Prior Credit Agreement and entered into a Loan, Guaranty and Security agreement with Bank of America, N.A. (“BofA”), as agent and lender, which was amended on November 22, 2021 (as so amended, the “Loan Agreement”). The Loan Agreement has a maturity date of February 24, 2026 and provides for a revolving credit facility with an aggregate committed availability of up to $150.0 million. We may also request additional increases in aggregate availability, up to a maximum of $200.0 million, in which case the existing lender under the Loan Agreement will have the option to increase their commitment to accommodate the requested increase. If the lender does not exercise that option, we may (with the consent of BofA in its role as the administrative agent, not to be unreasonably withheld) seek other lenders willing to provide such commitments. The credit facility includes a $50.0 million sublimit for issuances of letters of credit.

Similar to the Prior Credit Agreement, we may borrow under the Loan Agreement from time to time, provided the amounts outstanding will not exceed the lesser of the then aggregate committed availability (as discussed above) and the Borrowing Base (such lesser amount being referred to as the “Line Cap”). As defined in the Loan Agreement, the “Borrowing Base” generally is comprised of the sum, at the time of calculation, of (a) 90.00% of eligible credit card receivables; plus (b) the cost of eligible inventory (other than eligible in-transit inventory), net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible inventory (expressed as a percentage of the cost of eligible inventory); plus (c) the cost of eligible in-transit inventory, net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible in-transit inventory (expressed as a percentage of the cost of eligible in-transit inventory), minus (d) certain agreed-upon reserves as well as other reserves established by BofA in its role as the administrative agent in its reasonable discretion.

Generally, we may designate specific borrowings under the Loan Agreement as either base rate loans or LIBO rate loans. The applicable interest rate on our borrowings is a function of the daily average, over the preceding fiscal quarter, of the excess of the Line Cap over amounts borrowed (such amount being referred to as the “Average Daily Availability”). Those loans designated as LIBO rate loans bear interest at a rate equal to the then applicable adjusted LIBO rate plus an applicable margin as shown in the table below. Those loans designated as base rate loans bear interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the LIBO rate, plus one percentage point (1.00%), or (c) the rate of interest in effect for such day as announced from time to time within BofA as its “prime rate.” The applicable margin for all loans will be a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.375%	0.375%
II	Less than $70,000,000	1.500%	0.500%

The commitment fee assessed on the unused portion of the credit facility is 0.20% per annum.

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Obligations under the Loan Agreement are secured by a general lien on and security interest in substantially all of our assets. The Loan Agreement contains covenants that require us to maintain a fixed charge coverage ratio of not less than 1.0:1.0 in certain circumstances, and limits the ability to, among other things, incur liens, incur additional indebtedness, transfer or dispose of assets, change the nature of the business, guarantee obligations, pay dividends or make other distributions or repurchase stock, and make advances, loans or investments. We may generally declare or pay cash dividends or repurchase stock only if, among other things, no default or event of default then exists or would arise from such dividend or repurchase of stock and, after giving effect to such dividend or repurchase, certain availability and/or fixed charge coverage ratio requirements are satisfied, although we are permitted to make up to $5.0 million of dividend payments or stock repurchases per year without satisfaction of the availability or fixed charge coverage ratio requirements, but dividends or stock repurchases made without satisfying the availability and/or fixed charge coverage ratio requirements will require the establishment of an additional reserve that will reduce borrowing availability under the Loan Agreement for 75 days. The Loan Agreement contains customary events of default, including, without limitation, failure to pay when due principal amounts with respect to the credit facility, failure to pay any interest or other amounts under the credit facility, failure to comply with certain agreements or covenants contained in the Loan Agreement, failure to satisfy certain judgments against us, failure to pay when due (or any other default which permits the acceleration of) certain other material indebtedness in principal amount in excess of $5.0 million, and certain insolvency and bankruptcy events. As amended, the Loan Agreement provides for a transition to an alternative benchmark reference rate following the cessation of the LIBO rate.

The Prior Credit Agreement had a maturity date of September 29, 2022 and, as amended, provided for a line of credit up to $140.0 million, which amount could be increased at our option up to a maximum of $165.0 million. We could also request additional increases in aggregate availability, on an uncommitted basis up to a maximum of $200.0 million. The prior revolving credit facility included a $25.0 million sublimit for issuances of letters of credit and a $20.0 million sublimit for swingline loans. The Prior Credit Agreement provided for LIBO rate loans to bear interest at a rate equal to the applicable adjusted LIBO rate plus an applicable margin, as shown in the table below. The loans designated as base rate loans bore interest at a rate equal to the applicable margin for base rate loans plus the highest of (a) the Federal funds rate in effect plus one-half of one percent, (b) the LIBO rate, plus one percentage point, or (c) the prime interest rate. Under the Prior Credit Agreement, the applicable margin for all loans was a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.250%	0.250%
II	Less than $70,000,000	1.375%	0.500%

The commitment fee assessed on the unused portion of the prior credit facility was 0.20% per annum.

In the first quarter of fiscal 2021, we paid and capitalized $0.7 million in new creditor and third-party fees associated with the Loan Agreement, which will be amortized over the term of the Loan Agreement, and extinguished $0.2 million of deferred financing fees associated with the Prior Credit Agreement.

In order to support our liquidity in response to the rapidly growing COVID-19 outbreak, in March 2020 we exercised the accordion feature under our $140.0 million prior credit facility and drew down additional amounts under that facility that resulted in long-term revolving credit borrowings of $143.3 million as of March 31, 2020, our highest borrowing level. As a result of improved profitability and cash generation activities in response to the COVID-19 pandemic, we paid down to zero our long-term revolving credit borrowings and we had letter of credit commitments of $1.1 million outstanding as of January 2, 2022, compared with zero borrowings and letter of credit commitments of $2.6 million as of January 3, 2021. Total remaining borrowing availability, after subtracting letters of credit, was $148.9 million and $162.4 million as of January 2, 2022 and January 3, 2021, respectively.

The following table provides information about our revolving credit borrowings as of and for the periods indicated:

	Fiscal Year
	2021		2020
	(Dollars in thousands)
Fiscal year-end balance	$	—	$	—
Average interest rate	—			2.7	%
Maximum outstanding during the year	$	—	$	143,275
Average outstanding during the year	$	—	$	45,838

Future Capital Requirements. We had cash and cash equivalents on hand of $97.4 million as of January 2, 2022. We expect capital expenditures for fiscal 2022, excluding non-cash acquisitions, to range from approximately $15.0 million to $20.0 million, primarily for the opening of new stores, store-related remodeling, distribution center equipment and computer hardware and software purchases. For fiscal 2022, we anticipate opening approximately six new stores and closing two stores.

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Dividends are paid at the discretion of the Board of Directors. In fiscal 2021 and 2020 we paid annual cash dividends of $2.83 per share and $0.25 per share, respectively, of outstanding common stock. Dividends declared in fiscal 2021 included special dividends in the amount of $2.00 per share of outstanding common stock. In the first quarter of fiscal 2022, our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on March 25, 2022 to stockholders of record as of March 11, 2022.

As of January 2, 2022, a total of $7.7 million remained available for share repurchases under our previous share repurchase program. In the first quarter of fiscal 2022, our Board of Directors authorized a new share repurchase program of up to $25.0 million of our common stock, which replaced the previous share repurchase program. We consider several factors in determining when and if we make share repurchases including, among other things, our alternative cash requirements, existing business conditions and the market price of our stock.

Contractual Obligations. Our material contractual obligations include operating lease commitments associated with our leased properties and other occupancy expense, finance lease obligations, borrowings under our credit facility, if any, and other liabilities. Operating lease commitments consist principally of leases for our retail store facilities, distribution center and corporate offices. These leases frequently include options which permit us to extend the terms beyond the initial fixed lease term, and we intend to renegotiate most of these leases as they expire. Operating lease commitments also consist of information technology (“IT”) systems hardware and distribution center delivery tractors. Additional information regarding our operating leases is available in Item 2, Properties and Note 7, Lease Commitments, of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

In the ordinary course of business, we enter into arrangements with vendors to purchase merchandise in advance of expected delivery. Because most of these purchase orders do not contain any termination payments or other penalties if cancelled, they are not considered as outstanding contractual obligations.

Critical Accounting Estimates

Our critical accounting estimates detailed below are included in our significant accounting policies as described in Note 2 of the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Those consolidated financial statements were prepared in accordance with GAAP. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense. Our estimates are evaluated on an ongoing basis and drawn from historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the following accounting estimates are critical and reflect the more significant judgments and estimates we use in preparing our consolidated financial statements.

Valuation of Merchandise Inventories, Net

Our merchandise inventories are made up of finished goods and are valued at the lower of cost or net realizable value using the weighted-average cost method that approximates the first-in, first-out (“FIFO”) method. Average cost consists of the direct purchase price of merchandise inventory, net of vendor allowances and cash discounts, in-bound freight-related costs and allocated overhead costs associated with our distribution center.

We record valuation reserves on a quarterly basis for merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds net realizable value. These reserves are estimates of a reduction in value to reflect inventory valuation at the lower of cost or net realizable value. Factors included in determining slow-moving or obsolescence reserve estimates include recent customer demand, merchandise aging, seasonal trends and decisions to discontinue certain products. Because of our merchandise mix, we have not historically experienced significant occurrences of obsolescence. Our inventory valuation reserves for damaged and defective merchandise, slow-moving or obsolete merchandise and for lower of cost or net realizable value provisions totaled $2.7 million and $3.5 million as of January 2, 2022 and January 3, 2021, respectively, representing approximately 1% of our merchandise inventory for both periods.

A 10% change in our inventory valuation reserves estimate in total as of January 2, 2022, would result in a change in reserves of $0.3 million and a change in pre-tax earnings by the same amount. Our reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from our expectations. At this time, we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates or assumptions that we use to calculate our inventory reserves.

34

Seasonality and Impact of Inflation

We experience seasonal fluctuations in our net sales and operating results, which can suffer when weather does not conform to seasonal norms, such as the first quarter of fiscal 2020 when we experienced warm and dry winter-weather conditions across our markets. Seasonality in our net sales influences our buying patterns which directly 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 successful. 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 for our product mix in advance of a season, particularly the fourth quarter, our net sales can decline, which can harm our financial performance. A significant shortfall from expected net sales, particularly during the fourth quarter, can negatively impact our annual operating results.

In fiscal 2021 and 2020, we experienced greater inflation in the cost of products that we purchase for resale as well as higher freight costs than in previous years. While our merchandise inventory costs in fiscal 2021 and 2020 were impacted by these inflationary pressures, up to this point we have generally been able to adjust our selling prices in response to these higher product purchase costs. However, if we are unable to continue to adjust our selling prices for product purchase cost increases that might occur in the future, then our merchandise margins could decline, which would adversely impact our operating results.

Recently Issued Accounting Updates

See Note 2 to the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because we are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and the supplementary financial information required by this Item and included in this Annual Report on Form 10-K are listed in the “Index to Consolidated Financial Statements” beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

35

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information which is required to be timely disclosed is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), in a timely fashion. We conducted an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of January 2, 2022. Based on such evaluation, our CEO and CFO have concluded that, as of January 2, 2022, our disclosure controls and procedures are effective, at a reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of January 2, 2022, based upon the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of January 2, 2022, we maintained effective internal control over financial reporting. The attestation report issued by Deloitte & Touche LLP, our independent registered public accounting firm, on our internal control over financial reporting is included herein.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

36

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Big 5 Sporting Goods Corporation
El Segundo, California

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Big 5 Sporting Goods Corporation and subsidiaries (the “Company”) as of January 2, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 2, 2022, of the Company and our report dated March 2, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 2, 2022

37

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

38

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended January 2, 2022.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended January 2, 2022.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended January 2, 2022.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended January 2, 2022.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended January 2, 2022.

39

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)Documents filed as part of this report:

(1)Financial Statements.

See Index to Consolidated Financial Statements on page F-1 hereof.

(2)Financial Statement Schedule.

See Index to Consolidated Financial Statements on page F-1 hereof.

(3)Exhibits.

The exhibits listed in the Index to Exhibits shown beginning on the next page are filed as part of this Annual Report on Form 10-K, or are incorporated by reference from documents previously filed by the Company with the Securities and Exchange Commission as required by Item 601 of Regulation S-K.

40

BIG 5 SPORTING GOODS CORPORATION

EXHIBIT INDEX

Exhibit Number	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation of Big 5 Sporting Goods Corporation. (1)
3.2	Amended and Restated Bylaws. (11)
4.1	Specimen of Common Stock Certificate. (2)
4.2	Description of Registrant’s Common Stock. (18)
10.1	Second Amended and Restated Employment Agreement, dated as of December 31, 2008, between Steven G. Miller and Big 5 Sporting Goods Corporation. (14)
10.2	Amended and Restated Indemnification Implementation Agreement between Big 5 Corp. (successor to United Merchandising Corp.) and Thrifty PayLess Holdings, Inc. dated as of April 20, 1994. (1)
10.3	Agreement and Release among Pacific Enterprises, Thrifty PayLess Holdings, Inc., Thrifty PayLess, Inc., Thrifty and Big 5 Corp. (successor to United Merchandising Corp.) dated as of March 11, 1994. (1)
10.4	Form of Indemnification Agreement. (1)
10.5	Form of Indemnification Letter Agreement. (2)
10.6	Lease dated as of April 14, 2004 by and between Pannatoni Development Company, LLC and Big 5 Corp. (3)
10.7	Employment Offer Letter dated August 15, 2005 between Barry D. Emerson and Big 5 Corp. (5)
10.8	Severance Agreement dated as of August 9, 2006 between Barry D. Emerson and Big 5 Corp. (6)
10.9	Big 5 Sporting Goods Corporation 2007 Equity and Performance Incentive Plan (Amended and Restated as of April 19, 2016). (13)
10.10	Amendment No. 1 to Big 5 Sporting Goods Corporation 2007 Equity and Performance Incentive Plan, effective as of January 12, 2018. (14)
10.11	Form of Big 5 Sporting Goods Corporation Stock Option Grant Notice and Stock Option Agreement for use with 2007 Equity and Performance Incentive Plan. (7)
10.12	Form of Big 5 Sporting Goods Corporation Restricted Stock Grant Notice and Restricted Stock Agreement for use with 2007 Equity and Performance Incentive Plan. (8)
10.13	Form of Big 5 Sporting Goods Corporation Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice approved for use with Amended and Restated 2007 Equity and Performance Incentive Plan. (10)
10.14	Big 5 Sporting Goods Corporation 2019 Equity Incentive Plan. (15)
10.15	Form of Stock Option Agreement and Stock Option Grant Notice for use with 2019 Equity and Incentive Plan. (16)
10.16	Form of Restricted Stock Agreement and Restricted Stock Grant Notice for use with 2019 Equity Incentive Plan. (16)
10.17	Form of Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice for use with 2019 Equity Incentive Plan. (16)
10.18	Form of Change of Control Severance Agreement, dated as of August 5, 2015. (12)
10.19	Loan, Guaranty and Security Agreement, dated as of February 24, 2021 among Big 5 Sporting Goods Corporation, Big 5 Corp. and Big 5 Services Corp., the financial institutions party to the Agreement from time to time as lenders, and Bank of America, N.A., as agent. (17)
10.20	First Amendment to Loan, Guaranty and Security Agreement, dated as of November 22, 2021 among Big 5 Sporting Goods Corporation, Big 5 Corp. and Big 5 Services Corp., and Bank of America, N.A., as agent and lender. (19)
21.1	Subsidiaries of Big 5 Sporting Goods Corporation. (4)
23.1	Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLP. (19)
31.1	Rule 13a-14(a) Certification of Chief Executive Officer. (19)
31.2	Rule 13a-14(a) Certification of Chief Financial Officer. (19)

41

32.1	Section 1350 Certification of Chief Executive Officer. (19)
32.2	Section 1350 Certification of Chief Financial Officer. (19)
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL Document. (19)
101.SCH	Inline XBRL Taxonomy Extension Schema Document. (19)
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document. (19)
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document. (19)
101.LAB	Inline XBRL Taxonomy Label Linkbase Document. (19)
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document. (19)
104	Cover Page Interactive Data File (embedded within the Inline XBRL document). (19)

(1)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on March 31, 2003.

(2)Incorporated by reference to Amendment No. 4 to the Registration Statement on Form S-1 filed by Big 5 Sporting Goods Corporation on June 24, 2002.

(3)Incorporated by reference to the Quarterly Report on Form 10-Q filed by Big 5 Sporting Goods Corporation on August 6, 2004.

(4)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on September 6, 2005.

(5)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on March 16, 2006.

(6)Incorporated by reference to the Quarterly Report on Form 10-Q filed by Big 5 Sporting Goods Corporation on August 11, 2006.

(7)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on June 25, 2007.

(8)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on March 10, 2008.

(9)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on January 6, 2009.

(10)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on June 20, 2011.

(11)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on July 10, 2015.

(12)Incorporated by reference to the Quarterly Report on Form 10-Q filed by Big 5 Sporting Goods Corporation on October 28, 2015.

(13)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on June 14, 2016.

(14)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on February 28, 2018.

(15)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on June 11, 2019.

(16)Incorporated by reference to the Quarterly Report on Form 10-Q filed by Big 5 Sporting Goods Corporation on July 31, 2019.

(17)Incorporated by reference to the Current Report on Form 8-K filed by Big 5 Sporting Goods Corporation on March 1, 2021.

(18)Incorporated by reference to the Annual Report on Form 10-K filed by Big 5 Sporting Goods Corporation on March 3, 2021.

(19)Filed herewith.

42

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BIG 5 SPORTING GOODS CORPORATION,
	a Delaware corporation
Date: March 2, 2022	By:	/s/ Steven G. Miller
		Steven G. Miller
		Chairman of the Board of Directors, President, Chief Executive Officer and Director of the Company

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signatures	Title	Date
/s/ Steven G. Miller	Chairman of the Board of Directors,	March 2, 2022
Steven G. Miller	President, Chief Executive Officer and
	Director of the Company
	(Principal Executive Officer)
/s/ Barry D. Emerson	Executive Vice President,	March 2, 2022
Barry D. Emerson	Chief Financial Officer and Treasurer
	(Principal Financial and
	Accounting Officer)
/s/ Colleen B. Brown	Director of the Company	March 2, 2022
Colleen B. Brown
/s/ Stephen E. Carley	Director of the Company	March 2, 2022
Stephen E. Carley
/s/ Lily W. Chang	Director of the Company	March 2, 2022
Lily W. Chang
/s/ Jennifer H. Dunbar	Director of the Company	March 2, 2022
Jennifer H. Dunbar
/s/ Van B. Honeycutt	Director of the Company	March 2, 2022
Van B. Honeycutt
/s/ David R. Jessick	Director of the Company	March 2, 2022
David R. Jessick

43

BIG 5 SPORTING GOODS CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Index to Consolidated Financial Statements	F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	F-2
Consolidated Balance Sheets at January 2, 2022 and January 3, 2021	F-4
Consolidated Statements of Operations for the fiscal years ended January 2, 2022 and January 3, 2021	F-5
Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 2, 2022 and January 3, 2021	F-6
Consolidated Statements of Cash Flows for the fiscal years ended January 2, 2022 and January 3, 2021	F-7
Notes to Consolidated Financial Statements	F-8
Consolidated Financial Statement Schedule:	Schedule
Valuation and Qualifying Accounts as of January 2, 2022 and January 3, 2021	II

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Big 5 Sporting Goods Corporation
El Segundo, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Big 5 Sporting Goods Corporation and subsidiaries (the “Company”) as of January 2, 2022 and January 3, 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows, for each of the fiscal years ended January 2, 2022 and January 3, 2021, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 2, 2022 and January 3, 2021, and the results of its operations and its cash flows for each of the fiscal years ended January 2, 2022 and January 3, 2021 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 2, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventory - Valuation of Merchandise Inventories, Net - Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company’s merchandise inventories are valued using the weighted-average cost method. The Company estimates and records valuation reserves on a quarterly basis to record inventory at the lower of cost or net realizable value (“LCNRV”). This includes, among other things, estimating the valuation reserve for inventory with slow-moving or obsolescence exposure, which consider factors such as recent customer demand, merchandise aging, seasonal trends, and decisions to discontinue certain products. Merchandise inventories, net, and inventory valuation reserves were $280.0 million and $2.7 million, respectively, as of January 2, 2022.

We identified the valuation of merchandise inventories as a critical audit matter because of the significant assumptions required in identifying the population of inventory with slow-moving or obsolescence exposure and measuring the valuation reserves required to record such inventory at the LCNRV, resulting in a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate such assumptions.

F-2

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation reserves for inventory with slow-moving or obsolescence exposure included the following, among others:

•We tested the operating effectiveness of management’s controls over the review of slow-moving and obsolescence inventory exposure and the required reserves to record such inventory at the LCNRV.

•We evaluated the appropriateness of the underlying financial information used in management’s analysis, including the aging of on-hand inventory balances, recent sales quantity for specific inventory, and classification of inventory category by department.

•We evaluated the assumptions used by management in identifying the population of inventory with slow-moving or obsolescence exposure that require a reserve and determining the amount of reserve to record.

•We performed data analytical procedures over the inventory balance, such as analyzing inventory trend levels and turnover rates, to evaluate the completeness of management’s identified population of inventory with slow-moving or obsolescence exposure that require a reserve.

•We compared actual inventory sold below cost in the current fiscal year to the inventory valuation reserve estimated by the Company in the prior year to evaluate management’s ability to accurately estimate the valuation reserve for inventory.

•We evaluated management’s calculation of the valuation reserve by testing the mathematical accuracy of the reserve calculation.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 2, 2022

We have served as the Company’s auditor since 2007.

F-3

BIG 5 SPORTING GOODS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	January 2, 2022			January 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	97,420		$	64,654
Accounts receivable, net of allowances of $62 and $58, respectively		13,654			19,879
Merchandise inventories, net		279,981			251,180
Prepaid expenses		16,293			11,684
Total current assets		407,348			347,397
Operating lease right-of-use assets, net		270,110			278,607
Property and equipment, net		60,401			57,245
Deferred income taxes		12,097			13,831
Other assets, net of accumulated amortization of $905 and $2,407, respectively		3,997			2,914
Total assets	$	753,953		$	699,994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	104,359		$	80,882
Accrued expenses		85,041			82,877
Current portion of operating lease liabilities		76,882			73,737
Current portion of finance lease liabilities		3,518			2,089
Total current liabilities		269,800			239,585
Operating lease liabilities, less current portion		204,134			217,788
Finance lease liabilities, less current portion		6,456			2,504
Other long-term liabilities		6,254			7,479
Total liabilities		486,644			467,356
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 26,109,003 and     25,580,541 shares, respectively; outstanding 22,097,467 and 21,930,328 shares, respectively		260			255
Additional paid-in capital		124,909			121,837
Retained earnings		192,261			153,073
Less: Treasury stock, at cost; 4,011,536 and 3,650,213 shares, respectively		(50,121	)		(42,527	)
Total stockholders' equity		267,309			232,638
Total liabilities and stockholders' equity	$	753,953		$	699,994

See accompanying notes to consolidated financial statements.

F-4

BIG 5 SPORTING GOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended
	January 2, 2022		January 3, 2021
Net sales	$	1,161,820	$	1,041,212
Cost of sales		725,991		692,041
Gross profit		435,829		349,171
Selling and administrative expense		299,812		275,406
Other income		—		(2,500	)
Operating income		136,017		76,265
Interest expense		893		1,880
Income before income taxes		135,124		74,385
Income tax expense		32,738		18,445
Net income	$	102,386	$	55,940
Earnings per share:
Basic	$	4.73	$	2.63
Diluted	$	4.55	$	2.58
Weighted-average shares of common stock outstanding:
Basic		21,670		21,260
Diluted		22,512		21,663

See accompanying notes to consolidated financial statements.

F-5

BIG 5 SPORTING GOODS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

						Additional						Treasury
	Common Stock					Paid-In			Retained			Stock,
	Shares			Amount		Capital			Earnings			At Cost			Total
Balance as of January 3, 2021		21,930,328		$	255	$	121,837		$	153,073		$	(42,527	)	$	232,638
Net income		—			—		—			102,386			—			102,386
Dividends on common stock ($2.83 per share)		—			—		—			(63,198	)		—			(63,198	)
Issuance of nonvested share awards		248,550			2		(2	)		—			—			—
Exercise of share option awards		369,765			3		2,162			—			—			2,165
Share-based compensation		—			—		1,958			—			—			1,958
Forfeiture of nonvested share awards		(19,625	)		—		—			—			—			—
Retirement of common stock for payment    of withholding tax		(70,228	)		—		(1,046	)		—			—			(1,046	)
Purchases of treasury stock		(361,323	)		—		—			—			(7,594	)		(7,594	)
Balance as of January 2, 2022		22,097,467		$	260	$	124,909		$	192,261		$	(50,121	)	$	267,309
						Additional						Treasury
	Common Stock					Paid-In			Retained			Stock,
	Shares			Amount		Capital			Earnings			At Cost			Total
Balance as of December 29, 2019		21,664,076		$	252	$	120,054		$	102,593		$	(42,527	)	$	180,372
Net income		—			—		—			55,940			—			55,940
Dividends on common stock ($0.25 per share)		—			—		—			(5,460	)		—			(5,460	)
Issuance of nonvested share awards		321,600			3		(3	)		—			—			—
Exercise of share option awards		31,600			—		169			—			—			169
Share-based compensation		—			—		1,714			—			—			1,714
Forfeiture of nonvested share awards		(22,375	)		—		—			—			—			—
Retirement of common stock for payment    of withholding tax		(64,573	)		—		(97	)		—			—			(97	)
Balance as of January 3, 2021		21,930,328		$	255	$	121,837		$	153,073		$	(42,527	)	$	232,638

See accompanying notes to consolidated financial statements.

F-6

BIG 5 SPORTING GOODS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended
	January 2, 2022			January 3, 2021
Cash flows from operating activities:
Net income	$	102,386		$	55,940
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		17,698			18,450
Share-based compensation		1,958			1,714
Amortization of other assets		577			364
Noncash lease expense		65,716			64,316
Proceeds from insurance recovery - lost profit margin and expenses		1,083			1,077
Gain on recovery of insurance proceeds - lost profit margin and expenses		(460	)		(1,077	)
Gain on recovery of insurance proceeds - property and equipment		(249	)		(1,750	)
Gain on eminent domain condemnation		—			(2,500	)
Proceeds from eminent domain condemnation - lost profit margin		—			2,263
Deferred income taxes		1,734			(212	)
Changes in operating assets and liabilities:
Accounts receivable, net		5,902			(6,193	)
Merchandise inventories, net		(28,801	)		58,135
Prepaid expenses and other assets		(5,523	)		(1,861	)
Accounts payable		23,341			9,243
Operating lease liabilities		(68,028	)		(67,198	)
Accrued expenses and other long-term liabilities		(1,806	)		18,032
Net cash provided by operating activities		115,528			148,743
Cash flows from investing activities:
Purchases of property and equipment		(10,864	)		(7,347	)
Proceeds from insurance recovery - property and equipment		249			1,750
Proceeds from eminent domain condemnation - property and equipment		—			237
Net cash used in investing activities		(10,615	)		(5,360	)
Cash flows from financing activities:
Borrowings under revolving credit facility		—			137,296
Payments under revolving credit facility		—			(203,855	)
Changes in book overdraft		(246	)		(12,031	)
Debt issuance costs paid		(746	)		(106	)
Principal payments under finance lease obligations		(2,887	)		(2,858	)
Proceeds from exercise of share option awards		2,165			169
Cash purchases of treasury stock		(7,594	)		—
Tax withholding payments for share-based compensation		(1,046	)		(97	)
Dividends paid		(61,793	)		(5,470	)
Net cash used in financing activities		(72,147	)		(86,952	)
Net increase in cash and cash equivalents		32,766			56,431
Cash and cash equivalents at beginning of year		64,654			8,223
Cash and cash equivalents at end of year	$	97,420		$	64,654
Supplemental disclosures of non-cash investing and financing activities:
Property and equipment acquired under finance leases	$	8,276		$	—
Property and equipment additions unpaid	$	2,382		$	668
Supplemental disclosures of cash flow information:
Interest paid	$	624		$	1,856
Income taxes paid	$	36,391		$	19,625

See accompanying notes to consolidated financial statements.

F-7

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)Description of Business

Big 5 Sporting Goods Corporation (the “Company”) is a leading sporting goods retailer in the western United States, operating 431 stores and an e-commerce platform as of January 2, 2022. The Company provides a full-line product offering in a traditional sporting goods store format that averages approximately 11,000 square feet. The Company’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation. The Company is a holding company that operates as one reportable segment under the “Big 5 Sporting Goods” name through Big 5 Corp., its 100%-owned subsidiary, and Big 5 Services Corp., which is a 100%-owned subsidiary of Big 5 Corp. Big 5 Services Corp. provides a centralized operation for the issuance and administration of gift cards and returned merchandise credits (collectively, “stored-value cards”).

The Company’s consolidated financial statements as of January 2, 2022 and January 3, 2021 and for the years ended January 2, 2022 (“fiscal 2021”) and January 3, 2021 (“fiscal 2020”) represent the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

(2)Summary of Significant Accounting Policies

Consolidation

The accompanying consolidated financial statements include the accounts of Big 5 Sporting Goods Corporation, Big 5 Corp. and Big 5 Services Corp. Intercompany balances and transactions have been eliminated in consolidation.

Reporting Period

The Company follows the concept of a 52-53 week fiscal year, which ends on the Sunday nearest December 31. Fiscal 2021 included 52 weeks and fiscal 2020 included 53 weeks.

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in this standard are elective and are effective upon issuance for all entities, and the impact from this standard was immaterial.

Other recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements.

F-8

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

COVID-19 Impact on Concentration of Risk

The novel coronavirus (“COVID-19”) pandemic has significantly impacted health and economic conditions throughout the United States and globally, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine.

The Company primarily operates traditional sporting goods retail stores located in the western United States, with approximately 52% of its stores, along with its corporate offices and distribution center, located in California. Because of this, the Company is subject to regional risks, including the impact of the COVID-19 outbreak. Beginning on March 20, 2020, and continuing into the second quarter of fiscal 2020, the Company temporarily closed more than one-half of its retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. The Company was subsequently able to gradually reopen its store locations based on initially qualifying as an “essential” business under applicable regulations and later as a result of the easing of regulatory restrictions on retail operations in the Company’s market areas. In an effort to promote social distancing protocols, the Company implemented reduced store hours, limited the number of customers in its stores at any one time and generally implemented social-distancing guidelines throughout the store operating space in fiscal 2020. As of the end of fiscal 2020 and during fiscal 2021, all of the Company’s stores were open for in-store shopping with reduced operating hours and certain COVID-19-related protocols in place. The Company may further restrict its store operations and operations in its distribution facility if deemed necessary or if recommended or mandated by authorities, and new temporary closures of stores or new safety protocols may be required if additional orders are issued in response to changing health conditions.

A substantial amount of the Company’s inventory is manufactured abroad. COVID-19, and surging consumer demand initially associated with the pandemic, has also impacted the Company’s supply chain for products sold, particularly those products that are sourced from Asia. To the extent one or more vendors is negatively impacted by continued supply chain disruptions or by COVID-19, including due to interruptions at or closure of those vendors’ distribution centers or manufacturing facilities, or the Company or its vendors are unable to obtain the necessary shipping capacity to transport products to the Company’s distribution center, the Company may be unable to maintain delivery schedules or adequate inventory in its stores. During the second half of fiscal 2021, the Company experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited the Company’s ability to obtain desired quantities of inventory for various merchandise categories. While the Company has generally been able to sufficiently stock product in its stores to meet most consumer demand during the pandemic, future prolonged and sustained delays in product reaching the Company’s stores from overseas vendors, particularly during the holiday season, could result in the inability to obtain adequate levels of merchandise inventories to meet consumers’ needs, which could have an adverse impact on net sales and profitability.

General Concentration of Risk

The Company maintains its cash accounts in financial institutions, and accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash equivalents represent investments of excess cash on hand of $75.0 million and $50.0 million into U.S. Treasury bills as of January 2, 2022 and January 3, 2021, respectively.

Because of the Company’s geographic concentration in the western United States, the Company is 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 weather conditions, fires, droughts, earthquakes, power outages, floods and other natural disasters specific to the states in which the Company operates.

The Company relies on a single distribution center located in Riverside, California, which services all of its stores and e-commerce platform. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company’s ability to adequately stock its stores and fulfill its e-commerce business.

A substantial amount of the Company’s inventory is manufactured abroad. From time to time, shipping ports experience capacity constraints (such as delays associated with COVID-19), labor strikes, work stoppages or other disruptions that may delay the delivery of imported products. A contract dispute may lead to protracted delays in the movement of the Company’s products, which could further delay the delivery of products to the Company’s stores and impact net sales and profitability. In addition, other conditions outside of the Company’s control, such as adverse weather conditions or acts of terrorism, could significantly disrupt operations at shipping ports or otherwise impact transportation of the imported merchandise we sell.

F-9

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The Company purchases merchandise from over 700 suppliers, and the Company’s 20 largest suppliers accounted for 36.8% of total purchases in fiscal 2021. One vendor represented greater than 5% of total purchases, at 7.6%, in fiscal 2021. A significant portion of the Company’s inventory is manufactured abroad in Asia. Foreign imports subject the Company to the risks of changes in, or the imposition of new, import tariffs, duties or quotas, new restrictions on imports, loss of “most 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 fluctuations or revaluations, public health issues that could lead to temporary closures of facilities or shipping ports, such as the recent outbreak of COVID-19, and other economic uncertainties. If a disruption of trade were to occur from the countries in which the suppliers of the Company’s vendors are located, the Company may be unable to obtain sufficient quantities of products to satisfy its requirements, or the cost of obtaining products may increase.

In early fiscal 2021, the Company was informed of an expansion of Nike’s direct-to-consumer initiatives that will impact certain multi-branded retailers, including the Company, and which will lead to a significant reduction in the Company’s future supply chain relative to this vendor. This transition is not expected to impact the Company’s ability to continue to purchase certain Nike branded products from authorized licensees. The Company is actively expanding its relationships with other new and existing vendors in an effort to replace the affected Nike product within its product mix.

The Company could be exposed to credit risk in the event of nonperformance by its lender under its revolving credit facility. Instability in the financial and capital markets could bring additional potential risks to the Company, including higher costs of credit, potential lender defaults, and potential commercial bank failures. The Company has received no indication that any such events will negatively impact its lender under its credit facility; however, the possibility does exist.

Use of Estimates

Management makes a number of estimates and assumptions relating to the reporting of assets, liabilities and stockholders’ equity and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expense during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Certain items subject to such estimates and assumptions include the carrying amount of merchandise inventories, property and equipment, lease assets and lease liabilities; valuation allowances for receivables, sales returns and deferred income tax assets; estimates related to stored-value cards and the valuation of share-based compensation awards; and obligations related to litigation, self-insurance liabilities and employee benefits. Due to the inherent uncertainty involved in making assumptions and estimates, events and changes in circumstances arising after January 2, 2022, including those resulting from the impacts of the COVID-19 pandemic, may result in actual outcomes that differ from those contemplated by management’s assumptions and estimates.

Segment Reporting

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online, and whose Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis, for purposes of allocating resources and evaluating financial performance. The Company’s stores typically have similar square footage, with the stores and e-commerce platform offering a similar general product mix. The Company’s core customer demographic remains similar across all sales channels, as does the Company’s process for the procurement and marketing of its product mix. Furthermore, the Company distributes its product mix for both the stores and e-commerce platform from a single distribution center. Given the consolidated level of review by the CODM, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

F-10

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Revenue Recognition

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online. Generally, all revenue is recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends immaterial credit purchases to certain municipalities and local school districts.

As noted in the segment information elsewhere in this Note 2 to the Notes to Consolidated Financial Statements, the Company’s business consists of one reportable segment. In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates net sales into the following major merchandise categories to depict the nature and amount of revenue and related cash flows:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands)
Hardgoods	$	637,181	$	623,728
Athletic and sport footwear		279,645		228,311
Athletic and sport apparel		241,526		184,538
Other sales		3,468		4,635
Net sales	$	1,161,820	$	1,041,212

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

•Retail store sales

•E-commerce sales

•Stored-value cards

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the product is tendered for delivery to the common carrier. For performance obligations related to stored-value cards, the Company typically transfers control upon redemption of the stored-value card through consummation of a future sales transaction.

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract.

The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. There were no material adjustments to the Company’s previous estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated right-of-return merchandise cost related to the sales returns is recorded as prepaid expense in the Company’s consolidated balance sheet as of January 2, 2022. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

The Company has elected to apply the practical expedient, relative to e-commerce sales, which allows an entity to account for shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the sale of the product, at shipping point (when the customer gains control). Revenue associated with e-commerce sales is not material.

F-11

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Contract liabilities are recognized primarily for stored-value card sales. Cash received from the sale of stored-value cards is recorded as a contract liability in accrued expenses in the Company’s consolidated balance sheets, and the Company recognizes revenue upon the customer’s redemption of the stored-value card. Stored-value card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of five percent. The Company does not sell or provide stored-value cards that carry expiration dates.

The Company recognized $5.9 million and $5.4 million in stored-value card redemption revenue for fiscal 2021 and 2020, respectively. The Company also recognized $0.3 million in stored-value card breakage revenue for each of fiscal 2021 and 2020. The Company had outstanding stored-value card liabilities of $8.3 million and $7.5 million as of January 2, 2022 and January 3, 2021, respectively, which are included in accrued expenses in the Company’s consolidated balance sheets. Based upon historical experience, stored-value cards are predominantly redeemed in the first two years following their issuance date.

The Company recorded, as prepaid expense in the Company’s consolidated balance sheets, estimated right-of-return merchandise cost of $1.2 million related to estimated sales returns as of January 2, 2022 and January 3, 2021, and recorded, as accrued expense in the Company’s consolidated balance sheets, an allowance for sales returns reserve of $2.5 million and $2.4 million as of January 2, 2022 and January 3, 2021, respectively.

Cost of Sales

Cost of sales includes the cost of merchandise, net of discounts or allowances earned, freight (including e-commerce shipping and handling costs), inventory reserves, buying, distribution center expense, including depreciation and amortization, and store occupancy expense. Store occupancy expense includes rent, amortization of leasehold improvements, common area maintenance, property taxes and insurance.

Selling and Administrative Expense

Selling and administrative expense includes store-related expense, other than store occupancy expense, as well as advertising, depreciation and amortization, expense associated with operating the Company’s corporate headquarters and impairment charges, if any.

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. After reducing advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic, beginning in the second half of fiscal 2020, amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. These amounts were previously recorded as a reduction to selling and administrative expense.

Advertising Expense

Advertising is expensed when the advertising first occurs. Advertising expense, net of co-operative advertising allowances, amounted to $11.0 million and $10.6 million for fiscal 2021 and 2020, respectively. The Company reduced advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic. Advertising expense is included in selling and administrative expense in the Company’s consolidated statements of operations. The Company receives co-operative advertising allowances from certain product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors’ products. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to zero and $1.1 million for fiscal 2021 and 2020, respectively. Beginning in the second half of fiscal 2020, as a result of the significant reductions of print advertising in fiscal 2021 and 2020, the Company treated these advertising allowances as a reduction of inventory cost and cost of goods sold which had an immaterial effect on the Company’s consolidated financial statements.

F-12

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718, Compensation—Stock Compensation. The Company recognizes compensation expense on a straight-line basis over the requisite service period using the fair-value method for share option awards, nonvested share awards and nonvested share unit awards granted with service-only conditions. See Note 13 to the Notes to Consolidated Financial Statements for a further discussion on share-based compensation.

Pre-opening Costs

Pre-opening costs for new stores, which are not material, consist primarily of payroll and recruiting expense, training, marketing, rent, travel and supplies, and are expensed as incurred.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments of excess cash into U.S. Treasury bills, which have maturities of 90 days or less. See Note 4 to the Notes to Consolidated Financial Statements for a further discussion on the fair value of U.S. Treasury bills. Book overdrafts are classified as current liabilities in the Company’s consolidated balance sheets.

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products, volume purchase rebates or co-operative advertising, amounts due from lessors for tenant improvement allowances and insurance recovery receivables. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Valuation of Merchandise Inventories, Net

The Company’s merchandise inventories are made up of finished goods and are valued at the lower of cost or net realizable value using the weighted-average cost method that approximates the first-in, first-out (“FIFO”) method. Average cost includes the direct purchase price of merchandise inventory, net of vendor allowances and cash discounts, in-bound freight-related expense and allocated overhead expense associated with the Company’s distribution center.

Management regularly reviews inventories and records valuation reserves for damaged and defective merchandise, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds net realizable value. Because of its merchandise mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of merchandise sales based on historical inventory shrinkage trends. The Company performs physical inventories of its stores at least once per year and cycle counts inventories at its distribution center throughout the year. The reserve for inventory shrinkage primarily represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Prepaid Expenses and Other Assets

Prepaid expenses include the prepayment of various operating expenses such as insurance, income and property taxes, software maintenance and supplies, which are expensed when the operating cost is realized, as well as estimated right-of-return merchandise cost related to estimated sales returns.

Other assets include the long-term portion of certain prepaid expenses, capitalized deferred financing fees related to the Company’s credit facility and capitalized implementation costs related to hosting arrangements that are service contracts. While deferred financing fees and implementation costs are capitalized and amortized over the respective terms of their arrangements, costs related to the service element of a hosting arrangement that is a service contract are expensed as incurred.

F-13

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Property and Equipment, Net

Property and equipment are stated at cost and are being depreciated or amortized utilizing the straight-line method over the following estimated useful lives:

Land	Indefinite
Buildings	20 years
Leasehold improvements	Shorter of estimated useful life or term of lease
Furniture and equipment	3 – 10 years
Internal-use software	3 – 7 years

Maintenance and repairs are expensed as incurred.

The Company incurs costs to purchase and develop software for internal use. Costs related to the application development stage are capitalized and amortized over the estimated useful life of the software. Costs related to the design or maintenance of internal-use software are expensed as incurred. See Note 3 to the Notes to Consolidated Financial Statements for a further discussion on property and equipment.

Valuation of Long-Lived Assets

In accordance with ASC 360, Property, Plant, and Equipment, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”), usually at the store level. The carrying amount of a store asset group includes stores’ property and equipment, primarily leasehold improvements, and operating lease ROU assets. The carrying amount of a store asset group is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the store asset group. Factors that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses, and a projection that demonstrates continuing losses or insufficient income over the remaining reasonably certain lease term associated with the use of a store asset group. Other factors may include an adverse change in the business climate or an adverse action or assessment by a regulator in the market of a store asset group. When stores are identified as having an indicator of impairment, the Company forecasts undiscounted cash flows over the store asset group’s remaining reasonably certain lease term and compares the undiscounted cash flows to the carrying amount of the store asset group. If the store asset group is determined not to be recoverable, then an impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value, determined using discounted cash flow valuation techniques, as contemplated in ASC 820, Fair Value Measurements.

The Company determines the cash flows expected to result from the store asset group by projecting future revenue, gross margin and operating expense for each store asset group under evaluation for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning, and include assumptions about sales growth rates, gross margins and operating expense in relation to the current economic environment and the Company’s future expectations, competitive factors in its various markets, inflation, sales trends and other relevant environmental factors that may impact the store under evaluation. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. If economic conditions deteriorate in the markets in which the Company conducts business, or if other negative market conditions develop, the Company may experience additional impairment charges in the future for underperforming stores.

The resulting impairment charge, if any, is allocated to the property and equipment, primarily leasehold improvements, and operating lease ROU assets on a pro rata basis using the relative carrying amounts of those assets. The allocated impairment charge to a long-lived asset is limited to the extent that the impairment charge does not reduce the carrying amount of the long-lived asset below its individual fair value. The estimation of the fair value of an ROU asset involves the evaluation of current market value rental amounts for leases associated with ROU assets. The estimates of current market value rental amounts are primarily based on recent observable market rental data of other comparable retail store locations. The fair value of an ROU asset is measured using a discounted cash flow valuation technique by discounting the estimated current and future market rental values using a property-specific discount rate.

In fiscal 2021 and 2020, the Company recognized no non-cash impairment charges. Impairment charges, if any, represent property and equipment, primarily leasehold improvements, and are included in selling and administrative expense in the Company’s consolidated statements of operations.

F-14

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Leases

In accordance with ASC 842, Leases, the Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware, and distribution center delivery tractors and equipment. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Finance leases are included in property and equipment and finance lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Lease liabilities are calculated using the effective interest method, regardless of classification, while the amortization of ROU assets varies depending upon classification. Finance lease classification results in a front-loaded expense recognition pattern over the lease term which amortizes the ROU asset by recognizing interest expense and amortization expense as separate components of lease expense and calculates the amortization expense component on a straight-line basis. Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a single expense component, which results in amortization of the ROU asset that equals the difference between lease expense and interest expense. Lease expense for finance and operating leases are included in cost of sales or selling and administrative expense, based on the use of the leased asset, on the Company’s consolidated statement of operations. Variable payments such as property taxes, insurance and common area maintenance related to triple net leases, as well as certain equipment sales taxes, licenses, fees and repairs, are expensed as incurred, and leases with an initial term of 12 months or less are excluded from minimum lease payments and are not recorded on the Company’s consolidated balance sheets. The Company recognizes variable lease expense for these short-term leases on a straight-line basis over the remaining lease term.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. As the Company’s leases generally do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate (“IBR”) to determine the present value of lease payments. The collateralized IBR is based on a synthetic credit rating that is externally prepared on an annual basis. This analysis considers qualitative and quantitative factors based on guidance provided by a rating agency for the consumer durables industry. The Company adjusts the selected IBR quarterly with a company-specific unsecured yield curve that approximates the Company’s market risk profile. The collateralized IBR is also based upon the estimated impact that the collateral has on the IBR. To account for the collateralized nature of the IBR, the Company utilized a notching method based on notching guidance provided by a rating agency whereby the Company’s base credit rating is notched upward as the yield curve on a secured loan is expected to be lower versus an unsecured loan.

The operating lease ROU asset also includes any prepaid lease payments made and is reduced by lease incentives such as tenant improvement allowances. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.

Certain of the leases for the Company’s retail store facilities provide for payments based on future sales volumes at the leased location, which are not measurable at the inception of the lease. Under ASC 842, these contingent rents are expensed as they accrue.

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

F-15

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

In accordance with this interpretive guidance, the Company elected to account for lease concessions related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company accounted for COVID-19 lease abatements of $3.1 million in fiscal 2020 as reductions to variable lease expense and accounted for lease deferrals of $0.1 million and $0.6 million as of January 2, 2022 and January 3, 2021, respectively, as if no changes to the lease contract were made while continuing to recognize expense during the deferral period and deferring the payment obligation as a liability.

See Note 6 to the Notes to Consolidated Financial Statements for a further discussion on leases.

Self-Insurance Liabilities

The Company is self-insured for its various insurance risks including its estimated workers’ compensation liability risk in certain states. The Company also has a self-funded insurance program for a portion of its employee medical benefits. Under these programs, the Company maintains insurance coverage for losses in excess of specified per-occurrence amounts. Estimated expenses incurred under the self-insured workers’ compensation and medical benefits programs, including incurred but not reported claims, are recorded as expense based upon historical experience, trends of paid and incurred claims, and other actuarial assumptions. If actual claims trends under these programs, including the severity or frequency of claims, differ from the Company’s estimates, its financial results may be significantly impacted. The Company’s actuarially-estimated self-insurance liabilities, which are reported gross of expected workers’ compensation insurance reimbursements, are classified on the Company’s consolidated balance sheets as accrued expenses or other long-term liabilities based upon whether they are expected to be paid during or beyond the normal operating cycle of 12 months from the date of the Company’s consolidated financial statements. Self-insurance liabilities totaled $10.2 million and $11.0 million as of January 2, 2022 and January 3, 2021, respectively, of which $4.4 million and $4.8 million were recorded as a component of accrued expenses as of January 2, 2022 and January 3, 2021, respectively, and $5.8 million and $6.2 million were recorded as a component of other long-term liabilities as of January 2, 2022 and January 3, 2021, respectively, in the Company’s consolidated balance sheets.

Income Taxes

Under the asset and liability method prescribed within ASC 740, Income Taxes, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed throughout the year and a valuation allowance is recorded if necessary to reduce net deferred tax assets to the amount more likely than not to be realized. Certain prior period deferred tax disclosures were reclassified to conform with current period presentation.

ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company’s practice is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in selling and administrative expense in the Company’s consolidated statements of operations. As of January 2, 2022 and January 3, 2021, the Company had no accrued interest or penalties. See Note 8 to the Notes to Consolidated Financial Statements for a further discussion on income taxes.

F-16

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Treasury Stock Purchases

The Company repurchases its common stock in the open market pursuant to programs approved by its Board of Directors. In fiscal 2016, the Board of Directors authorized a share repurchase program for the purchase of up to $25.0 million of the Company’s common stock, which was in effect through the fourth quarter of fiscal 2021 and under which a total of $7.7 million remained available for share repurchases as of January 2, 2022. In the first quarter of fiscal 2022, the Board of Directors authorized a new share repurchase program of up to $25.0 million of our common stock, which replaced the previous share repurchase program. Under these programs, the Company may purchase shares from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission. The Company may repurchase its common stock for a variety of reasons, including, among other things, its alternative cash requirements, existing business conditions and the current market price of its stock. However, the timing and amount of such purchases, if any, would be at the discretion of management and the Board of Directors. The Company repurchased 361,323 shares of common stock in fiscal 2021, and repurchased no shares of common stock in fiscal 2020.  

(3)Property and Equipment, Net

Property and equipment, net, consist of the following:

	January 2, 2022			January 3, 2021
	(In thousands)
Leasehold improvements	$	176,066		$	170,701
Furniture and equipment		142,638			134,623
Internal-use software		37,188			37,147
Land		2,750			2,750
Building		1,775			1,775
		360,417			346,996
Accumulated depreciation and amortization (1)		(301,852	)		(290,638	)
		58,565			56,358
Assets not placed into service		1,836			887
Property and equipment, net	$	60,401		$	57,245

(1)Includes accumulated amortization for internal-use software development costs of $32.7 million and $30.8 million as of January 2, 2022 and January 3, 2021, respectively.

Depreciation expense associated with property and equipment, including assets leased under finance leases, was $7.6 million and $6.7 million for fiscal 2021 and 2020, respectively. Amortization expense for leasehold improvements was $8.0 million and $8.9 million for fiscal 2021 and 2020, respectively. Amortization expense for internal-use software was $2.1 million and $2.9 million for fiscal 2021 and 2020, respectively. The gross cost of equipment under finance leases, included above, was $16.5 million and $10.1 million as of January 2, 2022 and January 3, 2021, respectively. The accumulated depreciation related to these finance leases was $6.1 million and $5.5 million as of January 2, 2022 and January 3, 2021, respectively.

F-17

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

(4)Fair Value Measurements

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate the fair values of these instruments due to their short-term nature. Cash equivalents consist of highly liquid investments of excess cash into U.S. Treasury bills, which have maturities of 90 days or less. As of January 2, 2022 and January 3, 2021, the Company recorded $75.0 million and $50.0 million, respectively, in cash equivalents, and classified these assets as Level 1 inputs, which are quoted prices (unadjusted) in active markets for identical assets that the Company can access at the measurement date. The Company records these cash equivalents monthly, based on the prevailing market interest rate as of the measurement date. Book overdrafts for checks outstanding are classified as current liabilities in the Company’s consolidated balance sheets. The carrying amount for borrowings, if any, under the Company’s credit facility approximates fair value because of the variable market interest rate charged to the Company for these borrowings. When the Company recognizes impairment on certain of its underperforming stores, the carrying values of these stores are reduced to their estimated fair values.

The Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were assets subject to long-lived asset impairment related to certain underperforming stores. The Company estimates the fair values of these long-lived assets based on the Company’s own judgments about the assumptions that market participants would use in pricing the asset and on observable real estate market data of underperforming stores’ specific comparable markets, when available. The Company classifies these fair value measurements as Level 3 inputs, which are unobservable inputs for which market data are not available and that are developed using the best information available about pricing assumptions used by market participants in accordance with ASC 820. As of January 2, 2022, there were no long-lived assets subject to impairment, and as of January 3, 2021, these long-lived assets were immaterial.

(5)Accrued Expenses

The major components of accrued expenses are as follows:

	January 2, 2022		January 3, 2021
	(In thousands)
Payroll and related expense	$	37,345	$	37,826
Sales tax		12,112		11,609
Occupancy expense		10,168		10,215
Other		25,416		23,227
Accrued expenses	$	85,041	$	82,877

Payroll and related expense as of January 2, 2022 and January 3, 2021 reflected a deferral of the employer portion of Social Security tax provided by the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which allowed employers to defer their portion of the social security payroll tax otherwise due with respect to wages earned from March 27, 2020 through December 31, 2020.

(6)Lease Commitments

The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware, and distribution center delivery tractors and equipment, and accounts for these leases in accordance with ASC 842. The Company’s operating leases have remaining reasonably certain lease terms of up to 13 years, which typically include options to extend the leases for up to 5 years. The Company’s finance leases have remaining reasonably certain lease terms of up to 6 years.

Certain of the leases for the Company’s retail store facilities provide for variable payments for property taxes, insurance, common area maintenance payments related to triple net leases, rental payments based on future sales volumes at the leased location, as well as certain equipment sales taxes, licenses, fees and repairs, which are not measurable at the inception of the lease, or rental payments that are adjusted periodically for inflation. The Company recognizes variable lease expense for these leases in the period incurred which, for contingent rent, begins in the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

F-18

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

In accordance with ASC 842, the components of lease expense were as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Lease expense:
Amortization of right-of-use assets	$	2,940		$	2,721
Interest on lease liabilities		260			297
Finance lease expense		3,200			3,018
Operating lease expense		81,734			83,030
Variable lease expense (1)		18,384			15,238
Sublease income		(91	)		(1,192	)
Total lease expense	$	103,227		$	100,094

(1)Variable lease expense for fiscal 2020 was reduced by $3.1 million for lease abatements related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. See Note 2 to the Notes to Consolidated Financial Statements for a further discussion on lease concessions.

In accordance with ASC 842, other information related to leases was as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Operating cash flows from operating leases	$	85,238		$	83,028
Financing cash flows from finance leases		2,887			2,858
Operating cash flows from finance leases		271			313
Cash paid for amounts included in the measurement of lease liabilities	$	88,396		$	86,199
Right-of-use assets obtained in exchange for new finance lease liabilities	$	8,723		$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	56,953		$	80,452
Weighted-average remaining lease term—finance leases	3.8 years			2.4 years
Weighted-average remaining lease term—operating leases	4.8 years			5.0 years
Weighted-average discount rate—finance leases		3.1	%		4.8	%
Weighted-average discount rate—operating leases		5.4	%		6.1	%

F-19

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

In accordance with ASC 842, maturities of finance and operating lease liabilities as of January 2, 2022 were as follows:

Year Ending:	Finance Leases			Operating Leases
	(In thousands)
2022	$	3,748		$	86,185
2023		2,585			68,475
2024		1,787			59,654
2025		1,304			42,975
2026		867			27,670
Thereafter		197			34,051
Undiscounted cash flows	$	10,488		$	319,010
Reconciliation of lease liabilities:
Weighted-average remaining lease term	3.8 years			4.8 years
Weighted-average discount rate		3.1	%		5.4	%
Present values	$	9,974		$	281,016
Lease liabilities - current		3,518			76,882
Lease liabilities - long-term		6,456			204,134
Lease liabilities - total	$	9,974		$	281,016
Difference between undiscounted and discounted cash flows	$	514		$	37,994

(7)Long-Term Debt

The Company, Big 5 Corp. and Big 5 Services Corp. were parties to a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of other lenders, as amended (the “Prior Credit Agreement”), which was terminated and replaced on February 24, 2021, as discussed below.

On February 24, 2021, the Company entered into a Loan, Guaranty and Security Agreement with Bank of America, N.A. (“BofA”), as agent and lender, which was amended on November 22, 2021 (as so amended, the “Loan Agreement”). The Loan Agreement has a maturity date of February 24, 2026 and provides for a revolving credit facility with an aggregate committed availability of up to $150.0 million. The Company may also request additional increases in aggregate availability, up to a maximum of $200.0 million, in which case the existing lender under the Loan Agreement will have the option to increase the commitment to accommodate the requested increase. If such existing lender does not exercise that option, the Company may (with the consent of BofA in its role as the administrative agent, not to be unreasonably withheld) seek other lenders willing to provide such commitments. The credit facility includes a $50.0 million sublimit for issuances of letters of credit.

Similar to the Prior Credit Agreement, the Company may borrow under the Loan Agreement from time to time, provided the amounts outstanding will not exceed the lesser of the then aggregate committed availability (as discussed above) and the Borrowing Base (such lesser amount being referred to as the “Line Cap”). As defined in the Loan Agreement, the “Borrowing Base” generally is comprised of the sum, at the time of calculation, of (a) 90.00% of eligible credit card receivables; plus (b) the cost of eligible inventory (other than eligible in-transit inventory), net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible inventory (expressed as a percentage of the cost of eligible inventory); plus (c) the cost of eligible in-transit inventory, net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible in-transit inventory (expressed as a percentage of the cost of eligible in-transit inventory), minus (d) certain agreed-upon reserves as well as other reserves established by BofA in its role as the administrative agent in its reasonable discretion.

F-20

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Generally, the Company may designate specific borrowings under the Loan Agreement as either base rate loans or LIBO rate loans. The applicable interest rate on the Company’s borrowings is a function of the daily average, over the preceding fiscal quarter, of the excess of the Line Cap over amounts borrowed (such amount being referred to as the “Average Daily Availability”). Those loans designated as LIBO rate loans bear interest at a rate equal to the then applicable adjusted LIBO rate plus an applicable margin as shown in the table below. Those loans designated as base rate loans bear interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the LIBO rate, plus one percentage point (1.00%), or (c) the rate of interest in effect for such day as announced from time to time within BofA as its “prime rate.” The applicable margin for all loans is a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.375%	0.375%
II	Less than $70,000,000	1.500%	0.500%

The commitment fee assessed on the unused portion of the credit facility is 0.20% per annum.

Obligations under the Loan Agreement are secured by a general lien on and security interest in substantially all of the Company’s assets. The Loan Agreement contains covenants that require the Company to maintain a fixed charge coverage ratio of not less than 1.0:1.0 in certain circumstances, and limits the ability to, among other things, incur liens, incur additional indebtedness, transfer or dispose of assets, change the nature of the business, guarantee obligations, pay dividends or make other distributions or repurchase stock, and make advances, loans or investments. The Company may generally declare or pay cash dividends or repurchase stock only if, among other things, no default or event of default then exists or would arise from such dividend or repurchase of stock and, after giving effect to such dividend or repurchase, certain availability and/or fixed charge coverage ratio requirements are satisfied, although the Company is permitted to make up to $5.0 million of dividend payments or stock repurchases per year without satisfaction of the availability or fixed charge coverage ratio requirements, but dividends or stock repurchases made without satisfying the availability and/or fixed charge coverage ratio requirements will require the establishment of an additional reserve that will reduce borrowing availability under the Loan Agreement for 75 days. The Loan Agreement contains customary events of default, including, without limitation, failure to pay when due principal amounts with respect to the credit facility, failure to pay any interest or other amounts under the credit facility, failure to comply with certain agreements or covenants contained in the Loan Agreement, failure to satisfy certain judgments against the Company, failure to pay when due (or any other default which permits the acceleration of) certain other material indebtedness in principal amount in excess of $5.0 million, and certain insolvency and bankruptcy events. As amended, the Loan Agreement provides for a transition to an alternative benchmark reference rate following the cessation of the LIBO rate.

As previously disclosed, the Prior Credit Agreement had a maturity date of September 29, 2022 and, as amended, provided for a line of credit up to $140.0 million, which amount could be increased at the Company’s option up to a maximum of $165.0 million. The Company could also request additional increases in aggregate availability, on an uncommitted basis up to a maximum of $200.0 million. On March 30, 2020, the Company exercised the accordion feature and increased the amount available under the revolving credit facility to $165.0 million in response to the COVID-19 pandemic and drew down additional amounts at that time. The revolving credit facility under the Prior Credit Agreement included a $25.0 million sublimit for issuances of letters of credit and a $20.0 million sublimit for swingline loans. The Prior Credit Agreement provided for LIBO rate loans to bear interest at a rate equal to the applicable adjusted LIBO rate plus an applicable margin, as shown in the table below. The loans designated as base rate loans bore interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate in effect plus one-half of one percent, (b) the LIBO rate, plus one percentage point, or (c) the prime interest rate. Under the Prior Credit Agreement, the applicable margin for all loans was a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.250%	0.250%
II	Less than $70,000,000	1.375%	0.500%

The commitment fee assessed on the unused portion of the credit facility under the Prior Credit Agreement was 0.20% per annum.

In the first quarter of fiscal 2021, the Company paid and capitalized $0.7 million in new creditor and third-party fees associated with the Loan Agreement, which will be amortized over the term of the Loan Agreement, and extinguished $0.2 million of deferred financing fees associated with the Prior Credit Agreement.

As of January 2, 2022 and January 3, 2021, the Company had no long-term revolving credit borrowings outstanding.

F-21

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

(8)Income Taxes

Income tax expense (benefit) consists of the following:

	Current		Deferred			Total
	(In thousands)
Fiscal 2021:
Federal	$	23,422	$	1,121		$	24,543
State		7,582		613			8,195
	$	31,004	$	1,734		$	32,738
Fiscal 2020:
Federal	$	13,786	$	86		$	13,872
State		4,871		(298	)		4,573
	$	18,657	$	(212	)	$	18,445

The provision for income taxes differs from the amounts computed by applying the federal statutory tax rate of 21% to earnings before income taxes, as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Tax expense at statutory rate	$	28,376		$	15,621
State tax expense, net of federal tax effect		7,167			3,975
Additional deduction related to share-based compensation		(2,623	)		—
Nondeductible expenses		729			86
Tax credits		(603	)		(246	)
Change in valuation allowance		(318	)		(418	)
CARES Act net operating loss carryback		—			(822	)
Write-offs related to nonvested share awards		—			260
Other		10			(11	)
	$	32,738		$	18,445

Deferred tax assets and liabilities as of January 2, 2022 and January 3, 2021 are tax-effected based on the federal and state corporate income tax rates.

F-22

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Deferred tax assets and liabilities consist of the following tax-effected temporary differences:

	January 2, 2022			January 3, 2021
	(In thousands)
Deferred tax assets:
Employee benefit-related liabilities	$	2,889		$	2,986
Deferred rent		2,828			3,509
Insurance liabilities		2,421			2,581
State taxes		1,545			1,014
Gift card liability		1,420			1,324
Merchandise inventory		1,215			2,253
Share-based compensation		805			815
California Enterprise Zone Tax Credits		381			975
Other deferred tax assets		1,500			1,396
Gross deferred tax assets		15,004			16,853
Less: Valuation allowance		(280	)		(683	)
Deferred tax assets, net of valuation allowance		14,724			16,170
Deferred tax liabilities:
Prepaid expense		(1,147	)		(989	)
Federal liability on state deferred tax assets		(996	)		(1,125	)
Other deferred tax liabilities		(484	)		(225	)
Deferred tax liabilities		(2,627	)		(2,339	)
Net deferred tax assets	$	12,097		$	13,831

As of fiscal 2021 and 2020, the Company maintained a valuation allowance of $0.3 million and $0.7 million, respectively, related to unused California Enterprise Zone Tax Credits, which the Company will not be able to carry forward beyond 2024 as a result of California’s termination of this program. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections of future taxable income over the periods during which the deferred tax assets are deductible, except as noted above, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income are reduced. Certain prior period amounts were reclassified to conform with current period presentation requirements.

The Company files a consolidated federal income tax return and files tax returns in various state and local jurisdictions. The statutes of limitations for its consolidated federal income tax returns are open for fiscal years 2018 and after, and state and local income tax returns are open for fiscal years 2017 and after.

As of January 2, 2022 and January 3, 2021, the Company had no unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate over the next 12 months. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expense. As of January 2, 2022 and January 3, 2021, the Company had no accrued interest or penalties.

F-23

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

(9)Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

The following table sets forth the computation of basic and diluted earnings per common share:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands, except per share data)
Net income	$	102,386	$	55,940
Weighted-average shares of common stock outstanding:
Basic		21,670		21,260
Dilutive effect of common stock equivalents arising    from share option, nonvested share and nonvested    share unit awards		842		403
Diluted		22,512		21,663
Basic earnings per share	$	4.73	$	2.63
Diluted earnings per share	$	4.55	$	2.58
Antidilutive share option awards excluded    from diluted calculation		2		494
Antidilutive nonvested share and nonvested share unit    awards excluded from diluted calculation		—		46

The computation of diluted earnings per share for the periods presented excludes certain share option awards since the exercise prices of these share option awards exceeded the average market price of the Company’s common shares, and the effect of their inclusion would have been antidilutive (i.e., including such share option awards would result in higher earnings per share).

No nonvested share awards or nonvested share unit awards were antidilutive for fiscal 2021. The computation of diluted earnings per share for fiscal 2020 excludes certain nonvested share awards and nonvested share unit awards that were outstanding and antidilutive, since the grant date fair values of these nonvested share awards and nonvested share unit awards exceeded the average market price of the Company’s common shares.

(10)Employee Benefit Plans

The Company has a 401(k) plan covering eligible employees. Employee contributions are supplemented by Company contributions subject to 401(k) plan terms. The Company recognized employer matching and profit-sharing contributions of $5.3 million and $3.7 million for fiscal 2021 and 2020, respectively.

(11)Related Party Transactions

Prior to his death in fiscal 2008, the Company had an employment agreement with Robert W. Miller (“Mr. Miller”), co-founder of the Company and the father of Steven G. Miller, Chairman of the Board, President, Chief Executive Officer and a director of the Company. The employment agreement provided for Mr. Miller to receive an annual base salary of $350,000. The employment agreement further provided that, following his death, the Company would pay his surviving wife $350,000 per year and provide her specified benefits for the remainder of her life. During fiscal 2020, the Company made a payment of $350,000 to Mr. Miller’s wife. The Company recognized expense of $0.3 million in fiscal 2020, to provide for a liability for the future obligations under this agreement. Based upon actuarial valuation estimates related to this agreement, the Company had a recorded liability of $1.0 million as of January 3, 2021. The short-term portion of this liability was recorded in accrued expenses in the Company’s consolidated balance sheets and the long-term portion was recorded in other long-term liabilities in the Company’s consolidated balance sheet.

In January 2021, Mrs. Miller passed away and, accordingly, the Company eliminated the liability of $1.0 million and reduced selling and administrative expense by the same amount in the first quarter of fiscal 2021.

F-24

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

(12)Commitments and Contingencies

Eminent Domain Matter

On approximately March 13, 2018, the Orange County Transportation Authority (“OCTA”) filed an eminent domain action against the Company and its Westminster, California, store location to acquire the Company’s interest in the property for public purposes related to a transportation project. The Company surrendered possession of this location on approximately January 31, 2019. On March 31, 2020, the Company and representatives of the OCTA agreed to a preliminary settlement of the proceedings, which was formally approved by the OCTA’s Board on approximately April 27, 2020. Pursuant to the terms of the settlement, on May 21, 2020, the Company received a cash condemnation settlement from the OCTA in the amount of $2.5 million for lost profit and property. The Company recorded a pre-tax gain for the $2.5 million in the second quarter of fiscal 2020 related to the settlement, of which $0.2 million represented lost property and equipment, which was included as other income in the Company’s consolidated statement of operations. Attorneys’ fees related to this settlement totaled $0.1 million in fiscal 2020 and were included in selling and administrative expense in the Company’s consolidated statement of operations.

Recovery of Insurance Proceeds

In the second quarter of fiscal 2020, seven of the Company’s stores were damaged and qualified for loss recovery claims as a result of civil unrest, and the Company disposed of assets of approximately $0.6 million related to lost inventory and property and equipment. In the first quarter of fiscal 2021, the Company reached an agreement with its insurance carrier and, after application of a deductible of $0.3 million, the Company received a cash insurance recovery of $1.3 million in total, of which $1.0 million related to the reimbursement of lost inventory and profit margin, $0.2 million related to the reimbursement of property and equipment, and $0.1 million related to a reimbursement for business interruption. Accordingly, the Company recognized gains of $0.5 million related to the recovery of lost profit margin and business interruption, and $0.2 million related to the recovery of property and equipment. The gain related to the recovery of lost profit margin and business interruption is included in the Company’s consolidated statement of operations as a reduction to cost of goods sold, and the gain related to the recovery of lost property and equipment is included in the Company’s consolidated statement of operations as a reduction to selling and administrative expense for fiscal 2021.

In July 2019, one of the Company’s stores was damaged as a result of a fire and, in the fourth quarter of fiscal 2019, the Company disposed of assets of approximately $0.8 million related to lost inventory and property and equipment. In the fourth quarter of fiscal 2020, the Company reached an agreement with its insurance carrier and, after application of a previous advance of $0.5 million and deductible of $0.2 million, the Company received a cash insurance recovery and recorded a gain of $2.8 million in total, of which $1.7 million related to the reimbursement of property and equipment, $0.8 million related to the reimbursement of lost profit margin, and $0.3 million related to a reimbursement for business interruption. The reimbursement of lost property and equipment is included in the Company’s consolidated statements of operations as a reduction to selling and administrative expense, and the reimbursement of lost profit margin and business interruption is included in the Company’s consolidated statements of operations as a reduction to cost of goods sold for fiscal 2020.

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s results of operations or financial condition.

(13)Share-Based Compensation Plans

2019 Equity Incentive Plan

In April 2019, the Company adopted the 2019 Equity Incentive Plan (“2019 Plan”), which replaced the Company’s Amended and Restated 2007 Equity and Performance Incentive Plan (the “Prior Plan”). Awards under the 2019 Plan may consist of share option awards (both incentive share option awards and non-qualified share option awards), stock appreciation rights, nonvested share awards, other stock unit awards or dividend equivalents. In the past, share option awards issued by the Company have typically been non-qualified share option awards, while nonvested share awards and nonvested share unit awards issued by the Company have typically been based on the attainment of service-only conditions. Upon the adoption of the 2019 Plan, the Company stopped issuing awards under the Prior Plan, although the Company will continue to honor any outstanding awards under the Prior Plan.

The 2019 Plan (i) permits the Company to issue a maximum of 3,848,803 shares of the Company’s common stock plus the number of any additional shares that may thereafter become available as a result of the forfeiture, expiration or other cancellation of awards under any prior plans; and (ii) expires on April 11, 2029.

F-25

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Any share option awards or stock appreciation rights shall be counted against this limit as one share for every one share granted. Any shares that are subject to awards other than share option awards or stock appreciation rights (including shares delivered on the settlement of dividend equivalents) shall be counted against this limit as 2.5 shares for every one share granted. The aggregate number of shares available under the 2019 Plan and the number of outstanding share option awards will be increased or decreased to reflect any changes in the outstanding common stock of the Company by reason of any recapitalization, spin-off, reorganization, reclassification, stock dividend, stock split, reverse stock split, or similar transaction.

At its discretion, the Company grants share option awards, nonvested share awards and nonvested share unit awards to certain employees, as defined by ASC 718, Compensation—Stock Compensation, under the Company’s 2019 Plan, and accounts for its share-based compensation in accordance with ASC 718. As of January 2, 2022, 1,716,479 shares remained available for future grant, and 383,035 share option awards, 551,700 nonvested share awards and zero nonvested share unit awards remained outstanding.

The Company accounts for its share-based compensation in accordance with ASC 718 and recognizes compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures, using the fair-value method for share option awards, nonvested share awards and nonvested share unit awards granted with service-only conditions. The estimated forfeiture rate considers historical employee turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. The Company periodically revises the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recorded under this method for fiscal 2021 and 2020 was $2.0 million and $1.7 million, respectively, which reduced operating income and income before income taxes by the same amount. Compensation expense recognized in cost of sales was $0.1 million in fiscal 2021 and 2020 and compensation expense recognized in selling and administrative expense was $1.9 million and $1.6 million in fiscal 2021 and 2020, respectively. The recognized tax benefit related to compensation expense for fiscal 2021 and 2020 was $0.5 million and $0.4 million, respectively. Net income for fiscal 2021 and 2020 reflects the net-of-tax charge of $1.5 million and $1.3 million, respectively, or $0.07 and $0.06 per basic and diluted share, respectively.

Share Option Awards

Share option awards granted by the Company generally vest and become exercisable in four equal installments of 25% per year with a maximum life of ten years. The exercise price of share option awards is equal to the quoted market price of the Company’s common stock on the date of grant. The Company granted 10,000 share option awards with a weighted-average grant-date fair value of $12.16 per share option award in fiscal 2021, and granted 257,000 share option awards with a weighted-average grant-date fair value of $1.25 per share option award in fiscal 2020.

The following table details the Company’s share option awards activity for the current fiscal year:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at January 3, 2021		742,800		$	4.62
Granted		10,000			24.72
Exercised		(369,765	)		5.85
Outstanding at January 2, 2022		383,035		$	3.96		7.60	$	5,823,394
Exercisable at January 2, 2022		15,105		$	4.17		7.16	$	224,197
Vested and Expected to Vest at January 2, 2022		378,595		$	3.96		7.59	$	5,752,679

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $19.01 per share as of January 2, 2022, which would have been received by the share option award holders had all share option award holders exercised their share option awards as of that date.

The total intrinsic value of share option awards exercised, the total cash received from employees as a result of employee share option award exercises and the actual tax benefit realized for the tax deduction from share option award exercises in fiscal 2021 was approximately $6.6 million, $2.2 million and $1.6 million, respectively.

F-26

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted-average assumptions:

	Year Ended
	January 2, 2022			January 3, 2021
Risk-free interest rate		1.3	%		0.9	%
Expected term	6.5 years			5.7 years
Expected volatility		75.7	%		63.0	%
Expected dividend yield		4.0	%		—

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option award; the expected term represents the weighted-average period of time that option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s dividend rate at the time fair value is measured and future expectations.

As of January 2, 2022, there was $0.4 million of total unrecognized compensation expense related to nonvested share option awards granted. That expense is expected to be recognized over a weighted-average period of 1.6 years.

Nonvested Share Awards and Nonvested Share Unit Awards

Nonvested share awards granted by the Company vest for employees from the date of grant in four equal annual installments of 25% per year. Nonvested share awards and nonvested share unit awards granted by the Company to non-employee directors for their service as directors, as defined by ASC 718, vest 100% on the earlier of (a) the date of the Company’s next annual stockholders meeting following the grant date, or (b) the first anniversary of the grant date.

Nonvested share awards become outstanding when granted and are delivered to the recipient upon their vesting. Vested share unit awards, including any dividend reinvestments, are delivered to the recipient on the tenth business day of January following the year in which the recipient’s service to the Company is terminated, at which time the units convert to shares and become outstanding. On January 14, 2022, the Company delivered 124,012 shares on vested share unit awards, which included dividend reinvestments, to a Board member who retired in November 2021. Outstanding nonvested share awards and nonvested share unit awards accrue dividends at the same rate as dividends paid to the Company’s shareholders. Accrued dividends on nonvested share awards are paid upon vesting of the underlying shares and forfeited if a recipient’s service to the Company is terminated prior to vesting. Accrued dividends on nonvested share unit awards are reinvested into additional nonvested share unit awards, vest on the same schedule as the underlying share unit awards, and are settled at the same time as the underlying share unit awards. The total fair value of nonvested share awards which vested during fiscal 2021 and 2020 was $5.3 million and $0.4 million, respectively. The total fair value of nonvested share unit awards which vested during fiscal 2021 and 2020 was $2.1 million and $0.2 million, respectively.

The Company granted 248,550 nonvested share awards with a weighted-average grant-date fair value of $15.61 per share award in fiscal 2021 and granted 321,600 nonvested share awards with a weighted-average grant-date fair value of $1.69 per share award in fiscal 2020.

The following table details the Company’s nonvested share awards activity for the current fiscal year:

	Shares			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		591,325		$	3.79
Granted		248,550			15.61
Vested		(268,550	)		4.83
Forfeited		(19,625	)		6.59
Balance at January 2, 2022		551,700		$	8.51

F-27

BIG 5 SPORTING GOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

To satisfy employee minimum statutory tax withholding requirements for nonvested share awards that vest, the Company withholds and retires a portion of the vesting common shares, unless an employee elects to pay cash. In fiscal 2021, the Company withheld 70,228 common shares with a total value of $1.0 million. This amount is presented as a cash outflow from financing activities in the Company’s consolidated statement of cash flows.

As of January 2, 2022, dividends accrued but not paid related to nonvested share awards were $1.6 million.

The Company granted 2,614 nonvested share unit awards with a weighted-average grant-date fair value of $28.69 per share unit award in fiscal 2021 and granted 40,000 nonvested share unit awards with a weighted-average grant-date fair value of $2.28 per share unit award in fiscal 2020. The weighted-average grant-date fair value of nonvested share awards and nonvested share unit awards is the quoted market price of the Company’s common stock on the date of grant.

The following table details the Company’s nonvested share unit awards activity for the current fiscal year:

	Units			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		41,160		$	1.91
Granted		2,614			28.69
Dividend reinvestments		30,182			24.79
Vested		(42,614	)		3.90
Dividend reinvestments vested		(31,342	)		24.13
Balance at January 2, 2022		—		$	—

As of January 2, 2022, there were 285,591 cumulative vested share unit awards remaining, of which 79,271 of these awards represented cumulative dividend reinvestments. These cumulative vested share unit awards are deliverable to the holders on the tenth business day of January following the year in which the holder’s service to the Company terminates, at which time the units convert to shares of the Company’s common stock and become outstanding.

As of January 2, 2022, there was $3.2 million of total unrecognized compensation expense related to nonvested share awards, which is expected to be recognized over a weighted-average period of 2.2 years. There was no remaining unrecognized compensation expense related to nonvested share unit awards.

(14)Subsequent Event

In the first quarter of fiscal 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on March 25, 2022 to stockholders of record as of March 11, 2022.

Also, in the first quarter of fiscal 2022, the Company’s Board of Directors authorized a new share repurchase program for the purchase of up to an additional $25.0 million of the Company’s common stock. This program replaced the Company’s previous share repurchase program, under which $7.7 million remained available for repurchase.

F-28

BIG 5 SPORTING GOODS CORPORATION

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

	Balance at Beginning of Period		Charged to Costs and Expenses				Deductions			Balance at End of Period
January 2, 2022
Allowance for doubtful receivables	$	58	$	83			$	(79	)	$	62
Allowance for sales returns	$	2,444	$	84		(1)	$	—		$	2,528
Inventory reserves	$	6,138	$	3,335			$	(3,926	)	$	5,547
January 3, 2021
Allowance for doubtful receivables	$	58	$	44			$	(44	)	$	58
Allowance for sales returns	$	2,702	$	(258	)	(1)	$	—		$	2,444
Inventory reserves	$	6,796	$	2,954			$	(3,612	)	$	6,138

(1)Represents an increase (decrease) in the required reserve based upon the Company’s evaluation of anticipated merchandise returns.

II

EX-10.20

Exhibit 10.20

Execution Version

FIRST AMENDMENT TO LOAN, GUARANTY AND SECURITY AGREEMENT

This FIRST AMENDMENT TO LOAN, GUARANTY AND SECURITY AGREEMENT (this “Amendment”) dated as of November 22, 2021, is entered into by and among BIG 5 SPORTING GOODS CORPORATION, a Delaware corporation (“Parent”), BIG 5 CORP., a Delaware corporation (“Big 5 Corp”), BIG 5 SERVICES CORP., a Virginia corporation (“Big 5 Services”, and together with Big 5 Corp, each a “Borrower” and collectively, the “Borrowers”), Parent and certain of its subsidiaries from time to time joined thereto, as guarantors thereunder (each, a “Guarantor” and collectively, the “Guarantors”), financial institutions party to the Loan Agreement from time to time as Lenders, and BANK OF AMERICA, N.A., a national banking association (“Bank of America”), as agent for the Lenders (in such capacity, “Agent”), with reference to the following facts:

RECITALS

A. WHEREAS, Borrowers, Guarantors, Lenders and Agent entered into that certain Loan, Guaranty and Security Agreement dated as of February 24, 2021 (as amended, restated, extended, amended and restated, supplemented, or otherwise modified from time to time, the “Loan Agreement”);

B. WHEREAS, Borrowers have requested that the Agent and Lenders amend the Loan Agreement in certain respects, which Agent and Lenders are willing to do so, pursuant to the terms and subject to the conditions set forth in this Amendment.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

Definitions

Section 1.01 Defined Terms. Any and all initially-capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment), without definition shall have the respective meanings specified in the Loan Agreement.

Section 1.02 Recitals. The Recitals above are incorporated herein as though set forth in full and Borrowers stipulate to the accuracy of each of the Recitals.

ARTICLE II

AMENDMENTS TO LOAN AND SECURITY AGREEMENT

Section 2.01 Amendment to Section 1.1 – Deleted Definitions. The definitions for “ISDA Definitions,” “LIBOR Replacement Date,” “LIBOR Successor Rate,” “LIBOR Successor Rate Conforming Changes,” “Pre-Adjustment Successor Rate,” “Related Adjustment,” “Relevant Governmental Body,” “SOFR,” and “Term SOFR” are hereby deleted from Section 1.1 of the Loan Agreement without replacement.

1

152152366_4

Section 2.02 Amendment to Section 1.1 – New Definitions. The following definitions are hereby added to Section 1.1 of the Loan Agreement in the appropriate alphabetical order to read as follows:

“First Amendment: that certain First Amendment to Loan, Guaranty and Security Agreement dated as of the First Amendment Effective Date.”

“First Amendment Effective Date: November 22, 2021.”

Section 2.03 Amendment to clause (c) of the Definition of “Permitted Indebtedness” in Section 1.1. Clause (c) of the definition of “Permitted Indebtedness” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“(c) Without duplication of Debt described in clause (f) of this definition, purchase money Debt of any Obligor to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any Debt assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Debt that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof, provided that the amortization, maturity, collateral (if any) and subordination (if any), and other material terms thereof (other than the interest rate applicable thereto) taken as a whole, of any such refinancing, refunding, renewing or extending Debt, and of any agreement entered into and of any instrument issued in connection therewith, are not materially less favorable to the Obligors or the Lenders than the terms of any agreement or instrument governing the Debt being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Debt does not exceed the then applicable market interest rate, provided, however, that the aggregate principal amount of Debt permitted by this clause (c) shall not exceed $20,000,000 at any time outstanding and furtherprovided that, if requested by the Agent, the Obligors shall cause the holders of any such Debt which is secured by a Lien permitted pursuant to clause (h) of the definition of Permitted Liens to enter into a Lien Waiver on terms reasonably satisfactory to the Agent.”

For the avoidance of doubt, the definition of “Permitted Indebtedness” in Section 1.1 of the Loan Agreement shall otherwise remain in full force and effect.

Section 2.04 Amendment to Section 3.6. Section 3.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“Section 3.6.Inability to Determine Rates.

3.6.1 Notwithstanding anything to the contrary herein or in any other Loan Document:

(a) On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory supervisor of LIBOR’s administrator (“IBA”), announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-week, 1-month, 2-month,

2

3-month, 6-month and 12- month U.S. dollar LIBOR tenor settings. On the earliest of (A) the date that all Available Tenors of U.S dollar LIBOR have permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative, (B) June 30, 2023 and (C) the Early Opt-in Effective Date in respect of a SOFR Early Opt-in, if the then-current Benchmark is LIBOR, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.

(b) (x) Upon (A) the occurrence of a Benchmark Transition Event or (B) a determination by the Agent that neither of the alternatives under clause (1) of the definition of Benchmark Replacement are available, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; provided that solely in the event that the then-current Benchmark at the time of such Benchmark Transition Event is not a SOFR-based rate, the Benchmark Replacement therefor shall be determined in accordance with clause (1) of the definition of Benchmark Replacement unless the Agent determines that neither of such alternative rates is available. (y) On the Early Opt-in Effective Date in respect of an Other Rate Early Opt-in, the Benchmark Replacement will replace LIBOR for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document.

(c) At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrowers may revoke any request for a borrowing of, conversion to or continuation of LIBOR Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrowers’ receipt of notice from the Agent that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrowers will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During

3

the period referenced in the foregoing sentence, the component of Base Rate based upon the Benchmark will not be used in any determination of Base Rate.

(d) In connection with the implementation and administration of a Benchmark Replacement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.

(e) The Agent will promptly notify the Borrowers of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Agent pursuant to this Section 3.6.1, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.6.1.

(f) At any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR or LIBOR), then the Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (B) the Agent may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.

(b) Definitions. As used herein, the following terms have the meanings set forth below:

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an interest period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.

“Benchmark” means, initially, LIBOR; provided that if a replacement of the Benchmark has occurred pursuant to Section 3.6.1 then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior

4

benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.

“Benchmark Replacement” means:

(1) For purposes of Section 3.6.1(a), the first alternative set forth below that can be determined by the Agent:

(a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration, and 0.71513% (71.513 basis points) for an Available Tenor of twelve-months’ duration, or

(b) the sum of: (i) Daily Simple SOFR and (ii) 0.11448% (11.448 basis points);

provided that, if initially LIBOR is replaced with the rate contained in clause (b) above (Daily Simple SOFR plus the applicable spread adjustment) and subsequent to such replacement, the Agent determines that Term SOFR has become available and is administratively feasible for the Agent in its sole discretion, and the Agent notifies the Borrowers of such availability, then from and after the beginning of the interest period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Benchmark Replacement shall be as set forth in clause (a) above; and

(2) For purposes of Section 3.6.1(b), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Agent as the replacement Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by a Relevant Governmental Body, for syndicated credit facilities at such time;

provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than zero (0), the Benchmark Replacement will be deemed to be zero (0) for the purposes of this Agreement and the other Loan Documents.

Any Benchmark Replacement shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Agent,

5

such Benchmark Replacement shall be applied in a manner as otherwise reasonably determined by the Agent.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

“Benchmark Transition Event” means, with respect to any then-current Benchmark other than LIBOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark or a Governmental Authority with jurisdiction over such administrator announcing or stating that all Available Tenors are or will no longer be representative, or made available, or used for determining the interest rate of loans, or shall or will otherwise cease, provided that, at the time of such statement or publication, there is no successor administrator that is satisfactory to the Agent, that will continue to provide any representative tenors of such Benchmark after such specific date.

“Daily Simple SOFR” with respect to any applicable determination date means the secured overnight financing rate (“SOFR”) published on such date by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source).

“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Borrowers.

“Early Opt-in Election” means the occurrence of:

(1) a determination by the Agent, or a notification by the Borrowers to the Agent that the Borrowers have made a determination, that U.S. dollar-denominated bilateral credit facilities currently being

6

executed, or that include language similar to that contained in Section 3.6.1, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR, and

(2) the joint election by the Agent and the Borrowers to replace LIBOR with a Benchmark Replacement.

“Other Rate Early Opt-in” means the Agent and the Borrowers have elected to replace LIBOR with a Benchmark Replacement other than a SOFR-based rate pursuant to (1) an Early Opt-in Election and (2) Section 3.6.1(b) and paragraph (2) of the definition of “Benchmark Replacement”.

“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

“SOFR Early Opt-in” means the Agent and the Borrowers have elected to replace LIBOR pursuant to (1) an Early Opt-in Election and (2) Section 3.6.1(a) and paragraph (1) of the definition of “Benchmark Replacement”.

“Term SOFR” means, for the applicable corresponding tenor (or if any Available Tenor of a Benchmark does not correspond to an Available Tenor for the applicable Benchmark Replacement, the closest corresponding Available Tenor and if such Available Tenor corresponds equally to two Available Tenors of the applicable Benchmark Replacement, the corresponding tenor of the shorter duration shall be applied), the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

ARTICLE III

conditions to effectiveness

Section 3.01 Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

(a) This Amendment. The Agent shall have received this Amendment, duly executed by Borrowers, Agent and the Lender.

(c) No Default. After giving effect to this Amendment, no Default or Event of Default shall exist.

(d) Payment of Fees and Expenses. The Agent shall have received from Borrowers costs and expenses owed to and/or incurred by the Agent arising in connection with this Amendment (including reasonable attorneys’ fees and costs).

7

(e) Other Documents. Borrowers shall have executed and delivered to the Agent such other documents and instruments as the Agent may require.

ARTICLE IV

ADDITIONAL COVENANTS AND MISCELLANEOUS.

Section 4.01 Acknowledgment by Obligors. Each Obligor hereby represents and warrants that the execution and delivery of this Amendment and compliance by each Obligor with all of the provisions of this Amendment: (a) are within the powers and purposes of each Obligor; (b) have been duly authorized or approved by the board of directors or managers of each Obligor; and (c) when executed and delivered by or on behalf of each Obligor, will constitute valid and binding obligations of each Obligor, enforceable in accordance with their terms. Each Obligor reaffirms its obligation to pay all amounts due to Agent and Lenders under the Loan Documents in accordance with the terms thereof, as modified hereby.

Section 4.02 Survival of Representations and Warranties. All representations and warranties made in the Loan Agreement or in any other document or documents relating thereto, including, without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Agent or any closing shall affect the representations and warranties or the right of Agent to rely thereon.

Section 4.03 Amendment as Loan Document. This Amendment shall constitute a Loan Document under the Loan Agreement. Any provision of any Loan Document which applies to Loan Documents generally shall apply to this Amendment. It shall be an Event of Default under the Loan Agreement if any Borrower breaches any covenant contained herein or if any representation or warranty contained herein proves to be inaccurate or untrue in any material respect.

Section 4.04 Reference to Loan Agreement. The Loan Agreement, each of the other Loan Documents, and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof, or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference therein to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.

Section 4.05 Reserved.

Section 4.06 Loan Agreement Remains in Effect. The Loan Agreement and the other Loan Documents remain in full force and effect and each Obligor ratifies and confirms its agreements and covenants contained therein.

Section 4.07 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment, and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

Section 4.08 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF LAWS OF ANOTHER JURISDICTION. SECTIONS 14.13 AND 14.14 OF THE LOAN AGREEMENT SHALL BE INCORPORATED BY REFERENCE HEREIN, MUTATIS MUTANDIS.

8

Section 4.09 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Agent, Lenders and each Obligor and their respective successors and assigns; provided, however, that an Obligor may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Agent and Lenders.

Section 4.10 Counterparts; Electronic Delivery. This Amendment may be in the form of an Electronic Record and may be executed using Electronic Signatures (including, without limitation, facsimile and .pdf) and shall be considered an original, and shall have the same legal effect, validity and enforceability as a paper record. This Amendment may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Amendment. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Agent of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Communication converted into another format, for transmission, delivery and/or retention. “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.

Section 4.11 Headings. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

Section 4.12 NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENTS THE FINAL AGREEMENT BETWEEN THE AGENT, LENDERS AND OBLIGORS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE AGENT, LENDERS AND OBLIGORS.

[Signature Pages Follow]

9

IN WITNESS WHEREOF, the parties have entered into this Amendment by their respective duly authorized officers as of the date first written above.

PARENT AND GUARANTOR:	BIG 5 SPORTING GOODS CORPORATION, a Delaware corporation
	By:	/s/ Barry D. Emerson
	Name:	Barry D. Emerson
	Title:	Executive Vice President & Chief Financial Officer
	Address:	2525 E. El Segundo Blvd. El Segundo, CA 90245
BORROWERS:	BIG 5 CORP., a Delaware corporation
	By:	/s/ Barry D. Emerson
	Name:	Barry D. Emerson
	Title:	Executive Vice President & Chief Financial Officer
	Address:	2525 E. El Segundo Blvd. El Segundo, CA 90245
	BIG 5 SERVICES CORP., a Virginia corporation
	By:	/s/ Barry D. Emerson
	Name:	Barry D. Emerson
	Title:	Executive Vice President & Chief Financial Officer
	Address:	2525 E. El Segundo Blvd. El Segundo, CA 90245

First AMENDMENT TO LOAN, guaranty AND SECURITY AGREEMENT

(BIG 5)

SIGNATURE PAGE

AGENT AND LENDERS:

BANK OF AMERICA, N.A.,

as Agent and Lender

By:	/s/ Mia K. Bolin
Name:		Mia K. Bolin
Title:		Senior Vice President

First AMENDMENT TO LOAN, guaranty AND SECURITY AGREEMENT

(BIG 5)

SIGNATURE PAGE

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-149730, 333-179602, 333-215545, and 333-234317 on Form S-8 of our reports dated March 2, 2022, relating to the financial statements of Big 5 Sporting Goods Corporation and the effectiveness of Big 5 Sporting Goods Corporation’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended January 2, 2022.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 2, 2022

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Steven G. Miller, certify that:

1.I have reviewed this Annual Report on Form 10-K of Big 5 Sporting Goods Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 2, 2022

/s/	Steven G. Miller
	Steven G. Miller
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Barry D. Emerson, certify that:

1.I have reviewed this Annual Report on Form 10-K of Big 5 Sporting Goods Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 2, 2022

/s/	Barry D. Emerson
	Barry D. Emerson
	Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Big 5 Sporting Goods Corporation (the “Company”) for the period ending January 2, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven G. Miller, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/	Steven G. Miller
	Steven G. Miller
	President and Chief Executive Officer

March 2, 2022

A signed original of this written statement required by Section 906 has been provided to Big 5 Sporting Goods Corporation and will be retained by Big 5 Sporting Goods Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Big 5 Sporting Goods Corporation (the “Company”) for the period ending January 2, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry D. Emerson, Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(1)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/	Barry D. Emerson
	Barry D. Emerson
	Executive Vice President, Chief Financial Officer and Treasurer

March 2, 2022

A signed original of this written statement required by Section 906 has been provided to Big 5 Sporting Goods Corporation and will be retained by Big 5 Sporting Goods Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($)

12 Months Ended

Jan. 02, 2022

Feb. 22, 2022

Jul. 04, 2021

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Jan. 02, 2022

Document Fiscal Year Focus

2021

Document Fiscal Period Focus

FY

Trading Symbol

BGFV

Entity Registrant Name

BIG 5 SPORTING GOODS CORPORATION

Entity Central Index Key

0001156388

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Current Fiscal Year End Date

--01-02

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Filer Category

Accelerated Filer

ICFR Auditor Attestation Flag

true

Entity Shell Company

false

Entity Small Business

true

Entity Emerging Growth Company

false

Title of 12(b) Security

Common Stock, par value $0.01 per share

Security Exchange Name

NASDAQ

Entity Address, State or Province

CA

Entity File Number

000-49850

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

95-4388794

Entity Address, Address Line One

2525 East El Segundo Boulevard

Entity Address, City or Town

El Segundo

Entity Address, Postal Zip Code

90245

City Area Code

310

Local Phone Number

536-0611

Document Annual Report

true

Document Transition Report

false

Entity Common Stock, Shares Outstanding

22,219,839

Entity Public Float

$ 510,240,815

Documents Incorporated by Reference

Part III of this Form 10-K incorporates by reference certain information from the registrant’s 2022 definitive proxy statement (the “Proxy Statement”) to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year.

Auditor Name

Deloitte & Touche LLP

Auditor Firm ID

34

Auditor Location

Los Angeles, California

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Current assets:
Cash and cash equivalents	$ 97,420	$ 64,654
Accounts receivable, net of allowances of $62 and $58, respectively	13,654	19,879
Merchandise inventories, net	279,981	251,180
Prepaid expenses	16,293	11,684
Total current assets	407,348	347,397
Operating lease right-of-use assets, net	270,110	278,607
Property and equipment, net	60,401	57,245
Deferred income taxes	12,097	13,831
Other assets, net of accumulated amortization of $905 and $2,407, respectively	3,997	2,914
Total assets	753,953	699,994
Current liabilities:
Accounts payable	104,359	80,882
Accrued expenses	85,041	82,877
Current portion of operating lease liabilities	76,882	73,737
Current portion of finance lease liabilities	3,518	2,089
Total current liabilities	269,800	239,585
Operating lease liabilities, less current portion	204,134	217,788
Finance lease liabilities, less current portion	6,456	2,504
Long-term debt	0	0
Other long-term liabilities	6,254	7,479
Total liabilities	486,644	467,356
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 26,109,003 and,25,580,541 shares, respectively; outstanding 22,097,467 and 21,930,328 shares, respectively	260	255
Additional paid-in capital	124,909	121,837
Retained earnings	192,261	153,073
Less: Treasury stock, at cost; 4,011,536 and 3,650,213 shares, respectively	(50,121)	(42,527)
Total stockholders' equity	267,309	232,638
Total liabilities and stockholders' equity	$ 753,953	$ 699,994

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts receivable, current	$ 62	$ 58
Accumulated amortization on other assets	$ 905	$ 2,407
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	26,109,003	25,580,541
Common stock, shares outstanding	22,097,467	21,930,328
Treasury stock, shares	4,011,536	3,650,213

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Income Statement [Abstract]
Net sales	$ 1,161,820	$ 1,041,212
Cost of sales	725,991	692,041
Gross profit	435,829	349,171
Selling and administrative expense	299,812	275,406
Other income		(2,500)
Operating income	136,017	76,265
Interest expense	893	1,880
Income before income taxes	135,124	74,385
Income tax expense	32,738	18,445
Net income	$ 102,386	$ 55,940
Earnings per share:
Basic	$ 4.73	$ 2.63
Diluted	$ 4.55	$ 2.58
Weighted-average shares of common stock outstanding:
Basic	21,670	21,260
Diluted	22,512	21,663

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock Outstanding [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock, At Cost [Member]
Beginning Balance at Dec. 29, 2019	$ 180,372		$ 252	$ 120,054	$ 102,593	$ (42,527)
Beginning Balance, Shares at Dec. 29, 2019		21,664,076
Net income	55,940				55,940
Dividends on common stock	(5,460)				(5,460)
Issuance of nonvested share awards			3	(3)
Issuance of nonvested share awards, Shares		321,600
Exercise of share option awards	169			169
Exercise of share option awards, Shares		31,600
Share-based compensation	1,714			1,714
Forfeiture of nonvested share awards, Shares		(22,375)
Retirement of common stock for payment of withholding tax	(97)			(97)
Retirement of common stock for payment of withholding tax, Shares		(64,573)
Ending Balance at Jan. 03, 2021	232,638		255	121,837	153,073	(42,527)
Ending Balance, shares at Jan. 03, 2021		21,930,328
Net income	102,386				102,386
Dividends on common stock	(63,198)				(63,198)
Issuance of nonvested share awards			2	(2)
Issuance of nonvested share awards, Shares		248,550
Exercise of share option awards	$ 2,165		3	2,162
Exercise of share option awards, Shares	369,765	369,765
Share-based compensation	$ 1,958			1,958
Forfeiture of nonvested share awards, Shares		(19,625)
Retirement of common stock for payment of withholding tax	$ (1,046)			(1,046)
Retirement of common stock for payment of withholding tax, Shares	(70,228)	(70,228)
Purchases of treasury stock	$ (7,594)					(7,594)
Purchases of treasury stock, Shares		(361,323)
Ending Balance at Jan. 02, 2022	$ 267,309		$ 260	$ 124,909	$ 192,261	$ (50,121)
Ending Balance, shares at Jan. 02, 2022		22,097,467

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Retained Earnings [Member]
Dividends per share	$ 2.83	$ 0.25

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Cash flows from operating activities:
Net income	$ 102,386	$ 55,940
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,698	18,450
Share-based compensation	1,958	1,714
Amortization of other assets	577	364
Noncash lease expense	65,716	64,316
Proceeds from insurance recovery - lost profit margin and expenses	1,083	1,077
Gain on recovery of insurance proceeds - lost profit margin and expenses	(460)	(1,077)
Gain on recovery of insurance proceeds - property and equipment	(249)	(1,750)
Gain on eminent domain condemnation		(2,500)
Proceeds from eminent domain condemnation - lost profit margin		2,263
Deferred income taxes	1,734	(212)
Changes in operating assets and liabilities:
Accounts receivable, net	5,902	(6,193)
Merchandise inventories, net	(28,801)	58,135
Prepaid expenses and other assets	(5,523)	(1,861)
Accounts payable	23,341	9,243
Operating lease liabilities	(68,028)	(67,198)
Accrued expenses and other long-term liabilities	(1,806)	18,032
Net cash provided by operating activities	115,528	148,743
Cash flows from investing activities:
Purchases of property and equipment	(10,864)	(7,347)
Proceeds from insurance recovery - property and equipment	249	1,750
Proceeds from eminent domain condemnation - property and equipment		237
Net cash used in investing activities	(10,615)	(5,360)
Cash flows from financing activities:
Borrowings under revolving credit facility		137,296
Payments under revolving credit facility		(203,855)
Changes in book overdraft	(246)	(12,031)
Debt issuance costs paid	(746)	(106)
Principal payments under finance lease obligations	(2,887)	(2,858)
Proceeds from exercise of share option awards	2,165	169
Cash purchases of treasury stock	(7,594)
Tax withholding payments for share-based compensation	(1,046)	(97)
Dividends paid	(61,793)	(5,470)
Net cash used in financing activities	(72,147)	(86,952)
Net increase in cash and cash equivalents	32,766	56,431
Cash and cash equivalents at beginning of year	64,654	8,223
Cash and cash equivalents at end of year	97,420	64,654
Supplemental disclosures of non-cash investing and financing activities:
Property and equipment acquired under finance leases	8,276
Property and equipment additions unpaid	2,382	668
Supplemental disclosures of cash flow information:
Interest paid	624	1,856
Income taxes paid	$ 36,391	$ 19,625

XML

Description of Business

12 Months Ended

Jan. 02, 2022

Accounting Policies [Abstract]

Description of Business

(1)Description of Business

Big 5 Sporting Goods Corporation (the “Company”) is a leading sporting goods retailer in the western United States, operating 431 stores and an e-commerce platform as of January 2, 2022. The Company provides a full-line product offering in a traditional sporting goods store format that averages approximately 11,000 square feet. The Company’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation. The Company is a holding company that operates as one reportable segment under the “Big 5 Sporting Goods” name through Big 5 Corp., its 100%-owned subsidiary, and Big 5 Services Corp., which is a 100%-owned subsidiary of Big 5 Corp. Big 5 Services Corp. provides a centralized operation for the issuance and administration of gift cards and returned merchandise credits (collectively, “stored-value cards”).

The Company’s consolidated financial statements as of January 2, 2022 and January 3, 2021 and for the years ended January 2, 2022 (“fiscal 2021”) and January 3, 2021 (“fiscal 2020”) represent the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

XML

Summary of Significant Accounting Policies

12 Months Ended

Jan. 02, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(2)Summary of Significant Accounting Policies

Consolidation

The accompanying consolidated financial statements include the accounts of Big 5 Sporting Goods Corporation, Big 5 Corp. and Big 5 Services Corp. Intercompany balances and transactions have been eliminated in consolidation.

Reporting Period

The Company follows the concept of a 52-53 week fiscal year, which ends on the Sunday nearest December 31. Fiscal 2021 included 52 weeks and fiscal 2020 included 53 weeks.

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in this standard are elective and are effective upon issuance for all entities, and the impact from this standard was immaterial.

Other recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements.

COVID-19 Impact on Concentration of Risk

The novel coronavirus (“COVID-19”) pandemic has significantly impacted health and economic conditions throughout the United States and globally, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine.

The Company primarily operates traditional sporting goods retail stores located in the western United States, with approximately 52% of its stores, along with its corporate offices and distribution center, located in California. Because of this, the Company is subject to regional risks, including the impact of the COVID-19 outbreak. Beginning on March 20, 2020, and continuing into the second quarter of fiscal 2020, the Company temporarily closed more than one-half of its retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. The Company was subsequently able to gradually reopen its store locations based on initially qualifying as an “essential” business under applicable regulations and later as a result of the easing of regulatory restrictions on retail operations in the Company’s market areas. In an effort to promote social distancing protocols, the Company implemented reduced store hours, limited the number of customers in its stores at any one time and generally implemented social-distancing guidelines throughout the store operating space in fiscal 2020. As of the end of fiscal 2020 and during fiscal 2021, all of the Company’s stores were open for in-store shopping with reduced operating hours and certain COVID-19-related protocols in place. The Company may further restrict its store operations and operations in its distribution facility if deemed necessary or if recommended or mandated by authorities, and new temporary closures of stores or new safety protocols may be required if additional orders are issued in response to changing health conditions.

A substantial amount of the Company’s inventory is manufactured abroad. COVID-19, and surging consumer demand initially associated with the pandemic, has also impacted the Company’s supply chain for products sold, particularly those products that are sourced from Asia. To the extent one or more vendors is negatively impacted by continued supply chain disruptions or by COVID-19, including due to interruptions at or closure of those vendors’ distribution centers or manufacturing facilities, or the Company or its vendors are unable to obtain the necessary shipping capacity to transport products to the Company’s distribution center, the Company may be unable to maintain delivery schedules or adequate inventory in its stores. During the second half of fiscal 2021, the Company experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited the Company’s ability to obtain desired quantities of inventory for various merchandise categories. While the Company has generally been able to sufficiently stock product in its stores to meet most consumer demand during the pandemic, future prolonged and sustained delays in product reaching the Company’s stores from overseas vendors, particularly during the holiday season, could result in the inability to obtain adequate levels of merchandise inventories to meet consumers’ needs, which could have an adverse impact on net sales and profitability.

General Concentration of Risk

The Company maintains its cash accounts in financial institutions, and accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash equivalents represent investments of excess cash on hand of $75.0 million and $50.0 million into U.S. Treasury bills as of January 2, 2022 and January 3, 2021, respectively.

Because of the Company’s geographic concentration in the western United States, the Company is 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 weather conditions, fires, droughts, earthquakes, power outages, floods and other natural disasters specific to the states in which the Company operates.

The Company relies on a single distribution center located in Riverside, California, which services all of its stores and e-commerce platform. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company’s ability to adequately stock its stores and fulfill its e-commerce business.

A substantial amount of the Company’s inventory is manufactured abroad. From time to time, shipping ports experience capacity constraints (such as delays associated with COVID-19), labor strikes, work stoppages or other disruptions that may delay the delivery of imported products. A contract dispute may lead to protracted delays in the movement of the Company’s products, which could further delay the delivery of products to the Company’s stores and impact net sales and profitability. In addition, other conditions outside of the Company’s control, such as adverse weather conditions or acts of terrorism, could significantly disrupt operations at shipping ports or otherwise impact transportation of the imported merchandise we sell.

The Company purchases merchandise from over 700 suppliers, and the Company’s 20 largest suppliers accounted for 36.8% of total purchases in fiscal 2021. One vendor represented greater than 5% of total purchases, at 7.6%, in fiscal 2021. A significant portion of the Company’s inventory is manufactured abroad in Asia. Foreign imports subject the Company to the risks of changes in, or the imposition of new, import tariffs, duties or quotas, new restrictions on imports, loss of “most 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 fluctuations or revaluations, public health issues that could lead to temporary closures of facilities or shipping ports, such as the recent outbreak of COVID-19, and other economic uncertainties. If a disruption of trade were to occur from the countries in which the suppliers of the Company’s vendors are located, the Company may be unable to obtain sufficient quantities of products to satisfy its requirements, or the cost of obtaining products may increase.

In early fiscal 2021, the Company was informed of an expansion of Nike’s direct-to-consumer initiatives that will impact certain multi-branded retailers, including the Company, and which will lead to a significant reduction in the Company’s future supply chain relative to this vendor. This transition is not expected to impact the Company’s ability to continue to purchase certain Nike branded products from authorized licensees. The Company is actively expanding its relationships with other new and existing vendors in an effort to replace the affected Nike product within its product mix.

The Company could be exposed to credit risk in the event of nonperformance by its lender under its revolving credit facility. Instability in the financial and capital markets could bring additional potential risks to the Company, including higher costs of credit, potential lender defaults, and potential commercial bank failures. The Company has received no indication that any such events will negatively impact its lender under its credit facility; however, the possibility does exist.

Use of Estimates

Management makes a number of estimates and assumptions relating to the reporting of assets, liabilities and stockholders’ equity and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expense during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Certain items subject to such estimates and assumptions include the carrying amount of merchandise inventories, property and equipment, lease assets and lease liabilities; valuation allowances for receivables, sales returns and deferred income tax assets; estimates related to stored-value cards and the valuation of share-based compensation awards; and obligations related to litigation, self-insurance liabilities and employee benefits. Due to the inherent uncertainty involved in making assumptions and estimates, events and changes in circumstances arising after January 2, 2022, including those resulting from the impacts of the COVID-19 pandemic, may result in actual outcomes that differ from those contemplated by management’s assumptions and estimates.

Segment Reporting

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online, and whose Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis, for purposes of allocating resources and evaluating financial performance. The Company’s stores typically have similar square footage, with the stores and e-commerce platform offering a similar general product mix. The Company’s core customer demographic remains similar across all sales channels, as does the Company’s process for the procurement and marketing of its product mix. Furthermore, the Company distributes its product mix for both the stores and e-commerce platform from a single distribution center. Given the consolidated level of review by the CODM, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

Revenue Recognition

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online. Generally, all revenue is recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends immaterial credit purchases to certain municipalities and local school districts.

As noted in the segment information elsewhere in this Note 2 to the Notes to Consolidated Financial Statements, the Company’s business consists of one reportable segment. In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates net sales into the following major merchandise categories to depict the nature and amount of revenue and related cash flows:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands)
Hardgoods	$	637,181	$	623,728
Athletic and sport footwear		279,645		228,311
Athletic and sport apparel		241,526		184,538
Other sales		3,468		4,635
Net sales	$	1,161,820	$	1,041,212

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

•Retail store sales

•E-commerce sales

•Stored-value cards

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the product is tendered for delivery to the common carrier. For performance obligations related to stored-value cards, the Company typically transfers control upon redemption of the stored-value card through consummation of a future sales transaction.

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract.

The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. There were no material adjustments to the Company’s previous estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated right-of-return merchandise cost related to the sales returns is recorded as prepaid expense in the Company’s consolidated balance sheet as of January 2, 2022. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

The Company has elected to apply the practical expedient, relative to e-commerce sales, which allows an entity to account for shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the sale of the product, at shipping point (when the customer gains control). Revenue associated with e-commerce sales is not material.

Contract liabilities are recognized primarily for stored-value card sales. Cash received from the sale of stored-value cards is recorded as a contract liability in accrued expenses in the Company’s consolidated balance sheets, and the Company recognizes revenue upon the customer’s redemption of the stored-value card. Stored-value card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of five percent. The Company does not sell or provide stored-value cards that carry expiration dates.

The Company recognized $5.9 million and $5.4 million in stored-value card redemption revenue for fiscal 2021 and 2020, respectively. The Company also recognized $0.3 million in stored-value card breakage revenue for each of fiscal 2021 and 2020. The Company had outstanding stored-value card liabilities of $8.3 million and $7.5 million as of January 2, 2022 and January 3, 2021, respectively, which are included in accrued expenses in the Company’s consolidated balance sheets. Based upon historical experience, stored-value cards are predominantly redeemed in the first two years following their issuance date.

The Company recorded, as prepaid expense in the Company’s consolidated balance sheets, estimated right-of-return merchandise cost of $1.2 million related to estimated sales returns as of January 2, 2022 and January 3, 2021, and recorded, as accrued expense in the Company’s consolidated balance sheets, an allowance for sales returns reserve of $2.5 million and $2.4 million as of January 2, 2022 and January 3, 2021, respectively.

Cost of Sales

Cost of sales includes the cost of merchandise, net of discounts or allowances earned, freight (including e-commerce shipping and handling costs), inventory reserves, buying, distribution center expense, including depreciation and amortization, and store occupancy expense. Store occupancy expense includes rent, amortization of leasehold improvements, common area maintenance, property taxes and insurance.

Selling and Administrative Expense

Selling and administrative expense includes store-related expense, other than store occupancy expense, as well as advertising, depreciation and amortization, expense associated with operating the Company’s corporate headquarters and impairment charges, if any.

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. After reducing advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic, beginning in the second half of fiscal 2020, amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. These amounts were previously recorded as a reduction to selling and administrative expense.

Advertising Expense

Advertising is expensed when the advertising first occurs. Advertising expense, net of co-operative advertising allowances, amounted to $11.0 million and $10.6 million for fiscal 2021 and 2020, respectively. The Company reduced advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic. Advertising expense is included in selling and administrative expense in the Company’s consolidated statements of operations. The Company receives co-operative advertising allowances from certain product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors’ products. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to zero and $1.1 million for fiscal 2021 and 2020, respectively. Beginning in the second half of fiscal 2020, as a result of the significant reductions of print advertising in fiscal 2021 and 2020, the Company treated these advertising allowances as a reduction of inventory cost and cost of goods sold which had an immaterial effect on the Company’s consolidated financial statements.

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718, Compensation—Stock Compensation. The Company recognizes compensation expense on a straight-line basis over the requisite service period using the fair-value method for share option awards, nonvested share awards and nonvested share unit awards granted with service-only conditions. See Note 13 to the Notes to Consolidated Financial Statements for a further discussion on share-based compensation.

Pre-opening Costs

Pre-opening costs for new stores, which are not material, consist primarily of payroll and recruiting expense, training, marketing, rent, travel and supplies, and are expensed as incurred.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments of excess cash into U.S. Treasury bills, which have maturities of 90 days or less. See Note 4 to the Notes to Consolidated Financial Statements for a further discussion on the fair value of U.S. Treasury bills. Book overdrafts are classified as current liabilities in the Company’s consolidated balance sheets.

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products, volume purchase rebates or co-operative advertising, amounts due from lessors for tenant improvement allowances and insurance recovery receivables. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Valuation of Merchandise Inventories, Net

The Company’s merchandise inventories are made up of finished goods and are valued at the lower of cost or net realizable value using the weighted-average cost method that approximates the first-in, first-out (“FIFO”) method. Average cost includes the direct purchase price of merchandise inventory, net of vendor allowances and cash discounts, in-bound freight-related expense and allocated overhead expense associated with the Company’s distribution center.

Management regularly reviews inventories and records valuation reserves for damaged and defective merchandise, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds net realizable value. Because of its merchandise mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of merchandise sales based on historical inventory shrinkage trends. The Company performs physical inventories of its stores at least once per year and cycle counts inventories at its distribution center throughout the year. The reserve for inventory shrinkage primarily represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Prepaid Expenses and Other Assets

Prepaid expenses include the prepayment of various operating expenses such as insurance, income and property taxes, software maintenance and supplies, which are expensed when the operating cost is realized, as well as estimated right-of-return merchandise cost related to estimated sales returns.

Other assets include the long-term portion of certain prepaid expenses, capitalized deferred financing fees related to the Company’s credit facility and capitalized implementation costs related to hosting arrangements that are service contracts. While deferred financing fees and implementation costs are capitalized and amortized over the respective terms of their arrangements, costs related to the service element of a hosting arrangement that is a service contract are expensed as incurred.

Property and Equipment, Net

Property and equipment are stated at cost and are being depreciated or amortized utilizing the straight-line method over the following estimated useful lives:

Land	Indefinite
Buildings	20 years
Leasehold improvements	Shorter of estimated useful life or term of lease
Furniture and equipment	3 – 10 years
Internal-use software	3 – 7 years

Maintenance and repairs are expensed as incurred.

The Company incurs costs to purchase and develop software for internal use. Costs related to the application development stage are capitalized and amortized over the estimated useful life of the software. Costs related to the design or maintenance of internal-use software are expensed as incurred. See Note 3 to the Notes to Consolidated Financial Statements for a further discussion on property and equipment.

Valuation of Long-Lived Assets

In accordance with ASC 360, Property, Plant, and Equipment, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”), usually at the store level. The carrying amount of a store asset group includes stores’ property and equipment, primarily leasehold improvements, and operating lease ROU assets. The carrying amount of a store asset group is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the store asset group. Factors that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses, and a projection that demonstrates continuing losses or insufficient income over the remaining reasonably certain lease term associated with the use of a store asset group. Other factors may include an adverse change in the business climate or an adverse action or assessment by a regulator in the market of a store asset group. When stores are identified as having an indicator of impairment, the Company forecasts undiscounted cash flows over the store asset group’s remaining reasonably certain lease term and compares the undiscounted cash flows to the carrying amount of the store asset group. If the store asset group is determined not to be recoverable, then an impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value, determined using discounted cash flow valuation techniques, as contemplated in ASC 820, Fair Value Measurements.

The Company determines the cash flows expected to result from the store asset group by projecting future revenue, gross margin and operating expense for each store asset group under evaluation for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning, and include assumptions about sales growth rates, gross margins and operating expense in relation to the current economic environment and the Company’s future expectations, competitive factors in its various markets, inflation, sales trends and other relevant environmental factors that may impact the store under evaluation. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. If economic conditions deteriorate in the markets in which the Company conducts business, or if other negative market conditions develop, the Company may experience additional impairment charges in the future for underperforming stores.

The resulting impairment charge, if any, is allocated to the property and equipment, primarily leasehold improvements, and operating lease ROU assets on a pro rata basis using the relative carrying amounts of those assets. The allocated impairment charge to a long-lived asset is limited to the extent that the impairment charge does not reduce the carrying amount of the long-lived asset below its individual fair value. The estimation of the fair value of an ROU asset involves the evaluation of current market value rental amounts for leases associated with ROU assets. The estimates of current market value rental amounts are primarily based on recent observable market rental data of other comparable retail store locations. The fair value of an ROU asset is measured using a discounted cash flow valuation technique by discounting the estimated current and future market rental values using a property-specific discount rate.

In fiscal 2021 and 2020, the Company recognized no non-cash impairment charges. Impairment charges, if any, represent property and equipment, primarily leasehold improvements, and are included in selling and administrative expense in the Company’s consolidated statements of operations.

Leases

In accordance with ASC 842, Leases, the Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware, and distribution center delivery tractors and equipment. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Finance leases are included in property and equipment and finance lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Lease liabilities are calculated using the effective interest method, regardless of classification, while the amortization of ROU assets varies depending upon classification. Finance lease classification results in a front-loaded expense recognition pattern over the lease term which amortizes the ROU asset by recognizing interest expense and amortization expense as separate components of lease expense and calculates the amortization expense component on a straight-line basis. Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a single expense component, which results in amortization of the ROU asset that equals the difference between lease expense and interest expense. Lease expense for finance and operating leases are included in cost of sales or selling and administrative expense, based on the use of the leased asset, on the Company’s consolidated statement of operations. Variable payments such as property taxes, insurance and common area maintenance related to triple net leases, as well as certain equipment sales taxes, licenses, fees and repairs, are expensed as incurred, and leases with an initial term of 12 months or less are excluded from minimum lease payments and are not recorded on the Company’s consolidated balance sheets. The Company recognizes variable lease expense for these short-term leases on a straight-line basis over the remaining lease term.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. As the Company’s leases generally do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate (“IBR”) to determine the present value of lease payments. The collateralized IBR is based on a synthetic credit rating that is externally prepared on an annual basis. This analysis considers qualitative and quantitative factors based on guidance provided by a rating agency for the consumer durables industry. The Company adjusts the selected IBR quarterly with a company-specific unsecured yield curve that approximates the Company’s market risk profile. The collateralized IBR is also based upon the estimated impact that the collateral has on the IBR. To account for the collateralized nature of the IBR, the Company utilized a notching method based on notching guidance provided by a rating agency whereby the Company’s base credit rating is notched upward as the yield curve on a secured loan is expected to be lower versus an unsecured loan.

The operating lease ROU asset also includes any prepaid lease payments made and is reduced by lease incentives such as tenant improvement allowances. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.

Certain of the leases for the Company’s retail store facilities provide for payments based on future sales volumes at the leased location, which are not measurable at the inception of the lease. Under ASC 842, these contingent rents are expensed as they accrue.

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

In accordance with this interpretive guidance, the Company elected to account for lease concessions related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company accounted for COVID-19 lease abatements of $3.1 million in fiscal 2020 as reductions to variable lease expense and accounted for lease deferrals of $0.1 million and $0.6 million as of January 2, 2022 and January 3, 2021, respectively, as if no changes to the lease contract were made while continuing to recognize expense during the deferral period and deferring the payment obligation as a liability.

See Note 6 to the Notes to Consolidated Financial Statements for a further discussion on leases.

Self-Insurance Liabilities

The Company is self-insured for its various insurance risks including its estimated workers’ compensation liability risk in certain states. The Company also has a self-funded insurance program for a portion of its employee medical benefits. Under these programs, the Company maintains insurance coverage for losses in excess of specified per-occurrence amounts. Estimated expenses incurred under the self-insured workers’ compensation and medical benefits programs, including incurred but not reported claims, are recorded as expense based upon historical experience, trends of paid and incurred claims, and other actuarial assumptions. If actual claims trends under these programs, including the severity or frequency of claims, differ from the Company’s estimates, its financial results may be significantly impacted. The Company’s actuarially-estimated self-insurance liabilities, which are reported gross of expected workers’ compensation insurance reimbursements, are classified on the Company’s consolidated balance sheets as accrued expenses or other long-term liabilities based upon whether they are expected to be paid during or beyond the normal operating cycle of 12 months from the date of the Company’s consolidated financial statements. Self-insurance liabilities totaled $10.2 million and $11.0 million as of January 2, 2022 and January 3, 2021, respectively, of which $4.4 million and $4.8 million were recorded as a component of accrued expenses as of January 2, 2022 and January 3, 2021, respectively, and $5.8 million and $6.2 million were recorded as a component of other long-term liabilities as of January 2, 2022 and January 3, 2021, respectively, in the Company’s consolidated balance sheets.

Income Taxes

Under the asset and liability method prescribed within ASC 740, Income Taxes, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed throughout the year and a valuation allowance is recorded if necessary to reduce net deferred tax assets to the amount more likely than not to be realized. Certain prior period deferred tax disclosures were reclassified to conform with current period presentation.

ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company’s practice is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in selling and administrative expense in the Company’s consolidated statements of operations. As of January 2, 2022 and January 3, 2021, the Company had no accrued interest or penalties. See Note 8 to the Notes to Consolidated Financial Statements for a further discussion on income taxes.

Treasury Stock Purchases

The Company repurchases its common stock in the open market pursuant to programs approved by its Board of Directors. In fiscal 2016, the Board of Directors authorized a share repurchase program for the purchase of up to $25.0 million of the Company’s common stock, which was in effect through the fourth quarter of fiscal 2021 and under which a total of $7.7 million remained available for share repurchases as of January 2, 2022. In the first quarter of fiscal 2022, the Board of Directors authorized a new share repurchase program of up to $25.0 million of our common stock, which replaced the previous share repurchase program. Under these programs, the Company may purchase shares from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission. The Company may repurchase its common stock for a variety of reasons, including, among other things, its alternative cash requirements, existing business conditions and the current market price of its stock. However, the timing and amount of such purchases, if any, would be at the discretion of management and the Board of Directors. The Company repurchased 361,323 shares of common stock in fiscal 2021, and repurchased no shares of common stock in fiscal 2020.  

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Property and Equipment, Net

12 Months Ended

Jan. 02, 2022

Property Plant And Equipment [Abstract]

Property and Equipment, Net

(3)Property and Equipment, Net

Property and equipment, net, consist of the following:

	January 2, 2022			January 3, 2021
	(In thousands)
Leasehold improvements	$	176,066		$	170,701
Furniture and equipment		142,638			134,623
Internal-use software		37,188			37,147
Land		2,750			2,750
Building		1,775			1,775
		360,417			346,996
Accumulated depreciation and amortization (1)		(301,852	)		(290,638	)
		58,565			56,358
Assets not placed into service		1,836			887
Property and equipment, net	$	60,401		$	57,245

(1)Includes accumulated amortization for internal-use software development costs of $32.7 million and $30.8 million as of January 2, 2022 and January 3, 2021, respectively.

Depreciation expense associated with property and equipment, including assets leased under finance leases, was $7.6 million and $6.7 million for fiscal 2021 and 2020, respectively. Amortization expense for leasehold improvements was $8.0 million and $8.9 million for fiscal 2021 and 2020, respectively. Amortization expense for internal-use software was $2.1 million and $2.9 million for fiscal 2021 and 2020, respectively. The gross cost of equipment under finance leases, included above, was $16.5 million and $10.1 million as of January 2, 2022 and January 3, 2021, respectively. The accumulated depreciation related to these finance leases was $6.1 million and $5.5 million as of January 2, 2022 and January 3, 2021, respectively.

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Fair Value Measurements

12 Months Ended

Jan. 02, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

(4)Fair Value Measurements

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate the fair values of these instruments due to their short-term nature. Cash equivalents consist of highly liquid investments of excess cash into U.S. Treasury bills, which have maturities of 90 days or less. As of January 2, 2022 and January 3, 2021, the Company recorded $75.0 million and $50.0 million, respectively, in cash equivalents, and classified these assets as Level 1 inputs, which are quoted prices (unadjusted) in active markets for identical assets that the Company can access at the measurement date. The Company records these cash equivalents monthly, based on the prevailing market interest rate as of the measurement date. Book overdrafts for checks outstanding are classified as current liabilities in the Company’s consolidated balance sheets. The carrying amount for borrowings, if any, under the Company’s credit facility approximates fair value because of the variable market interest rate charged to the Company for these borrowings. When the Company recognizes impairment on certain of its underperforming stores, the carrying values of these stores are reduced to their estimated fair values.

The Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were assets subject to long-lived asset impairment related to certain underperforming stores. The Company estimates the fair values of these long-lived assets based on the Company’s own judgments about the assumptions that market participants would use in pricing the asset and on observable real estate market data of underperforming stores’ specific comparable markets, when available. The Company classifies these fair value measurements as Level 3 inputs, which are unobservable inputs for which market data are not available and that are developed using the best information available about pricing assumptions used by market participants in accordance with ASC 820. As of January 2, 2022, there were no long-lived assets subject to impairment, and as of January 3, 2021, these long-lived assets were immaterial.

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Accrued Expenses

12 Months Ended

Jan. 02, 2022

Payables And Accruals [Abstract]

Accrued Expenses

(5)Accrued Expenses

The major components of accrued expenses are as follows:

	January 2, 2022		January 3, 2021
	(In thousands)
Payroll and related expense	$	37,345	$	37,826
Sales tax		12,112		11,609
Occupancy expense		10,168		10,215
Other		25,416		23,227
Accrued expenses	$	85,041	$	82,877

Payroll and related expense as of January 2, 2022 and January 3, 2021 reflected a deferral of the employer portion of Social Security tax provided by the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which allowed employers to defer their portion of the social security payroll tax otherwise due with respect to wages earned from March 27, 2020 through December 31, 2020.

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Lease Commitments

12 Months Ended

Jan. 02, 2022

Leases [Abstract]

Lease Commitments

(6)Lease Commitments

The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware, and distribution center delivery tractors and equipment, and accounts for these leases in accordance with ASC 842. The Company’s operating leases have remaining reasonably certain lease terms of up to 13 years, which typically include options to extend the leases for up to 5 years. The Company’s finance leases have remaining reasonably certain lease terms of up to 6 years.

Certain of the leases for the Company’s retail store facilities provide for variable payments for property taxes, insurance, common area maintenance payments related to triple net leases, rental payments based on future sales volumes at the leased location, as well as certain equipment sales taxes, licenses, fees and repairs, which are not measurable at the inception of the lease, or rental payments that are adjusted periodically for inflation. The Company recognizes variable lease expense for these leases in the period incurred which, for contingent rent, begins in the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In accordance with ASC 842, the components of lease expense were as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Lease expense:
Amortization of right-of-use assets	$	2,940		$	2,721
Interest on lease liabilities		260			297
Finance lease expense		3,200			3,018
Operating lease expense		81,734			83,030
Variable lease expense (1)		18,384			15,238
Sublease income		(91	)		(1,192	)
Total lease expense	$	103,227		$	100,094

(1)Variable lease expense for fiscal 2020 was reduced by $3.1 million for lease abatements related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. See Note 2 to the Notes to Consolidated Financial Statements for a further discussion on lease concessions.

In accordance with ASC 842, other information related to leases was as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Operating cash flows from operating leases	$	85,238		$	83,028
Financing cash flows from finance leases		2,887			2,858
Operating cash flows from finance leases		271			313
Cash paid for amounts included in the measurement of lease liabilities	$	88,396		$	86,199
Right-of-use assets obtained in exchange for new finance lease liabilities	$	8,723		$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	56,953		$	80,452
Weighted-average remaining lease term—finance leases	3.8 years			2.4 years
Weighted-average remaining lease term—operating leases	4.8 years			5.0 years
Weighted-average discount rate—finance leases		3.1	%		4.8	%
Weighted-average discount rate—operating leases		5.4	%		6.1	%

In accordance with ASC 842, maturities of finance and operating lease liabilities as of January 2, 2022 were as follows:

Year Ending:	Finance Leases			Operating Leases
	(In thousands)
2022	$	3,748		$	86,185
2023		2,585			68,475
2024		1,787			59,654
2025		1,304			42,975
2026		867			27,670
Thereafter		197			34,051
Undiscounted cash flows	$	10,488		$	319,010
Reconciliation of lease liabilities:
Weighted-average remaining lease term	3.8 years			4.8 years
Weighted-average discount rate		3.1	%		5.4	%
Present values	$	9,974		$	281,016
Lease liabilities - current		3,518			76,882
Lease liabilities - long-term		6,456			204,134
Lease liabilities - total	$	9,974		$	281,016
Difference between undiscounted and discounted cash flows	$	514		$	37,994

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Long-Term Debt

12 Months Ended

Jan. 02, 2022

Debt Disclosure [Abstract]

Long-Term Debt

(7)Long-Term Debt

The Company, Big 5 Corp. and Big 5 Services Corp. were parties to a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of other lenders, as amended (the “Prior Credit Agreement”), which was terminated and replaced on February 24, 2021, as discussed below.

On February 24, 2021, the Company entered into a Loan, Guaranty and Security Agreement with Bank of America, N.A. (“BofA”), as agent and lender, which was amended on November 22, 2021 (as so amended, the “Loan Agreement”). The Loan Agreement has a maturity date of February 24, 2026 and provides for a revolving credit facility with an aggregate committed availability of up to $150.0 million. The Company may also request additional increases in aggregate availability, up to a maximum of $200.0 million, in which case the existing lender under the Loan Agreement will have the option to increase the commitment to accommodate the requested increase. If such existing lender does not exercise that option, the Company may (with the consent of BofA in its role as the administrative agent, not to be unreasonably withheld) seek other lenders willing to provide such commitments. The credit facility includes a $50.0 million sublimit for issuances of letters of credit.

Similar to the Prior Credit Agreement, the Company may borrow under the Loan Agreement from time to time, provided the amounts outstanding will not exceed the lesser of the then aggregate committed availability (as discussed above) and the Borrowing Base (such lesser amount being referred to as the “Line Cap”). As defined in the Loan Agreement, the “Borrowing Base” generally is comprised of the sum, at the time of calculation, of (a) 90.00% of eligible credit card receivables; plus (b) the cost of eligible inventory (other than eligible in-transit inventory), net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible inventory (expressed as a percentage of the cost of eligible inventory); plus (c) the cost of eligible in-transit inventory, net of inventory reserves, multiplied by 90.00% of the appraised net orderly liquidation value of eligible in-transit inventory (expressed as a percentage of the cost of eligible in-transit inventory), minus (d) certain agreed-upon reserves as well as other reserves established by BofA in its role as the administrative agent in its reasonable discretion.

Generally, the Company may designate specific borrowings under the Loan Agreement as either base rate loans or LIBO rate loans. The applicable interest rate on the Company’s borrowings is a function of the daily average, over the preceding fiscal quarter, of the excess of the Line Cap over amounts borrowed (such amount being referred to as the “Average Daily Availability”). Those loans designated as LIBO rate loans bear interest at a rate equal to the then applicable adjusted LIBO rate plus an applicable margin as shown in the table below. Those loans designated as base rate loans bear interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the LIBO rate, plus one percentage point (1.00%), or (c) the rate of interest in effect for such day as announced from time to time within BofA as its “prime rate.” The applicable margin for all loans is a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.375%	0.375%
II	Less than $70,000,000	1.500%	0.500%

The commitment fee assessed on the unused portion of the credit facility is 0.20% per annum.

Obligations under the Loan Agreement are secured by a general lien on and security interest in substantially all of the Company’s assets. The Loan Agreement contains covenants that require the Company to maintain a fixed charge coverage ratio of not less than 1.0:1.0 in certain circumstances, and limits the ability to, among other things, incur liens, incur additional indebtedness, transfer or dispose of assets, change the nature of the business, guarantee obligations, pay dividends or make other distributions or repurchase stock, and make advances, loans or investments. The Company may generally declare or pay cash dividends or repurchase stock only if, among other things, no default or event of default then exists or would arise from such dividend or repurchase of stock and, after giving effect to such dividend or repurchase, certain availability and/or fixed charge coverage ratio requirements are satisfied, although the Company is permitted to make up to $5.0 million of dividend payments or stock repurchases per year without satisfaction of the availability or fixed charge coverage ratio requirements, but dividends or stock repurchases made without satisfying the availability and/or fixed charge coverage ratio requirements will require the establishment of an additional reserve that will reduce borrowing availability under the Loan Agreement for 75 days. The Loan Agreement contains customary events of default, including, without limitation, failure to pay when due principal amounts with respect to the credit facility, failure to pay any interest or other amounts under the credit facility, failure to comply with certain agreements or covenants contained in the Loan Agreement, failure to satisfy certain judgments against the Company, failure to pay when due (or any other default which permits the acceleration of) certain other material indebtedness in principal amount in excess of $5.0 million, and certain insolvency and bankruptcy events. As amended, the Loan Agreement provides for a transition to an alternative benchmark reference rate following the cessation of the LIBO rate.

As previously disclosed, the Prior Credit Agreement had a maturity date of September 29, 2022 and, as amended, provided for a line of credit up to $140.0 million, which amount could be increased at the Company’s option up to a maximum of $165.0 million. The Company could also request additional increases in aggregate availability, on an uncommitted basis up to a maximum of $200.0 million. On March 30, 2020, the Company exercised the accordion feature and increased the amount available under the revolving credit facility to $165.0 million in response to the COVID-19 pandemic and drew down additional amounts at that time. The revolving credit facility under the Prior Credit Agreement included a $25.0 million sublimit for issuances of letters of credit and a $20.0 million sublimit for swingline loans. The Prior Credit Agreement provided for LIBO rate loans to bear interest at a rate equal to the applicable adjusted LIBO rate plus an applicable margin, as shown in the table below. The loans designated as base rate loans bore interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate in effect plus one-half of one percent, (b) the LIBO rate, plus one percentage point, or (c) the prime interest rate. Under the Prior Credit Agreement, the applicable margin for all loans was a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.250%	0.250%
II	Less than $70,000,000	1.375%	0.500%

The commitment fee assessed on the unused portion of the credit facility under the Prior Credit Agreement was 0.20% per annum.

In the first quarter of fiscal 2021, the Company paid and capitalized $0.7 million in new creditor and third-party fees associated with the Loan Agreement, which will be amortized over the term of the Loan Agreement, and extinguished $0.2 million of deferred financing fees associated with the Prior Credit Agreement.

As of January 2, 2022 and January 3, 2021, the Company had no long-term revolving credit borrowings outstanding.

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Income Taxes

12 Months Ended

Jan. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes

(8)Income Taxes

Income tax expense (benefit) consists of the following:

	Current		Deferred			Total
	(In thousands)
Fiscal 2021:
Federal	$	23,422	$	1,121		$	24,543
State		7,582		613			8,195
	$	31,004	$	1,734		$	32,738
Fiscal 2020:
Federal	$	13,786	$	86		$	13,872
State		4,871		(298	)		4,573
	$	18,657	$	(212	)	$	18,445

The provision for income taxes differs from the amounts computed by applying the federal statutory tax rate of 21% to earnings before income taxes, as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Tax expense at statutory rate	$	28,376		$	15,621
State tax expense, net of federal tax effect		7,167			3,975
Additional deduction related to share-based compensation		(2,623	)		—
Nondeductible expenses		729			86
Tax credits		(603	)		(246	)
Change in valuation allowance		(318	)		(418	)
CARES Act net operating loss carryback		—			(822	)
Write-offs related to nonvested share awards		—			260
Other		10			(11	)
	$	32,738		$	18,445

Deferred tax assets and liabilities as of January 2, 2022 and January 3, 2021 are tax-effected based on the federal and state corporate income tax rates.

Deferred tax assets and liabilities consist of the following tax-effected temporary differences:

	January 2, 2022			January 3, 2021
	(In thousands)
Deferred tax assets:
Employee benefit-related liabilities	$	2,889		$	2,986
Deferred rent		2,828			3,509
Insurance liabilities		2,421			2,581
State taxes		1,545			1,014
Gift card liability		1,420			1,324
Merchandise inventory		1,215			2,253
Share-based compensation		805			815
California Enterprise Zone Tax Credits		381			975
Other deferred tax assets		1,500			1,396
Gross deferred tax assets		15,004			16,853
Less: Valuation allowance		(280	)		(683	)
Deferred tax assets, net of valuation allowance		14,724			16,170
Deferred tax liabilities:
Prepaid expense		(1,147	)		(989	)
Federal liability on state deferred tax assets		(996	)		(1,125	)
Other deferred tax liabilities		(484	)		(225	)
Deferred tax liabilities		(2,627	)		(2,339	)
Net deferred tax assets	$	12,097		$	13,831

As of fiscal 2021 and 2020, the Company maintained a valuation allowance of $0.3 million and $0.7 million, respectively, related to unused California Enterprise Zone Tax Credits, which the Company will not be able to carry forward beyond 2024 as a result of California’s termination of this program. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections of future taxable income over the periods during which the deferred tax assets are deductible, except as noted above, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income are reduced. Certain prior period amounts were reclassified to conform with current period presentation requirements.

The Company files a consolidated federal income tax return and files tax returns in various state and local jurisdictions. The statutes of limitations for its consolidated federal income tax returns are open for fiscal years 2018 and after, and state and local income tax returns are open for fiscal years 2017 and after.

As of January 2, 2022 and January 3, 2021, the Company had no unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate over the next 12 months. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expense. As of January 2, 2022 and January 3, 2021, the Company had no accrued interest or penalties.

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Earnings Per Share

12 Months Ended

Jan. 02, 2022

Earnings Per Share [Abstract]

Earnings Per Share

(9)Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

The following table sets forth the computation of basic and diluted earnings per common share:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands, except per share data)
Net income	$	102,386	$	55,940
Weighted-average shares of common stock outstanding:
Basic		21,670		21,260
Dilutive effect of common stock equivalents arising    from share option, nonvested share and nonvested    share unit awards		842		403
Diluted		22,512		21,663
Basic earnings per share	$	4.73	$	2.63
Diluted earnings per share	$	4.55	$	2.58
Antidilutive share option awards excluded    from diluted calculation		2		494
Antidilutive nonvested share and nonvested share unit    awards excluded from diluted calculation		—		46

The computation of diluted earnings per share for the periods presented excludes certain share option awards since the exercise prices of these share option awards exceeded the average market price of the Company’s common shares, and the effect of their inclusion would have been antidilutive (i.e., including such share option awards would result in higher earnings per share).

No nonvested share awards or nonvested share unit awards were antidilutive for fiscal 2021. The computation of diluted earnings per share for fiscal 2020 excludes certain nonvested share awards and nonvested share unit awards that were outstanding and antidilutive, since the grant date fair values of these nonvested share awards and nonvested share unit awards exceeded the average market price of the Company’s common shares.

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Employee Benefit Plans

12 Months Ended

Jan. 02, 2022

Postemployment Benefits [Abstract]

Employee Benefit Plans

(10)Employee Benefit Plans

The Company has a 401(k) plan covering eligible employees. Employee contributions are supplemented by Company contributions subject to 401(k) plan terms. The Company recognized employer matching and profit-sharing contributions of $5.3 million and $3.7 million for fiscal 2021 and 2020, respectively.

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Related Party Transactions

12 Months Ended

Jan. 02, 2022

Related Party Transactions [Abstract]

Related Party Transactions

(11)Related Party Transactions

Prior to his death in fiscal 2008, the Company had an employment agreement with Robert W. Miller (“Mr. Miller”), co-founder of the Company and the father of Steven G. Miller, Chairman of the Board, President, Chief Executive Officer and a director of the Company. The employment agreement provided for Mr. Miller to receive an annual base salary of $350,000. The employment agreement further provided that, following his death, the Company would pay his surviving wife $350,000 per year and provide her specified benefits for the remainder of her life. During fiscal 2020, the Company made a payment of $350,000 to Mr. Miller’s wife. The Company recognized expense of $0.3 million in fiscal 2020, to provide for a liability for the future obligations under this agreement. Based upon actuarial valuation estimates related to this agreement, the Company had a recorded liability of $1.0 million as of January 3, 2021. The short-term portion of this liability was recorded in accrued expenses in the Company’s consolidated balance sheets and the long-term portion was recorded in other long-term liabilities in the Company’s consolidated balance sheet.

In January 2021, Mrs. Miller passed away and, accordingly, the Company eliminated the liability of $1.0 million and reduced selling and administrative expense by the same amount in the first quarter of fiscal 2021.

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Commitments and Contingencies

12 Months Ended

Jan. 02, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(12)Commitments and Contingencies

Eminent Domain Matter

On approximately March 13, 2018, the Orange County Transportation Authority (“OCTA”) filed an eminent domain action against the Company and its Westminster, California, store location to acquire the Company’s interest in the property for public purposes related to a transportation project. The Company surrendered possession of this location on approximately January 31, 2019. On March 31, 2020, the Company and representatives of the OCTA agreed to a preliminary settlement of the proceedings, which was formally approved by the OCTA’s Board on approximately April 27, 2020. Pursuant to the terms of the settlement, on May 21, 2020, the Company received a cash condemnation settlement from the OCTA in the amount of $2.5 million for lost profit and property. The Company recorded a pre-tax gain for the $2.5 million in the second quarter of fiscal 2020 related to the settlement, of which $0.2 million represented lost property and equipment, which was included as other income in the Company’s consolidated statement of operations. Attorneys’ fees related to this settlement totaled $0.1 million in fiscal 2020 and were included in selling and administrative expense in the Company’s consolidated statement of operations.

Recovery of Insurance Proceeds

In the second quarter of fiscal 2020, seven of the Company’s stores were damaged and qualified for loss recovery claims as a result of civil unrest, and the Company disposed of assets of approximately $0.6 million related to lost inventory and property and equipment. In the first quarter of fiscal 2021, the Company reached an agreement with its insurance carrier and, after application of a deductible of $0.3 million, the Company received a cash insurance recovery of $1.3 million in total, of which $1.0 million related to the reimbursement of lost inventory and profit margin, $0.2 million related to the reimbursement of property and equipment, and $0.1 million related to a reimbursement for business interruption. Accordingly, the Company recognized gains of $0.5 million related to the recovery of lost profit margin and business interruption, and $0.2 million related to the recovery of property and equipment. The gain related to the recovery of lost profit margin and business interruption is included in the Company’s consolidated statement of operations as a reduction to cost of goods sold, and the gain related to the recovery of lost property and equipment is included in the Company’s consolidated statement of operations as a reduction to selling and administrative expense for fiscal 2021.

In July 2019, one of the Company’s stores was damaged as a result of a fire and, in the fourth quarter of fiscal 2019, the Company disposed of assets of approximately $0.8 million related to lost inventory and property and equipment. In the fourth quarter of fiscal 2020, the Company reached an agreement with its insurance carrier and, after application of a previous advance of $0.5 million and deductible of $0.2 million, the Company received a cash insurance recovery and recorded a gain of $2.8 million in total, of which $1.7 million related to the reimbursement of property and equipment, $0.8 million related to the reimbursement of lost profit margin, and $0.3 million related to a reimbursement for business interruption. The reimbursement of lost property and equipment is included in the Company’s consolidated statements of operations as a reduction to selling and administrative expense, and the reimbursement of lost profit margin and business interruption is included in the Company’s consolidated statements of operations as a reduction to cost of goods sold for fiscal 2020.

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s results of operations or financial condition.

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Share-Based Compensation Plans

12 Months Ended

Jan. 02, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation Plans

(13)Share-Based Compensation Plans

2019 Equity Incentive Plan

In April 2019, the Company adopted the 2019 Equity Incentive Plan (“2019 Plan”), which replaced the Company’s Amended and Restated 2007 Equity and Performance Incentive Plan (the “Prior Plan”). Awards under the 2019 Plan may consist of share option awards (both incentive share option awards and non-qualified share option awards), stock appreciation rights, nonvested share awards, other stock unit awards or dividend equivalents. In the past, share option awards issued by the Company have typically been non-qualified share option awards, while nonvested share awards and nonvested share unit awards issued by the Company have typically been based on the attainment of service-only conditions. Upon the adoption of the 2019 Plan, the Company stopped issuing awards under the Prior Plan, although the Company will continue to honor any outstanding awards under the Prior Plan.

The 2019 Plan (i) permits the Company to issue a maximum of 3,848,803 shares of the Company’s common stock plus the number of any additional shares that may thereafter become available as a result of the forfeiture, expiration or other cancellation of awards under any prior plans; and (ii) expires on April 11, 2029.

Any share option awards or stock appreciation rights shall be counted against this limit as one share for every one share granted. Any shares that are subject to awards other than share option awards or stock appreciation rights (including shares delivered on the settlement of dividend equivalents) shall be counted against this limit as 2.5 shares for every one share granted. The aggregate number of shares available under the 2019 Plan and the number of outstanding share option awards will be increased or decreased to reflect any changes in the outstanding common stock of the Company by reason of any recapitalization, spin-off, reorganization, reclassification, stock dividend, stock split, reverse stock split, or similar transaction.

At its discretion, the Company grants share option awards, nonvested share awards and nonvested share unit awards to certain employees, as defined by ASC 718, Compensation—Stock Compensation, under the Company’s 2019 Plan, and accounts for its share-based compensation in accordance with ASC 718. As of January 2, 2022, 1,716,479 shares remained available for future grant, and 383,035 share option awards, 551,700 nonvested share awards and zero nonvested share unit awards remained outstanding.

The Company accounts for its share-based compensation in accordance with ASC 718 and recognizes compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures, using the fair-value method for share option awards, nonvested share awards and nonvested share unit awards granted with service-only conditions. The estimated forfeiture rate considers historical employee turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. The Company periodically revises the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recorded under this method for fiscal 2021 and 2020 was $2.0 million and $1.7 million, respectively, which reduced operating income and income before income taxes by the same amount. Compensation expense recognized in cost of sales was $0.1 million in fiscal 2021 and 2020 and compensation expense recognized in selling and administrative expense was $1.9 million and $1.6 million in fiscal 2021 and 2020, respectively. The recognized tax benefit related to compensation expense for fiscal 2021 and 2020 was $0.5 million and $0.4 million, respectively. Net income for fiscal 2021 and 2020 reflects the net-of-tax charge of $1.5 million and $1.3 million, respectively, or $0.07 and $0.06 per basic and diluted share, respectively.

Share Option Awards

Share option awards granted by the Company generally vest and become exercisable in four equal installments of 25% per year with a maximum life of ten years. The exercise price of share option awards is equal to the quoted market price of the Company’s common stock on the date of grant. The Company granted 10,000 share option awards with a weighted-average grant-date fair value of $12.16 per share option award in fiscal 2021, and granted 257,000 share option awards with a weighted-average grant-date fair value of $1.25 per share option award in fiscal 2020.

The following table details the Company’s share option awards activity for the current fiscal year:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at January 3, 2021		742,800		$	4.62
Granted		10,000			24.72
Exercised		(369,765	)		5.85
Outstanding at January 2, 2022		383,035		$	3.96		7.60	$	5,823,394
Exercisable at January 2, 2022		15,105		$	4.17		7.16	$	224,197
Vested and Expected to Vest at January 2, 2022		378,595		$	3.96		7.59	$	5,752,679

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $19.01 per share as of January 2, 2022, which would have been received by the share option award holders had all share option award holders exercised their share option awards as of that date.

The total intrinsic value of share option awards exercised, the total cash received from employees as a result of employee share option award exercises and the actual tax benefit realized for the tax deduction from share option award exercises in fiscal 2021 was approximately $6.6 million, $2.2 million and $1.6 million, respectively.

The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted-average assumptions:

	Year Ended
	January 2, 2022			January 3, 2021
Risk-free interest rate		1.3	%		0.9	%
Expected term	6.5 years			5.7 years
Expected volatility		75.7	%		63.0	%
Expected dividend yield		4.0	%		—

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option award; the expected term represents the weighted-average period of time that option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s dividend rate at the time fair value is measured and future expectations.

As of January 2, 2022, there was $0.4 million of total unrecognized compensation expense related to nonvested share option awards granted. That expense is expected to be recognized over a weighted-average period of 1.6 years.

Nonvested Share Awards and Nonvested Share Unit Awards

Nonvested share awards granted by the Company vest for employees from the date of grant in four equal annual installments of 25% per year. Nonvested share awards and nonvested share unit awards granted by the Company to non-employee directors for their service as directors, as defined by ASC 718, vest 100% on the earlier of (a) the date of the Company’s next annual stockholders meeting following the grant date, or (b) the first anniversary of the grant date.

Nonvested share awards become outstanding when granted and are delivered to the recipient upon their vesting. Vested share unit awards, including any dividend reinvestments, are delivered to the recipient on the tenth business day of January following the year in which the recipient’s service to the Company is terminated, at which time the units convert to shares and become outstanding. On January 14, 2022, the Company delivered 124,012 shares on vested share unit awards, which included dividend reinvestments, to a Board member who retired in November 2021. Outstanding nonvested share awards and nonvested share unit awards accrue dividends at the same rate as dividends paid to the Company’s shareholders. Accrued dividends on nonvested share awards are paid upon vesting of the underlying shares and forfeited if a recipient’s service to the Company is terminated prior to vesting. Accrued dividends on nonvested share unit awards are reinvested into additional nonvested share unit awards, vest on the same schedule as the underlying share unit awards, and are settled at the same time as the underlying share unit awards. The total fair value of nonvested share awards which vested during fiscal 2021 and 2020 was $5.3 million and $0.4 million, respectively. The total fair value of nonvested share unit awards which vested during fiscal 2021 and 2020 was $2.1 million and $0.2 million, respectively.

The Company granted 248,550 nonvested share awards with a weighted-average grant-date fair value of $15.61 per share award in fiscal 2021 and granted 321,600 nonvested share awards with a weighted-average grant-date fair value of $1.69 per share award in fiscal 2020.

The following table details the Company’s nonvested share awards activity for the current fiscal year:

	Shares			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		591,325		$	3.79
Granted		248,550			15.61
Vested		(268,550	)		4.83
Forfeited		(19,625	)		6.59
Balance at January 2, 2022		551,700		$	8.51

To satisfy employee minimum statutory tax withholding requirements for nonvested share awards that vest, the Company withholds and retires a portion of the vesting common shares, unless an employee elects to pay cash. In fiscal 2021, the Company withheld 70,228 common shares with a total value of $1.0 million. This amount is presented as a cash outflow from financing activities in the Company’s consolidated statement of cash flows.

As of January 2, 2022, dividends accrued but not paid related to nonvested share awards were $1.6 million.

The Company granted 2,614 nonvested share unit awards with a weighted-average grant-date fair value of $28.69 per share unit award in fiscal 2021 and granted 40,000 nonvested share unit awards with a weighted-average grant-date fair value of $2.28 per share unit award in fiscal 2020. The weighted-average grant-date fair value of nonvested share awards and nonvested share unit awards is the quoted market price of the Company’s common stock on the date of grant.

The following table details the Company’s nonvested share unit awards activity for the current fiscal year:

	Units			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		41,160		$	1.91
Granted		2,614			28.69
Dividend reinvestments		30,182			24.79
Vested		(42,614	)		3.90
Dividend reinvestments vested		(31,342	)		24.13
Balance at January 2, 2022		—		$	—

As of January 2, 2022, there were 285,591 cumulative vested share unit awards remaining, of which 79,271 of these awards represented cumulative dividend reinvestments. These cumulative vested share unit awards are deliverable to the holders on the tenth business day of January following the year in which the holder’s service to the Company terminates, at which time the units convert to shares of the Company’s common stock and become outstanding.

As of January 2, 2022, there was $3.2 million of total unrecognized compensation expense related to nonvested share awards, which is expected to be recognized over a weighted-average period of 2.2 years. There was no remaining unrecognized compensation expense related to nonvested share unit awards.

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Subsequent Event

12 Months Ended

Jan. 02, 2022

Subsequent Events [Abstract]

Subsequent Event

(14)Subsequent Event

In the first quarter of fiscal 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock, which will be paid on March 25, 2022 to stockholders of record as of March 11, 2022.

Also, in the first quarter of fiscal 2022, the Company’s Board of Directors authorized a new share repurchase program for the purchase of up to an additional $25.0 million of the Company’s common stock. This program replaced the Company’s previous share repurchase program, under which $7.7 million remained available for repurchase.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Jan. 02, 2022

Valuation And Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

BIG 5 SPORTING GOODS CORPORATION

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

	Balance at Beginning of Period		Charged to Costs and Expenses				Deductions			Balance at End of Period
January 2, 2022
Allowance for doubtful receivables	$	58	$	83			$	(79	)	$	62
Allowance for sales returns	$	2,444	$	84		(1)	$	—		$	2,528
Inventory reserves	$	6,138	$	3,335			$	(3,926	)	$	5,547
January 3, 2021
Allowance for doubtful receivables	$	58	$	44			$	(44	)	$	58
Allowance for sales returns	$	2,702	$	(258	)	(1)	$	—		$	2,444
Inventory reserves	$	6,796	$	2,954			$	(3,612	)	$	6,138

(1)Represents an increase (decrease) in the required reserve based upon the Company’s evaluation of anticipated merchandise returns.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jan. 02, 2022

Accounting Policies [Abstract]

Consolidation

Consolidation

The accompanying consolidated financial statements include the accounts of Big 5 Sporting Goods Corporation, Big 5 Corp. and Big 5 Services Corp. Intercompany balances and transactions have been eliminated in consolidation.

Reporting Period

Reporting Period

The Company follows the concept of a 52-53 week fiscal year, which ends on the Sunday nearest December 31. Fiscal 2021 included 52 weeks and fiscal 2020 included 53 weeks.

Recently Issued Accounting Updates

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in this standard are elective and are effective upon issuance for all entities, and the impact from this standard was immaterial.

Other recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements.

Concentration of Risk

COVID-19 Impact on Concentration of Risk

The novel coronavirus (“COVID-19”) pandemic has significantly impacted health and economic conditions throughout the United States and globally, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine.

The Company primarily operates traditional sporting goods retail stores located in the western United States, with approximately 52% of its stores, along with its corporate offices and distribution center, located in California. Because of this, the Company is subject to regional risks, including the impact of the COVID-19 outbreak. Beginning on March 20, 2020, and continuing into the second quarter of fiscal 2020, the Company temporarily closed more than one-half of its retail store locations in response to state and local shelter orders related to the COVID-19 outbreak. The Company was subsequently able to gradually reopen its store locations based on initially qualifying as an “essential” business under applicable regulations and later as a result of the easing of regulatory restrictions on retail operations in the Company’s market areas. In an effort to promote social distancing protocols, the Company implemented reduced store hours, limited the number of customers in its stores at any one time and generally implemented social-distancing guidelines throughout the store operating space in fiscal 2020. As of the end of fiscal 2020 and during fiscal 2021, all of the Company’s stores were open for in-store shopping with reduced operating hours and certain COVID-19-related protocols in place. The Company may further restrict its store operations and operations in its distribution facility if deemed necessary or if recommended or mandated by authorities, and new temporary closures of stores or new safety protocols may be required if additional orders are issued in response to changing health conditions.

A substantial amount of the Company’s inventory is manufactured abroad. COVID-19, and surging consumer demand initially associated with the pandemic, has also impacted the Company’s supply chain for products sold, particularly those products that are sourced from Asia. To the extent one or more vendors is negatively impacted by continued supply chain disruptions or by COVID-19, including due to interruptions at or closure of those vendors’ distribution centers or manufacturing facilities, or the Company or its vendors are unable to obtain the necessary shipping capacity to transport products to the Company’s distribution center, the Company may be unable to maintain delivery schedules or adequate inventory in its stores. During the second half of fiscal 2021, the Company experienced significant shipping delays of products sourced from overseas vendors to be received at the Ports of Los Angeles and Long Beach, which reflected increased shipping volume and insufficient labor resources at the ports that have significantly increased cargo backlogs. These factors, in addition to workforce shortages in the trucking industry, have limited the Company’s ability to obtain desired quantities of inventory for various merchandise categories. While the Company has generally been able to sufficiently stock product in its stores to meet most consumer demand during the pandemic, future prolonged and sustained delays in product reaching the Company’s stores from overseas vendors, particularly during the holiday season, could result in the inability to obtain adequate levels of merchandise inventories to meet consumers’ needs, which could have an adverse impact on net sales and profitability.

General Concentration of Risk

The Company maintains its cash accounts in financial institutions, and accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash equivalents represent investments of excess cash on hand of $75.0 million and $50.0 million into U.S. Treasury bills as of January 2, 2022 and January 3, 2021, respectively.

Because of the Company’s geographic concentration in the western United States, the Company is 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 weather conditions, fires, droughts, earthquakes, power outages, floods and other natural disasters specific to the states in which the Company operates.

The Company relies on a single distribution center located in Riverside, California, which services all of its stores and e-commerce platform. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company’s ability to adequately stock its stores and fulfill its e-commerce business.

A substantial amount of the Company’s inventory is manufactured abroad. From time to time, shipping ports experience capacity constraints (such as delays associated with COVID-19), labor strikes, work stoppages or other disruptions that may delay the delivery of imported products. A contract dispute may lead to protracted delays in the movement of the Company’s products, which could further delay the delivery of products to the Company’s stores and impact net sales and profitability. In addition, other conditions outside of the Company’s control, such as adverse weather conditions or acts of terrorism, could significantly disrupt operations at shipping ports or otherwise impact transportation of the imported merchandise we sell.

The Company purchases merchandise from over 700 suppliers, and the Company’s 20 largest suppliers accounted for 36.8% of total purchases in fiscal 2021. One vendor represented greater than 5% of total purchases, at 7.6%, in fiscal 2021. A significant portion of the Company’s inventory is manufactured abroad in Asia. Foreign imports subject the Company to the risks of changes in, or the imposition of new, import tariffs, duties or quotas, new restrictions on imports, loss of “most 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 fluctuations or revaluations, public health issues that could lead to temporary closures of facilities or shipping ports, such as the recent outbreak of COVID-19, and other economic uncertainties. If a disruption of trade were to occur from the countries in which the suppliers of the Company’s vendors are located, the Company may be unable to obtain sufficient quantities of products to satisfy its requirements, or the cost of obtaining products may increase.

In early fiscal 2021, the Company was informed of an expansion of Nike’s direct-to-consumer initiatives that will impact certain multi-branded retailers, including the Company, and which will lead to a significant reduction in the Company’s future supply chain relative to this vendor. This transition is not expected to impact the Company’s ability to continue to purchase certain Nike branded products from authorized licensees. The Company is actively expanding its relationships with other new and existing vendors in an effort to replace the affected Nike product within its product mix.

The Company could be exposed to credit risk in the event of nonperformance by its lender under its revolving credit facility. Instability in the financial and capital markets could bring additional potential risks to the Company, including higher costs of credit, potential lender defaults, and potential commercial bank failures. The Company has received no indication that any such events will negatively impact its lender under its credit facility; however, the possibility does exist.

Use of Estimates

Use of Estimates

Management makes a number of estimates and assumptions relating to the reporting of assets, liabilities and stockholders’ equity and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expense during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Certain items subject to such estimates and assumptions include the carrying amount of merchandise inventories, property and equipment, lease assets and lease liabilities; valuation allowances for receivables, sales returns and deferred income tax assets; estimates related to stored-value cards and the valuation of share-based compensation awards; and obligations related to litigation, self-insurance liabilities and employee benefits. Due to the inherent uncertainty involved in making assumptions and estimates, events and changes in circumstances arising after January 2, 2022, including those resulting from the impacts of the COVID-19 pandemic, may result in actual outcomes that differ from those contemplated by management’s assumptions and estimates.

Segment Reporting

Segment Reporting

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online, and whose Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis, for purposes of allocating resources and evaluating financial performance. The Company’s stores typically have similar square footage, with the stores and e-commerce platform offering a similar general product mix. The Company’s core customer demographic remains similar across all sales channels, as does the Company’s process for the procurement and marketing of its product mix. Furthermore, the Company distributes its product mix for both the stores and e-commerce platform from a single distribution center. Given the consolidated level of review by the CODM, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Earnings Per Share

Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

Revenue Recognition

Revenue Recognition

The Company operates solely as a sporting goods retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the western United States and online. Generally, all revenue is recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends immaterial credit purchases to certain municipalities and local school districts.

As noted in the segment information elsewhere in this Note 2 to the Notes to Consolidated Financial Statements, the Company’s business consists of one reportable segment. In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates net sales into the following major merchandise categories to depict the nature and amount of revenue and related cash flows:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands)
Hardgoods	$	637,181	$	623,728
Athletic and sport footwear		279,645		228,311
Athletic and sport apparel		241,526		184,538
Other sales		3,468		4,635
Net sales	$	1,161,820	$	1,041,212

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

•Retail store sales

•E-commerce sales

•Stored-value cards

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the product is tendered for delivery to the common carrier. For performance obligations related to stored-value cards, the Company typically transfers control upon redemption of the stored-value card through consummation of a future sales transaction.

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract.

The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. There were no material adjustments to the Company’s previous estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated right-of-return merchandise cost related to the sales returns is recorded as prepaid expense in the Company’s consolidated balance sheet as of January 2, 2022. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

The Company has elected to apply the practical expedient, relative to e-commerce sales, which allows an entity to account for shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the sale of the product, at shipping point (when the customer gains control). Revenue associated with e-commerce sales is not material.

Contract liabilities are recognized primarily for stored-value card sales. Cash received from the sale of stored-value cards is recorded as a contract liability in accrued expenses in the Company’s consolidated balance sheets, and the Company recognizes revenue upon the customer’s redemption of the stored-value card. Stored-value card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of five percent. The Company does not sell or provide stored-value cards that carry expiration dates.

The Company recognized $5.9 million and $5.4 million in stored-value card redemption revenue for fiscal 2021 and 2020, respectively. The Company also recognized $0.3 million in stored-value card breakage revenue for each of fiscal 2021 and 2020. The Company had outstanding stored-value card liabilities of $8.3 million and $7.5 million as of January 2, 2022 and January 3, 2021, respectively, which are included in accrued expenses in the Company’s consolidated balance sheets. Based upon historical experience, stored-value cards are predominantly redeemed in the first two years following their issuance date.

The Company recorded, as prepaid expense in the Company’s consolidated balance sheets, estimated right-of-return merchandise cost of $1.2 million related to estimated sales returns as of January 2, 2022 and January 3, 2021, and recorded, as accrued expense in the Company’s consolidated balance sheets, an allowance for sales returns reserve of $2.5 million and $2.4 million as of January 2, 2022 and January 3, 2021, respectively.

Cost of Sales

Cost of Sales

Cost of sales includes the cost of merchandise, net of discounts or allowances earned, freight (including e-commerce shipping and handling costs), inventory reserves, buying, distribution center expense, including depreciation and amortization, and store occupancy expense. Store occupancy expense includes rent, amortization of leasehold improvements, common area maintenance, property taxes and insurance.

Selling and Administrative Expense

Selling and Administrative Expense

Selling and administrative expense includes store-related expense, other than store occupancy expense, as well as advertising, depreciation and amortization, expense associated with operating the Company’s corporate headquarters and impairment charges, if any.

Vendor Allowances

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. After reducing advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic, beginning in the second half of fiscal 2020, amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. These amounts were previously recorded as a reduction to selling and administrative expense.

Advertising Expense

Advertising Expense

Advertising is expensed when the advertising first occurs. Advertising expense, net of co-operative advertising allowances, amounted to $11.0 million and $10.6 million for fiscal 2021 and 2020, respectively. The Company reduced advertising significantly in fiscal 2021 and 2020 in response to the COVID-19 pandemic. Advertising expense is included in selling and administrative expense in the Company’s consolidated statements of operations. The Company receives co-operative advertising allowances from certain product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors’ products. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to zero and $1.1 million for fiscal 2021 and 2020, respectively. Beginning in the second half of fiscal 2020, as a result of the significant reductions of print advertising in fiscal 2021 and 2020, the Company treated these advertising allowances as a reduction of inventory cost and cost of goods sold which had an immaterial effect on the Company’s consolidated financial statements.

Share-Based Compensation

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718, Compensation—Stock Compensation. The Company recognizes compensation expense on a straight-line basis over the requisite service period using the fair-value method for share option awards, nonvested share awards and nonvested share unit awards granted with service-only conditions. See Note 13 to the Notes to Consolidated Financial Statements for a further discussion on share-based compensation.

Pre-opening Costs

Pre-opening Costs

Pre-opening costs for new stores, which are not material, consist primarily of payroll and recruiting expense, training, marketing, rent, travel and supplies, and are expensed as incurred.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments of excess cash into U.S. Treasury bills, which have maturities of 90 days or less. See Note 4 to the Notes to Consolidated Financial Statements for a further discussion on the fair value of U.S. Treasury bills. Book overdrafts are classified as current liabilities in the Company’s consolidated balance sheets.

Accounts Receivable

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products, volume purchase rebates or co-operative advertising, amounts due from lessors for tenant improvement allowances and insurance recovery receivables. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Valuation of Merchandise Inventories, Net

Valuation of Merchandise Inventories, Net

The Company’s merchandise inventories are made up of finished goods and are valued at the lower of cost or net realizable value using the weighted-average cost method that approximates the first-in, first-out (“FIFO”) method. Average cost includes the direct purchase price of merchandise inventory, net of vendor allowances and cash discounts, in-bound freight-related expense and allocated overhead expense associated with the Company’s distribution center.

Management regularly reviews inventories and records valuation reserves for damaged and defective merchandise, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds net realizable value. Because of its merchandise mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of merchandise sales based on historical inventory shrinkage trends. The Company performs physical inventories of its stores at least once per year and cycle counts inventories at its distribution center throughout the year. The reserve for inventory shrinkage primarily represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Prepaid Expenses And Other Assets

Prepaid Expenses and Other Assets

Prepaid expenses include the prepayment of various operating expenses such as insurance, income and property taxes, software maintenance and supplies, which are expensed when the operating cost is realized, as well as estimated right-of-return merchandise cost related to estimated sales returns.

Other assets include the long-term portion of certain prepaid expenses, capitalized deferred financing fees related to the Company’s credit facility and capitalized implementation costs related to hosting arrangements that are service contracts. While deferred financing fees and implementation costs are capitalized and amortized over the respective terms of their arrangements, costs related to the service element of a hosting arrangement that is a service contract are expensed as incurred.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment are stated at cost and are being depreciated or amortized utilizing the straight-line method over the following estimated useful lives:

Land	Indefinite
Buildings	20 years
Leasehold improvements	Shorter of estimated useful life or term of lease
Furniture and equipment	3 – 10 years
Internal-use software	3 – 7 years

Maintenance and repairs are expensed as incurred.

The Company incurs costs to purchase and develop software for internal use. Costs related to the application development stage are capitalized and amortized over the estimated useful life of the software. Costs related to the design or maintenance of internal-use software are expensed as incurred. See Note 3 to the Notes to Consolidated Financial Statements for a further discussion on property and equipment.

Valuation of Long-Lived Assets

Valuation of Long-Lived Assets

In accordance with ASC 360, Property, Plant, and Equipment, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”), usually at the store level. The carrying amount of a store asset group includes stores’ property and equipment, primarily leasehold improvements, and operating lease ROU assets. The carrying amount of a store asset group is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the store asset group. Factors that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses, and a projection that demonstrates continuing losses or insufficient income over the remaining reasonably certain lease term associated with the use of a store asset group. Other factors may include an adverse change in the business climate or an adverse action or assessment by a regulator in the market of a store asset group. When stores are identified as having an indicator of impairment, the Company forecasts undiscounted cash flows over the store asset group’s remaining reasonably certain lease term and compares the undiscounted cash flows to the carrying amount of the store asset group. If the store asset group is determined not to be recoverable, then an impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value, determined using discounted cash flow valuation techniques, as contemplated in ASC 820, Fair Value Measurements.

The Company determines the cash flows expected to result from the store asset group by projecting future revenue, gross margin and operating expense for each store asset group under evaluation for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning, and include assumptions about sales growth rates, gross margins and operating expense in relation to the current economic environment and the Company’s future expectations, competitive factors in its various markets, inflation, sales trends and other relevant environmental factors that may impact the store under evaluation. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. If economic conditions deteriorate in the markets in which the Company conducts business, or if other negative market conditions develop, the Company may experience additional impairment charges in the future for underperforming stores.

The resulting impairment charge, if any, is allocated to the property and equipment, primarily leasehold improvements, and operating lease ROU assets on a pro rata basis using the relative carrying amounts of those assets. The allocated impairment charge to a long-lived asset is limited to the extent that the impairment charge does not reduce the carrying amount of the long-lived asset below its individual fair value. The estimation of the fair value of an ROU asset involves the evaluation of current market value rental amounts for leases associated with ROU assets. The estimates of current market value rental amounts are primarily based on recent observable market rental data of other comparable retail store locations. The fair value of an ROU asset is measured using a discounted cash flow valuation technique by discounting the estimated current and future market rental values using a property-specific discount rate.

In fiscal 2021 and 2020, the Company recognized no non-cash impairment charges. Impairment charges, if any, represent property and equipment, primarily leasehold improvements, and are included in selling and administrative expense in the Company’s consolidated statements of operations.

Leases

Leases

In accordance with ASC 842, Leases, the Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware, and distribution center delivery tractors and equipment. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Finance leases are included in property and equipment and finance lease liabilities, current and noncurrent, on the Company’s consolidated balance sheets. Lease liabilities are calculated using the effective interest method, regardless of classification, while the amortization of ROU assets varies depending upon classification. Finance lease classification results in a front-loaded expense recognition pattern over the lease term which amortizes the ROU asset by recognizing interest expense and amortization expense as separate components of lease expense and calculates the amortization expense component on a straight-line basis. Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a single expense component, which results in amortization of the ROU asset that equals the difference between lease expense and interest expense. Lease expense for finance and operating leases are included in cost of sales or selling and administrative expense, based on the use of the leased asset, on the Company’s consolidated statement of operations. Variable payments such as property taxes, insurance and common area maintenance related to triple net leases, as well as certain equipment sales taxes, licenses, fees and repairs, are expensed as incurred, and leases with an initial term of 12 months or less are excluded from minimum lease payments and are not recorded on the Company’s consolidated balance sheets. The Company recognizes variable lease expense for these short-term leases on a straight-line basis over the remaining lease term.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. As the Company’s leases generally do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate (“IBR”) to determine the present value of lease payments. The collateralized IBR is based on a synthetic credit rating that is externally prepared on an annual basis. This analysis considers qualitative and quantitative factors based on guidance provided by a rating agency for the consumer durables industry. The Company adjusts the selected IBR quarterly with a company-specific unsecured yield curve that approximates the Company’s market risk profile. The collateralized IBR is also based upon the estimated impact that the collateral has on the IBR. To account for the collateralized nature of the IBR, the Company utilized a notching method based on notching guidance provided by a rating agency whereby the Company’s base credit rating is notched upward as the yield curve on a secured loan is expected to be lower versus an unsecured loan.

The operating lease ROU asset also includes any prepaid lease payments made and is reduced by lease incentives such as tenant improvement allowances. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.

Certain of the leases for the Company’s retail store facilities provide for payments based on future sales volumes at the leased location, which are not measurable at the inception of the lease. Under ASC 842, these contingent rents are expensed as they accrue.

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

In accordance with this interpretive guidance, the Company elected to account for lease concessions related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company accounted for COVID-19 lease abatements of $3.1 million in fiscal 2020 as reductions to variable lease expense and accounted for lease deferrals of $0.1 million and $0.6 million as of January 2, 2022 and January 3, 2021, respectively, as if no changes to the lease contract were made while continuing to recognize expense during the deferral period and deferring the payment obligation as a liability.

See Note 6 to the Notes to Consolidated Financial Statements for a further discussion on leases.

Self-Insurance Liabilities

Self-Insurance Liabilities

The Company is self-insured for its various insurance risks including its estimated workers’ compensation liability risk in certain states. The Company also has a self-funded insurance program for a portion of its employee medical benefits. Under these programs, the Company maintains insurance coverage for losses in excess of specified per-occurrence amounts. Estimated expenses incurred under the self-insured workers’ compensation and medical benefits programs, including incurred but not reported claims, are recorded as expense based upon historical experience, trends of paid and incurred claims, and other actuarial assumptions. If actual claims trends under these programs, including the severity or frequency of claims, differ from the Company’s estimates, its financial results may be significantly impacted. The Company’s actuarially-estimated self-insurance liabilities, which are reported gross of expected workers’ compensation insurance reimbursements, are classified on the Company’s consolidated balance sheets as accrued expenses or other long-term liabilities based upon whether they are expected to be paid during or beyond the normal operating cycle of 12 months from the date of the Company’s consolidated financial statements. Self-insurance liabilities totaled $10.2 million and $11.0 million as of January 2, 2022 and January 3, 2021, respectively, of which $4.4 million and $4.8 million were recorded as a component of accrued expenses as of January 2, 2022 and January 3, 2021, respectively, and $5.8 million and $6.2 million were recorded as a component of other long-term liabilities as of January 2, 2022 and January 3, 2021, respectively, in the Company’s consolidated balance sheets.

Income Taxes

Income Taxes

Under the asset and liability method prescribed within ASC 740, Income Taxes, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed throughout the year and a valuation allowance is recorded if necessary to reduce net deferred tax assets to the amount more likely than not to be realized. Certain prior period deferred tax disclosures were reclassified to conform with current period presentation.

ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company’s practice is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in selling and administrative expense in the Company’s consolidated statements of operations. As of January 2, 2022 and January 3, 2021, the Company had no accrued interest or penalties. See Note 8 to the Notes to Consolidated Financial Statements for a further discussion on income taxes.

Treasury Stock Purchases

Treasury Stock Purchases

The Company repurchases its common stock in the open market pursuant to programs approved by its Board of Directors. In fiscal 2016, the Board of Directors authorized a share repurchase program for the purchase of up to $25.0 million of the Company’s common stock, which was in effect through the fourth quarter of fiscal 2021 and under which a total of $7.7 million remained available for share repurchases as of January 2, 2022. In the first quarter of fiscal 2022, the Board of Directors authorized a new share repurchase program of up to $25.0 million of our common stock, which replaced the previous share repurchase program. Under these programs, the Company may purchase shares from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission. The Company may repurchase its common stock for a variety of reasons, including, among other things, its alternative cash requirements, existing business conditions and the current market price of its stock. However, the timing and amount of such purchases, if any, would be at the discretion of management and the Board of Directors. The Company repurchased 361,323 shares of common stock in fiscal 2021, and repurchased no shares of common stock in fiscal 2020.  

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jan. 02, 2022

Accounting Policies [Abstract]

Summary of Disaggregates Net Sales into Major Merchandise Categories to Depict Nature and Amount of Revenue and Related Cash Flows

In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates net sales into the following major merchandise categories to depict the nature and amount of revenue and related cash flows:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands)
Hardgoods	$	637,181	$	623,728
Athletic and sport footwear		279,645		228,311
Athletic and sport apparel		241,526		184,538
Other sales		3,468		4,635
Net sales	$	1,161,820	$	1,041,212

Schedule of Estimated Useful Life of Property and Equipment

Property and equipment are stated at cost and are being depreciated or amortized utilizing the straight-line method over the following estimated useful lives:

Land	Indefinite
Buildings	20 years
Leasehold improvements	Shorter of estimated useful life or term of lease
Furniture and equipment	3 – 10 years
Internal-use software	3 – 7 years

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Property and Equipment, Net (Tables)

12 Months Ended

Jan. 02, 2022

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net, consist of the following:

	January 2, 2022			January 3, 2021
	(In thousands)
Leasehold improvements	$	176,066		$	170,701
Furniture and equipment		142,638			134,623
Internal-use software		37,188			37,147
Land		2,750			2,750
Building		1,775			1,775
		360,417			346,996
Accumulated depreciation and amortization (1)		(301,852	)		(290,638	)
		58,565			56,358
Assets not placed into service		1,836			887
Property and equipment, net	$	60,401		$	57,245

(1)Includes accumulated amortization for internal-use software development costs of $32.7 million and $30.8 million as of January 2, 2022 and January 3, 2021, respectively.

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Accrued Expenses (Tables)

12 Months Ended

Jan. 02, 2022

Payables And Accruals [Abstract]

Summary of Accrued Expenses

The major components of accrued expenses are as follows:

	January 2, 2022		January 3, 2021
	(In thousands)
Payroll and related expense	$	37,345	$	37,826
Sales tax		12,112		11,609
Occupancy expense		10,168		10,215
Other		25,416		23,227
Accrued expenses	$	85,041	$	82,877

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Lease Commitments (Tables)

12 Months Ended

Jan. 02, 2022

Leases [Abstract]

Summary of Components of Lease Expense

In accordance with ASC 842, the components of lease expense were as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Lease expense:
Amortization of right-of-use assets	$	2,940		$	2,721
Interest on lease liabilities		260			297
Finance lease expense		3,200			3,018
Operating lease expense		81,734			83,030
Variable lease expense (1)		18,384			15,238
Sublease income		(91	)		(1,192	)
Total lease expense	$	103,227		$	100,094

(1)Variable lease expense for fiscal 2020 was reduced by $3.1 million for lease abatements related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. See Note 2 to the Notes to Consolidated Financial Statements for a further discussion on lease concessions.

Schedule of Other Information Related To Leases

In accordance with ASC 842, other information related to leases was as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Operating cash flows from operating leases	$	85,238		$	83,028
Financing cash flows from finance leases		2,887			2,858
Operating cash flows from finance leases		271			313
Cash paid for amounts included in the measurement of lease liabilities	$	88,396		$	86,199
Right-of-use assets obtained in exchange for new finance lease liabilities	$	8,723		$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	56,953		$	80,452
Weighted-average remaining lease term—finance leases	3.8 years			2.4 years
Weighted-average remaining lease term—operating leases	4.8 years			5.0 years
Weighted-average discount rate—finance leases		3.1	%		4.8	%
Weighted-average discount rate—operating leases		5.4	%		6.1	%

Schedule of Maturities For Finance And Operating Leases

In accordance with ASC 842, maturities of finance and operating lease liabilities as of January 2, 2022 were as follows:

Year Ending:	Finance Leases			Operating Leases
	(In thousands)
2022	$	3,748		$	86,185
2023		2,585			68,475
2024		1,787			59,654
2025		1,304			42,975
2026		867			27,670
Thereafter		197			34,051
Undiscounted cash flows	$	10,488		$	319,010
Reconciliation of lease liabilities:
Weighted-average remaining lease term	3.8 years			4.8 years
Weighted-average discount rate		3.1	%		5.4	%
Present values	$	9,974		$	281,016
Lease liabilities - current		3,518			76,882
Lease liabilities - long-term		6,456			204,134
Lease liabilities - total	$	9,974		$	281,016
Difference between undiscounted and discounted cash flows	$	514		$	37,994

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Long-Term Debt (Tables)

12 Months Ended

Jan. 02, 2022

Loan, Guaranty and Security Agreement [Member]

Average Daily Excess Availability for Preceding Fiscal Quarter

The applicable margin for all loans is a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.375%	0.375%
II	Less than $70,000,000	1.500%	0.500%

Prior Credit Agreement [Member]

Average Daily Excess Availability for Preceding Fiscal Quarter

Under the Prior Credit Agreement, the applicable margin for all loans was a function of Average Daily Availability for the preceding fiscal quarter as set forth below.

Level	Average Daily Availability	LIBO Rate Applicable Margin	Base Rate Applicable Margin
I	Greater than or equal to $70,000,000	1.250%	0.250%
II	Less than $70,000,000	1.375%	0.500%

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Income Taxes (Tables)

12 Months Ended

Jan. 02, 2022

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:

	Current		Deferred			Total
	(In thousands)
Fiscal 2021:
Federal	$	23,422	$	1,121		$	24,543
State		7,582		613			8,195
	$	31,004	$	1,734		$	32,738
Fiscal 2020:
Federal	$	13,786	$	86		$	13,872
State		4,871		(298	)		4,573
	$	18,657	$	(212	)	$	18,445

Schedule of Federal Statutory Tax Rate Reconciliation

The provision for income taxes differs from the amounts computed by applying the federal statutory tax rate of 21% to earnings before income taxes, as follows:

	Year Ended
	January 2, 2022			January 3, 2021
	(In thousands)
Tax expense at statutory rate	$	28,376		$	15,621
State tax expense, net of federal tax effect		7,167			3,975
Additional deduction related to share-based compensation		(2,623	)		—
Nondeductible expenses		729			86
Tax credits		(603	)		(246	)
Change in valuation allowance		(318	)		(418	)
CARES Act net operating loss carryback		—			(822	)
Write-offs related to nonvested share awards		—			260
Other		10			(11	)
	$	32,738		$	18,445

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consist of the following tax-effected temporary differences:

	January 2, 2022			January 3, 2021
	(In thousands)
Deferred tax assets:
Employee benefit-related liabilities	$	2,889		$	2,986
Deferred rent		2,828			3,509
Insurance liabilities		2,421			2,581
State taxes		1,545			1,014
Gift card liability		1,420			1,324
Merchandise inventory		1,215			2,253
Share-based compensation		805			815
California Enterprise Zone Tax Credits		381			975
Other deferred tax assets		1,500			1,396
Gross deferred tax assets		15,004			16,853
Less: Valuation allowance		(280	)		(683	)
Deferred tax assets, net of valuation allowance		14,724			16,170
Deferred tax liabilities:
Prepaid expense		(1,147	)		(989	)
Federal liability on state deferred tax assets		(996	)		(1,125	)
Other deferred tax liabilities		(484	)		(225	)
Deferred tax liabilities		(2,627	)		(2,339	)
Net deferred tax assets	$	12,097		$	13,831

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Earnings Per Share (Tables)

12 Months Ended

Jan. 02, 2022

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share:

	Year Ended
	January 2, 2022		January 3, 2021
	(In thousands, except per share data)
Net income	$	102,386	$	55,940
Weighted-average shares of common stock outstanding:
Basic		21,670		21,260
Dilutive effect of common stock equivalents arising    from share option, nonvested share and nonvested    share unit awards		842		403
Diluted		22,512		21,663
Basic earnings per share	$	4.73	$	2.63
Diluted earnings per share	$	4.55	$	2.58
Antidilutive share option awards excluded    from diluted calculation		2		494
Antidilutive nonvested share and nonvested share unit    awards excluded from diluted calculation		—		46

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Share-Based Compensation Plans (Tables)

12 Months Ended

Jan. 02, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Share Option Awards

The following table details the Company’s share option awards activity for the current fiscal year:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at January 3, 2021		742,800		$	4.62
Granted		10,000			24.72
Exercised		(369,765	)		5.85
Outstanding at January 2, 2022		383,035		$	3.96		7.60	$	5,823,394
Exercisable at January 2, 2022		15,105		$	4.17		7.16	$	224,197
Vested and Expected to Vest at January 2, 2022		378,595		$	3.96		7.59	$	5,752,679

Weighted-Average Assumptions Used to Estimate the Fair Value of Each Share Option Award

The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted-average assumptions:

	Year Ended
	January 2, 2022			January 3, 2021
Risk-free interest rate		1.3	%		0.9	%
Expected term	6.5 years			5.7 years
Expected volatility		75.7	%		63.0	%
Expected dividend yield		4.0	%		—

Summary of Nonvested Share Awards Activity

The following table details the Company’s nonvested share awards activity for the current fiscal year:

	Shares			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		591,325		$	3.79
Granted		248,550			15.61
Vested		(268,550	)		4.83
Forfeited		(19,625	)		6.59
Balance at January 2, 2022		551,700		$	8.51

The following table details the Company’s nonvested share unit awards activity for the current fiscal year:

	Units			Weighted- Average Grant- Date Fair Value
Balance at January 3, 2021		41,160		$	1.91
Granted		2,614			28.69
Dividend reinvestments		30,182			24.79
Vested		(42,614	)		3.90
Dividend reinvestments vested		(31,342	)		24.13
Balance at January 2, 2022		—		$	—

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Description of Business - Additional Information (Detail)	12 Months Ended
	Jan. 02, 2022 ft² Segment Store
Description Of Business [Line Items]
Number of operating stores | Store	431
Area of traditional sporting goods store | ft²	11,000
Number of reportable segment | Segment	1
Big 5 Corp [Member]
Description Of Business [Line Items]
Subsidiary interest ownership percentage	100.00%
Big 5 Service Corp [Member] | Big 5 Corp [Member]
Description Of Business [Line Items]
Subsidiary interest ownership percentage	100.00%

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Summary of Significant Accounting Policies - Additional Information (Detail)		12 Months Ended
	Mar. 20, 2020	Jan. 02, 2022 USD ($) Segment Supplier shares	Jan. 03, 2021 USD ($) shares	Apr. 03, 2022 USD ($)	Jan. 01, 2017 USD ($)
Accounting Policies [Line Items]
Reporting period, minimum		364 days
Reporting period, maximum		371 days
Cash deposits insured by the Federal Deposit Insurance Corporation		$ 250,000
Cash and cash equivalents		$ 97,420,000	$ 64,654,000
Concentration risk, suppliers | Supplier		700
Concentration risk, largest supplier | Supplier		20
Suppliers accounted for total purchases		36.80%
Vendor represented greater than of total purchases | Supplier		1
Number of reportable segment | Segment		1
Number of performance obligation		one
Percentage of gift card historical breakage rate		5.00%
Stored value card redemption revenue recognized		$ 5,900,000	5,400,000
Outstanding stored value card liabilities		$ 8,300,000	7,500,000
Stored value cards redeemed period		2 years
Advertising expense, net of co-operative advertising allowances		$ 11,000,000.0	10,600,000
Co-operative advertising allowances		0	1,100,000
Impairment charges		0	0
Self-insurance liabilities		10,200,000	11,000,000.0
Accrued interest or penalties		$ 0	$ 0
Common Stock [Member]
Accounting Policies [Line Items]
Share repurchase program, additional authorized amount					$ 25,000,000.0
Number of shares repurchased during period | shares		361,323	0
Share repurchase program, remaining amount available for repurchase		$ 7,700,000
Common Stock [Member] | Current Share Repurchase Program [Member] | Scenario Forecast [Member]
Accounting Policies [Line Items]
Share repurchase program, additional authorized amount				$ 25,000,000.0
Accrued expenses [Member]
Accounting Policies [Line Items]
Self-insurance liabilities		4,400,000	$ 4,800,000
Other long-term liabilities [Member]
Accounting Policies [Line Items]
Self-insurance liabilities		5,800,000	6,200,000
Stored Value Card Breakage Revenue [Member]
Accounting Policies [Line Items]
Recognized stored value card breakage revenue		$ 300,000	300,000
One vendor [Member]
Accounting Policies [Line Items]
Suppliers accounted for total purchases		7.60%
Percentage of vendors represented greater than of total purchases		5.00%
U.S. Treasury Bills [Member]
Accounting Policies [Line Items]
Cash and cash equivalents		$ 75,000,000.0	50,000,000.0
COVID-19 [Member]
Accounting Policies [Line Items]
Percentage of minimum number of retail store locations closed	50.00%
Lease abatements, to decrease on variable lease expense			3,100,000
Deferred, lease liability		$ 100,000	600,000
COVID-19 [Member] | California [Member]
Accounting Policies [Line Items]
Percentage of stores		52.00%
Merchandise [Member] | Accounting Standards Update 2014-09 | ASC 606 [Member]
Accounting Policies [Line Items]
Estimated right of return related to estimated sales returns		$ 1,200,000	1,200,000
Allowance for sales returns reserve		$ 2,500,000	$ 2,400,000

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Summary of Significant Accounting Policies - Summary of Disaggregates Net Sales into Major Merchandise Categories to Depict Nature and Amount of Revenue and Related Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Accounting Policies [Line Items]
Net sales	$ 1,161,820	$ 1,041,212
Hardgoods [Member]
Accounting Policies [Line Items]
Net sales	637,181	623,728
Athletic and sport footwear [Member]
Accounting Policies [Line Items]
Net sales	279,645	228,311
Athletic and sport apparel [Member]
Accounting Policies [Line Items]
Net sales	241,526	184,538
Other sales [Member]
Accounting Policies [Line Items]
Net sales	$ 3,468	$ 4,635

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Summary of Significant Accounting Policies - Schedule of Estimated Useful Life of Property and Equipment (Detail)	12 Months Ended
	Jan. 02, 2022
Land [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	Indefinite
Buildings [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	20 years
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	Shorter of estimated useful life or term of lease
Furniture and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Furniture and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Internal-use software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Internal-use software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years

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Property and Equipment, Net - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 360,417	$ 346,996
Accumulated depreciation and amortization	(301,852)	(290,638)
Property and equipment, net excluding assets not placed into service	58,565	56,358
Assets not placed into service	1,836	887
Property and equipment, net	60,401	57,245
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	176,066	170,701
Furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	142,638	134,623
Internal-use software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	37,188	37,147
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,750	2,750
Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,775	$ 1,775

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Property and Equipment, Net - Schedule of Property and Equipment (Parenthetical) (Detail) - USD ($) $ in Millions	Jan. 02, 2022	Jan. 03, 2021
Internal-use software development [Member]
Property, Plant and Equipment [Line Items]
Accumulated amortization for internal-use software development costs	$ 32.7	$ 30.8

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Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 7.6	$ 6.7
Amortization expense	8.0	8.9
Finance leases, gross	16.5	10.1
Accumulated depreciation of finance leases	6.1	5.5
Internal-use software [Member]
Property, Plant and Equipment [Line Items]
Amortization expense	$ 2.1	$ 2.9

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Fair Value Measurements - Additional Information (Details) - USD ($)	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charges	$ 0	$ 0
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 75,000,000.0	$ 50,000,000.0

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Accrued Expenses - Summary of Accrued Expenses (Detail) - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Payables And Accruals [Abstract]
Payroll and related expense	$ 37,345	$ 37,826
Sales tax	12,112	11,609
Occupancy expense	10,168	10,215
Other	25,416	23,227
Accrued expenses	$ 85,041	$ 82,877

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Lease Commitments - Additional Information (Detail)	12 Months Ended
	Jan. 02, 2022
Lessee Lease Description [Line Items]
Operating lease, option to extend, description	options to extend the leases for up to 5 years
Operating lease, option to extend	true
Maximum [Member]
Lessee Lease Description [Line Items]
Operating lease term	13 years
Operating lease, option to extend	5 years
Finance lease term	6 years

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Lease Commitments - Summary of Components of Lease Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Lease expense:
Amortization of right-of-use assets	$ 2,940	$ 2,721
Interest on lease liabilities	260	297
Finance lease expense	3,200	3,018
Operating lease expense	81,734	83,030
Variable lease expense	18,384	15,238
Sublease income	(91)	(1,192)
Total lease expense	$ 103,227	$ 100,094

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Lease Commitments - Summary of Components of Lease Expenses (Parenthetical) (Detail) $ in Millions	12 Months Ended
	Jan. 03, 2021 USD ($)
COVID-19 [Member]
Lessee Lease Description [Line Items]
Lease abatements, to decrease on variable lease expense	$ 3.1

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Lease Commitments - Schedule of Other Information Related to Leases (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 85,238	$ 83,028
Financing cash flows from finance leases	2,887	2,858
Operating cash flows from finance leases	271	313
Cash paid for amounts included in the measurement of lease liabilities	88,396	86,199
Right-of-use assets obtained in exchange for new finance lease liabilities	8,723
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 56,953	$ 80,452
Weighted-average remaining lease term—finance leases	3 years 9 months 18 days	2 years 4 months 24 days
Weighted-average remaining lease term—operating leases	4 years 9 months 18 days	5 years
Weighted-average discount rate - Finance Leases	3.10%	4.80%
Weighted-average discount rate - Operating Leases	5.40%	6.10%

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Lease Commitments - Schedule of Finance and Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Finance Lease Liabilities, Payments, Due [Abstract]
Finance leases, 2022	$ 3,748
Finance leases, 2023	2,585
Finance leases, 2024	1,787
Finance leases, 2025	1,304
Finance leases, 2026	867
Finance leases, thereafter	197
Finance leases, total lease payments	$ 10,488
Weighted-average remaining lease term	3 years 9 months 18 days	2 years 4 months 24 days
Weighted-average discount rate - Finance Leases	3.10%	4.80%
Present values	$ 9,974
Lease liabilities - current	3,518	$ 2,089
Lease liabilities - long-term	6,456	$ 2,504
Lease liabilities - total	9,974
Difference between undiscounted and discounted cash flows	514
Operating Lease Liabilities, Payments Due [Abstract]
Operating leases, 2022	86,185
Operating leases, 2023	68,475
Operating leases, 2024	59,654
Operating leases, 2025	42,975
Operating leases, 2026	27,670
Operating leases, thereafter	34,051
Operating leases, total lease payments	$ 319,010
Weighted-average remaining lease term	4 years 9 months 18 days	5 years
Weighted-average discount rate - Operating Leases	5.40%	6.10%
Present values	$ 281,016
Lease liabilities - current	76,882	$ 73,737
Lease liabilities - long-term	204,134	$ 217,788
Lease liabilities - total	281,016
Difference between undiscounted and discounted cash flows	$ 37,994

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Long-Term Debt - Additional Information (Detail) - USD ($)		3 Months Ended	12 Months Ended
	Feb. 24, 2021	Apr. 04, 2021	Jan. 02, 2022	Jan. 03, 2021	Mar. 30, 2020
Debt Instrument [Line Items]
Credit Agreement description			The Company, Big 5 Corp. and Big 5 Services Corp. were parties to a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of other lenders, as amended (the “Prior Credit Agreement”), which was terminated and replaced on February 24, 2021, as discussed below.
Long-term revolving credit borrowings outstanding			$ 0	$ 0
Debt issuance costs paid		$ 700,000	$ 746,000	$ 106,000
Loan, Guaranty and Security Agreement [Member]
Debt Instrument [Line Items]
Revolving credit facility	$ 150,000,000.0
Maximum limit of credit facility	200,000,000.0
Sublimit for issuances of letters of credit	$ 50,000,000.0
Maturity date of credit agreement	Feb. 24, 2026
Percentage of eligible credit card accounts receivables	90.00%
Percentage of the value of eligible inventory	90.00%
Percentage of the value of eligible in-transit inventory	90.00%
Interest rate, description			the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the LIBO rate, plus one percentage point (1.00%), or (c) the rate of interest in effect for such day as announced from time to time within BofA as its “prime rate.”
Commitment fee assessed	0.20%
Debt instrument, covenant description			Obligations under the Loan Agreement are secured by a general lien on and security interest in substantially all of the Company’s assets. The Loan Agreement contains covenants that require the Company to maintain a fixed charge coverage ratio of not less than 1.0:1.0 in certain circumstances, and limits the ability
Events of default, description			The Loan Agreement contains customary events of default, including, without limitation, failure to pay when due principal amounts with respect to the credit facility, failure to pay any interest or other amounts under the credit facility, failure to comply with certain agreements or covenants contained in the Loan Agreement, failure to satisfy certain judgments against the Company, failure to pay when due (or any other default which permits the acceleration of) certain other material indebtedness in principal amount in excess of $5.0 million, and certain insolvency and bankruptcy events. As amended, the Loan Agreement provides for a transition to an alternative benchmark reference rate following the cessation of the LIBO rate.
Maximum dividend payment or stock purchase amount	$ 5,000,000.0
Line of Credit Facility default debt minimum amount	$ 5,000,000.0
Loan, Guaranty and Security Agreement [Member] | Minimum [Member]
Debt Instrument [Line Items]
Fixed charge coverage ratio	100.00%
Loan, Guaranty and Security Agreement [Member] | Federal Funds Rate [Member]
Debt Instrument [Line Items]
Applicable margin in addition to variable rate	0.50%
Loan, Guaranty and Security Agreement [Member] | LIBO Rate [Member]
Debt Instrument [Line Items]
Applicable margin in addition to variable rate	1.00%
Prior Credit Agreement [Member]
Debt Instrument [Line Items]
Revolving credit facility			$ 140,000,000.0		$ 165,000,000.0
Maximum limit of credit facility			200,000,000.0
Sublimit for issuances of letters of credit			$ 25,000,000.0
Maturity date of credit agreement			Sep. 29, 2022
Interest rate, description			The Prior Credit Agreement provided for LIBO rate loans to bear interest at a rate equal to the applicable adjusted LIBO rate plus an applicable margin, as shown in the table below. The loans designated as base rate loans bore interest at a rate equal to the applicable margin for base rate loans (as shown below) plus the highest of (a) the Federal funds rate in effect plus one-half of one percent, (b) the LIBO rate, plus one percentage point, or (c) the prime interest rate.
Commitment fee assessed			0.20%
First tier of increase to the borrowing capacity			$ 165,000,000.0
Sublimit for swingline loans			$ 20,000,000.0
Write off of deferred debt issuance cost		$ 200,000
Prior Credit Agreement [Member] | Federal Funds Rate [Member]
Debt Instrument [Line Items]
Applicable margin in addition to variable rate			0.50%
Prior Credit Agreement [Member] | LIBO Rate [Member]
Debt Instrument [Line Items]
Applicable margin in addition to variable rate			1.00%

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Long-Term Debt - Average Daily Excess Availability for Preceding Fiscal Quarter (Detail)		12 Months Ended
	Feb. 24, 2021	Jan. 02, 2022
Loan, Guaranty and Security Agreement [Member] | Level I [Member]
Line Of Credit Facility [Line Items]
Average Daily Availability	Greater than or equal to $70,000,000
LIBO Rate Applicable Margin	1.375%
Base Rate Applicable Margin	0.375%
Loan, Guaranty and Security Agreement [Member] | Level II [Member]
Line Of Credit Facility [Line Items]
Average Daily Availability	Less than $70,000,000
LIBO Rate Applicable Margin	1.50%
Base Rate Applicable Margin	0.50%
Prior Credit Agreement [Member] | Level I [Member]
Line Of Credit Facility [Line Items]
Average Daily Availability		Greater than or equal to $70,000,000
LIBO Rate Applicable Margin		1.25%
Base Rate Applicable Margin		0.25%
Prior Credit Agreement [Member] | Level II [Member]
Line Of Credit Facility [Line Items]
Average Daily Availability		Less than $70,000,000
LIBO Rate Applicable Margin		1.375%
Base Rate Applicable Margin		0.50%

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Income Taxes - Summary of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Income Tax Disclosure [Abstract]
Current, Federal	$ 23,422	$ 13,786
Current, State	7,582	4,871
Current, Total	31,004	18,657
Deferred, Federal	1,121	86
Deferred, State	613	(298)
Deferred, Total	1,734	(212)
Total, Federal	24,543	13,872
Total, State	8,195	4,573
Total income tax expense (benefit)	$ 32,738	$ 18,445

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Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Income Tax Contingency [Line Items]
Federal statutory tax rate	21.00%
Deferred tax assets valuation allowance	$ 280,000	$ 683,000
Unrecognized tax benefits	$ 0	0
Unrecognized tax benefits, period	over the next 12 months
Accrued interest or penalties	$ 0	0
Earliest Tax Year [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Income tax returns in period	2018
Earliest Tax Year [Member] | State and Local [Member]
Income Tax Contingency [Line Items]
Income tax returns in period	2017
California Enterprise Zone Tax Credits [Member]
Income Tax Contingency [Line Items]
Deferred tax assets valuation allowance	$ 300,000	$ 700,000
Tax credits carry forward latest expiration year	2024

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Income Taxes - Schedule of Federal Statutory Tax Rate Reconciliation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Income Tax Disclosure [Abstract]
Tax expense at statutory rate	$ 28,376	$ 15,621
State tax expense, net of federal tax effect	7,167	3,975
Additional deduction related to share-based compensation	(2,623)
Nondeductible expenses	729	86
Tax credits	(603)	(246)
Change in valuation allowance	(318)	(418)
CARES Act net operating loss carryback		(822)
Write-offs related to nonvested share awards		260
Other	(10)	(11)
Total income tax expense (benefit)	$ 32,738	$ 18,445

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Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jan. 02, 2022	Jan. 03, 2021
Deferred tax assets:
Employee benefit-related liabilities	$ 2,889	$ 2,986
Deferred rent	2,828	3,509
Insurance liabilities	2,421	2,581
State taxes	1,545	1,014
Gift card liability	1,420	1,324
Merchandise inventory	1,215	2,253
Share-based compensation	805	815
California Enterprise Zone Tax Credits	381	975
Other deferred tax assets	1,500	1,396
Gross deferred tax assets	15,004	16,853
Less: Valuation allowance	(280)	(683)
Deferred tax assets, net of valuation allowance	14,724	16,170
Deferred tax liabilities:
Prepaid expense	(1,147)	(989)
Federal liability on state deferred tax assets	(996)	(1,125)
Other deferred tax liabilities	(484)	(225)
Deferred tax liabilities	(2,627)	(2,339)
Net deferred tax assets	$ 12,097	$ 13,831

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Earnings Per Share Basic [Line Items]
Net income	$ 102,386	$ 55,940
Weighted-average shares of common stock outstanding:
Basic	21,670,000	21,260,000
Dilutive effect of common stock equivalents arising from share option, nonvested share and nonvested share unit awards	842,000	403,000
Diluted	22,512,000	21,663,000
Basic earnings per share	$ 4.73	$ 2.63
Diluted earnings per share	$ 4.55	$ 2.58
Share Option Awards [Member]
Weighted-average shares of common stock outstanding:
Antidilutive shares/unit awards excluded from diluted calculation	2,000	494,000
Nonvested Share Awards and Nonvested Share Unit Awards [Member]
Weighted-average shares of common stock outstanding:
Antidilutive shares/unit awards excluded from diluted calculation	0	46,000

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Earnings Per Share - Additional Information (Detail) - shares	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Nonvested Share Awards and Nonvested Share Unit Awards [Member]
Earnings Per Share Basic [Line Items]
Antidilutive options	0	46,000

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Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Compensation And Retirement Disclosure [Abstract]
Employer matching and profit-sharing contributions	$ 5.3	$ 3.7

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Related Party Transactions - Additional Information (Detail) - Co-founder [Member] - USD ($)	3 Months Ended	12 Months Ended
	Apr. 04, 2021	Jan. 02, 2022	Jan. 03, 2021	Jan. 31, 2021
Related Party Transaction [Line Items]
Annual base salary under agreement to be paid to related party		$ 350,000
Salary base amount under agreement paid to related party			$ 350,000
Expense recognized to provide future obligations under agreement			300,000
Liability of future obligations			$ 1,000,000.0
Related party transaction, liability eliminate				$ 1,000,000.0
Selling and Administrative Expenses [Member]
Related Party Transaction [Line Items]
Related party transaction, reduce selling and administrative expense	$ 1,000,000.0

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Commitments and Contingencies - Additional Information (Detail) $ in Thousands		1 Months Ended	3 Months Ended				12 Months Ended
	May 21, 2020 USD ($)	Jul. 31, 2019 Store	Apr. 04, 2021 USD ($)	Jan. 03, 2021 USD ($)	Jun. 28, 2020 USD ($) Store	Dec. 29, 2019 USD ($)	Jan. 02, 2022 USD ($)	Jan. 03, 2021 USD ($)
Commitments And Contingencies [Line Items]
Received cash condemnation settlement from Orange County Transport Authority pre-tax gain amount								$ 2,500
Cash condemnation settlement from Orange Country Transport Authority	$ 2,500
Loss on property and equipment								237
Number of stores destroyed in civil unrest | Store					7
Number of stores destroyed in fire | Store		1
Loss contingency, total loss					$ 600	$ 800
Advance on settlement				$ 500
Deduction on settlement			$ 300	200
Proceeds from insurance recovery							$ 1,083	1,077
Proceeds related to property damage and business interruption				2,800
Proceeds from insurance recovery - property and equipment			200	1,700			249	1,750
Gain on recovery of insurance proceeds - lost profit margin and business interruption			500	800			460	1,077
Gain on insurance associated with business interruption				$ 300
Proceeds from cash insurance recovery total, net of insurance deductible			1,300
Gain on recovery of insurance proceeds - property and equipment			200				$ 249	1,750
Lost Inventory and Profit Margin [Member]
Commitments And Contingencies [Line Items]
Proceeds from insurance recovery			1,000
Business Interruption [Member]
Commitments And Contingencies [Line Items]
Proceeds from insurance recovery			$ 100
Other Income [Member]
Commitments And Contingencies [Line Items]
Received cash condemnation settlement from Orange County Transport Authority pre-tax gain amount					2,500
Loss on property and equipment					$ 200
Selling and Administrative Expenses [Member]
Commitments And Contingencies [Line Items]
Attorneys' fees related to fees settlement								$ 100

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Share-Based Compensation Plans - Additional Information (Detail)		1 Months Ended		12 Months Ended
	Jan. 14, 2022 shares	Nov. 30, 2021 Member	Apr. 30, 2019 shares	Jan. 02, 2022 USD ($) $ / shares shares	Jan. 03, 2021 USD ($) $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares outstanding				383,035	742,800
Compensation expense | $				$ 2,000,000.0	$ 1,700,000
Recognized tax benefit relating to compensation expense | $				500,000	400,000
Net income (loss) reflects net of tax charge | $				$ 1,500,000	$ 1,300,000
Basic and diluted income (loss) per share net of tax | $ / shares				$ 0.07	$ 0.06
Granted, shares				10,000
Proceeds from exercise of share option awards | $				$ 2,165,000	$ 169,000
Shares withheld for tax requirements				70,228
Tax withholding payments for share-based compensation | $				$ 1,046,000	97,000
Common Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Closing stock price per share | $ / shares				$ 19.01
Cost of sales [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation expense | $				$ 100,000	100,000
Selling, General and Administrative Expenses
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation expense | $				$ 1,900,000	$ 1,600,000
Share Option Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum expiration period of share based payment awards granted				10 years
Granted, shares				10,000	257,000
Weighted-average grant-date fair value per share | $ / shares				$ 12.16	$ 1.25
Intrinsic value of share option awards exercised | $				$ 6,600,000
Proceeds from exercise of share option awards | $				2,200,000
Tax benefit realized for the expected tax deduction from share option award exercises | $				1,600,000
Unrecognized compensation expense | $				$ 400,000
Weighted-average period of recognition				1 year 7 months 6 days
Share Option Awards [Member] | Share-based Compensation Award, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rights (as percentage)				25.00%
Nonvested Share Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested shares outstanding				551,700	591,325
Weighted-average period of recognition				2 years 2 months 12 days
Fair value of nonvested share awards | $				$ 5,300,000	$ 400,000
Issuance of nonvested share awards, Shares				248,550	321,600
Weighted-average grant-date fair value per share, granted | $ / shares				$ 15.61	$ 1.69
Dividends accrued but not paid | $				$ 1,600,000
Unrecognized compensation expenses | $				$ 3,200,000
Nonvested Share Unit Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested shares outstanding				0	41,160
Shares vested included in dividend reinvestments				31,342
Fair value of nonvested share awards | $				$ 2,100,000	$ 200,000
Issuance of nonvested share awards, Shares				2,614	40,000
Weighted-average grant-date fair value per share, granted | $ / shares				$ 28.69	$ 2.28
Cumulative vested share unit awards				285,591
Cumulative dividend reinvestment awards				79,271
Unrecognized compensation expenses | $				$ 0
Nonvested Share Unit Awards [Member] | Board Members [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of persons retired | Member		1
Nonvested Share Unit Awards [Member] | Board Members [Member] | Subsequent Event [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares vested included in dividend reinvestments	124,012
Performance Shares [Member] | Share-based Compensation Award, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rights (as percentage)				25.00%
Performance Shares [Member] | Share-based Compensation Award, Tranche One [Member] | Non-Employee Directors [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rights (as percentage)				100.00%
2019 Equity Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Aggregate amount of shares authorized for issuance			3,848,803
Shares available for future grant				1,716,479
Expiration date of plan			Apr. 11, 2029
Shares limited for every one share granted				250.00%
2019 Equity Incentive Plan [Member] | Share Option Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares outstanding				383,035
2019 Equity Incentive Plan [Member] | Nonvested Share Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested shares outstanding				551,700
2019 Equity Incentive Plan [Member] | Nonvested Share Unit Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested shares outstanding				0

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Share-Based Compensation Plans - Summary of Share Option Awards (Detail)	12 Months Ended
	Jan. 02, 2022 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Shares, Outstanding at January 3, 2021 | shares	742,800
Shares, Granted | shares	10,000
Shares, Exercised | shares	(369,765)
Shares, Outstanding at January 2, 2022 | shares	383,035
Shares, Exercisable at January 2, 2022 | shares	15,105
Shares, Vested and Expected to Vest at January 2, 2022 | shares	378,595
Weighted-Average Exercise Price, Outstanding at January 3, 2021 | $ / shares	$ 4.62
Weighted-Average Exercise Price, Granted | $ / shares	24.72
Weighted-Average Exercise Price, Exercised | $ / shares	5.85
Weighted-Average Exercise Price, Outstanding at January 2, 2022 | $ / shares	3.96
Weighted-Average Exercise Price, Exercisable at January 2, 2022 | $ / shares	4.17
Weighted-Average Exercise Price, Vested and Expected to Vest at January 2, 2022 | $ / shares	$ 3.96
Weighted-Average Remaining Contractual Life (In Years), Outstanding at January 2, 2022	7 years 7 months 6 days
Weighted-Average Remaining Contractual Life (In Years), Exercisable at January 2, 2022	7 years 1 month 28 days
Weighted-Average Remaining Contractual Life (In Years), Vested and Expected to Vest at January 2, 2022	7 years 7 months 2 days
Aggregate Intrinsic Value, Outstanding at January 2, 2022 | $	$ 5,823,394
Aggregate Intrinsic Value, Exercisable at January 2, 2022 | $	224,197
Aggregate Intrinsic Value, Vested and Expected to Vest at January 2, 2022 | $	$ 5,752,679

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Share-Based Compensation Plans - Fair Value of Share Option Award Based on Weighted-Average Assumptions (Detail)	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rate	1.30%	0.90%
Expected term	6 years 6 months	5 years 8 months 12 days
Expected volatility	75.70%	63.00%
Expected dividend yield	4.00%

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Share-Based Compensation Plans - Summary of Nonvested Share Awards Activity (Detail) - $ / shares	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Nonvested Share Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested shares/share units, beginning balance	591,325
Granted, shares/share units	248,550	321,600
Vested, shares/share units	(268,550)
Forfeited, shares/share units	(19,625)
Nonvested shares/share units, ending balance	551,700	591,325
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Grant-Date Fair Value, Beginning Balance	$ 3.79
Weighted-Average Grant-Date Fair Value, Granted	15.61	$ 1.69
Weighted-Average Grant-Date Fair Value, Vested	4.83
Weighted-Average Grant-Date Fair Value, Forfeited	6.59
Weighted-Average Grant-Date Fair Value, Ending Balance	$ 8.51	$ 3.79
Nonvested Share Unit Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested shares/share units, beginning balance	41,160
Granted, shares/share units	2,614	40,000
Dividend reinvestments, shares/share units	30,182
Vested, shares/share units	(42,614)
Dividend reinvestments vested, shares/share units	(31,342)
Nonvested shares/share units, ending balance	0	41,160
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Grant-Date Fair Value, Beginning Balance	$ 1.91
Weighted-Average Grant-Date Fair Value, Granted	28.69	$ 2.28
Weighted-Average Grant-Date Fair Value, Dividend Reinvestments	24.79
Weighted-Average Grant-Date Fair Value, Vested	3.90
Weighted-Average Grant-Date Fair Value, Dividend Reinvestments Vested	24.13
Weighted-Average Grant-Date Fair Value, Ending Balance	$ 0	$ 1.91

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Subsequent Event - Additional Information (Detail) - USD ($)	3 Months Ended
	Apr. 03, 2022	Jan. 02, 2022	Jan. 01, 2017
Common Stock [Member]
Subsequent Event [Line Items]
Share repurchase program, additional authorized amount			$ 25,000,000.0
Share repurchase program, remaining amount available for repurchase		$ 7,700,000
Previous Share Repurchase Program [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Share repurchase program, remaining amount available for repurchase		$ 7,700,000
Scenario Forecast [Member]
Subsequent Event [Line Items]
Dividend per share	$ 0.25
Dividend declared per share, payable date	Mar. 25, 2022
Dividend declared per share, record date	Mar. 11, 2022
Scenario Forecast [Member] | New Share Repurchase Program [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Share repurchase program, additional authorized amount	$ 25,000,000.0

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Schedule II - Valuation and Qualifying Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2022	Jan. 03, 2021
Allowance for doubtful receivables [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	$ 58	$ 58
Charged to Costs and Expenses	83	44
Deductions	(79)	(44)
Balance at End of Period	62	58
Allowance for sales returns [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	2,444	2,702
Charged to Costs and Expenses	84	(258)
Balance at End of Period	2,528	2,444
Inventory reserves [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	6,138	6,796
Charged to Costs and Expenses	3,335	2,954
Deductions	(3,926)	(3,612)
Balance at End of Period	$ 5,547	$ 6,138