What caused the dramatic tax expense changes in 2023?

The dramatic tax expense changes in 2023 for Big 5 Sporting Goods Corporation (BGFV) can be attributed to several key factors:

1. **Revenue Decline and Gross Margin Pressure**: The company's revenue decreased by 12% from the second quarter of 2022 to the second quarter of 2023, reaching $223.6 million. This decline in revenue, coupled with a decrease in gross profit margin from 35.0% in Q2 2022 to 32.2% in Q2 2023, indicates a challenging sales environment. Lower revenue and reduced gross margins typically lead to increased tax expenses as a percentage of revenue due to the inability to fully absorb costs.
2. **Inflationary Pressures and Operating Expenses**: The company has mentioned facing persistent inflationary pressures, which could have led to higher tax expenses. Inflation affects not only raw materials and operational costs but also employee salaries and benefits, all of which are influenced by tax calculations.
3. **Dividend Payments and Shareholder Returns**: Big 5 Sporting Goods has a history of paying dividends, with a recent quarterly cash dividend of $0.25 per share. Dividend payments are a taxable event for shareholders, and the company's commitment to returning capital to shareholders through dividends could contribute to higher tax expenses, especially if these dividends are significant relative to the company's pre-tax income.
4. **Strategic Investments and Store Expansion**: The company has been investing in inventory and maintaining a healthy inventory position to support merchandise margin execution. Such investments can lead to increased tax expenses due to the depreciation and amortization associated with these assets, as well as potential tax liabilities on the disposal of inventory.

In summary, the dramatic tax expense changes in 2023 for Big 5 Sporting Goods Corporation are primarily due to a combination of revenue decline, gross margin pressure, inflationary pressures, dividend payments, and strategic investments. These factors, either directly or indirectly, influence the company's tax liabilities and expenses.