Business news : Big 5 Returns to Profitability in Q4

Big 5 Sporting Goods Corp. reported net income in the fourth quarter ended Dec. 30 was $4.0 million, or 19 cents per share, in the fourth quarter, compared to a net loss for the fourth quarter of fiscal 2011 of $9,000, or less than one cent a share.

The year-ago period included a non-cash impairment charge of 5 cents per diluted share.

As the company previously reported, net sales for the fiscal 2012 fourth quarter increased to $243.6 million from net sales of $226.7 million for the fourth quarter of fiscal 2011. Same store sales increased 6.5 percent for the fourth quarter of fiscal 2012.

Gross profit for the fiscal 2012 fourth quarter increased to $78.4 million from $70.7 million in the fourth quarter of the prior year. The company's gross profit margin was 32.2 percent in the fiscal 2012 fourth quarter versus 31.2 percent in the fourth quarter of the prior year. The improvement in gross profit margin reflects an increase in merchandise margins of approximately 20 basis points and lower store occupancy and distribution costs as a percentage of net sales.

Selling and administrative expense as a percentage of net sales improved to 29.2 percent in the fiscal 2012 fourth quarter from 31.3 percent in the fourth quarter of the prior year. Overall selling and administrative expense increased $0.4 million for the quarter over the prior year due primarily to higher store-related expense reflecting an increased store count and increased employee benefit-related costs, partially offset by lower advertising expense. Selling and administrative expense in the fourth quarter of the prior year included a non-cash pre-tax impairment charge of $1.5 million.

For the fiscal 2012 full year, net sales increased to $940.5 million from net sales of $902.1 million for fiscal 2011. Same store sales increased 2.5 percent in fiscal 2012 from the prior year. Net income in fiscal 2012 was $14.9 million, or 69 cents per diluted share, including $0.04 of store closing and non-cash impairment charges, compared to net income in fiscal 2011 of $11.7 million, or 53 cents per diluted share, including non-cash impairment charges of 7 cents per diluted share.

"We are pleased to deliver a quarter of strong sales, expanded gross margins, expense leverage, meaningful earnings growth and very healthy cash flow," said Steven G. Miller, the company's chairman, president and CEO. "As previously reported, our fourth quarter same store sales increase of 6.5 percent represented our largest quarterly same store sales increase in over ten years. Our sales comped positively in the mid-single-digit range for our October and November periods and comped positively in the high single-digit range for our December period. All three of our major merchandise categories comped positively for the quarter, with hardgoods being our strongest category followed by apparel and footwear. Our hardgoods category benefitted from the well-publicized national increase in demand for firearms and ammunition products. Despite the sales mix shift favoring these lower margin products, we expanded overall product selling margins for the quarter. We also are pleased to have further strengthened our balance sheet, as our operating cash flow for the year of $39.6 million allowed us to reduce borrowings under our credit facility by 25 percent to $47.5 million at year-end compared to the end of fiscal 2011, invest in new and relocated stores and return $10 million to shareholders through cash dividends and stock repurchases."

Miller continued, "We have continued to enjoy very healthy sales during the first quarter of fiscal 2013 to date, as we have benefitted from favorable winter weather conditions in many of our markets and the continued increase in demand for firearms and ammunition products. Although our recent performance has been encouraging and we are pleased with the progress on our merchandise and marketing initiatives implemented over the last year, we recognize that the economy remains challenging for many, with ongoing pressures that could certainly impact consumer spending. We continue to focus our efforts on broadening our appeal to today's consumer and driving sales by offering an unmatched combination of value, selection and convenience."

Quarterly Cash Dividend
The company's Board of Directors has approved an increase of the company's quarterly cash dividend to $0.10 per share of outstanding common stock, for an annual rate of $0.40 per share. Previously, the company's quarterly cash dividend was $0.075 per share, for an annual rate of $0.30 per share. The quarterly cash dividend of $0.10 per share of outstanding common stock will be paid on March 22, 2013 to stockholders of record as of March 8, 2013.

Share Repurchases
During the fiscal 2012 fourth quarter, the company repurchased 40,000 shares of its common stock for a total expenditure of $0.4 million. As of the end of the fourth quarter, the company had approximately $9.6 million available for future stock repurchases under its $20.0 million share repurchase program authorized in the fiscal 2007 fourth quarter.

GuidanceFor the fiscal 2013 first quarter, the company expects same store sales in the positive high single-digit range and earnings per diluted share in the range of $0.18 to $0.24, including an anticipated tax benefit of $0.01 per diluted share. This guidance reflects the aforementioned increase in demand for firearms and ammunition products and favorable winter weather conditions compared to the prior year, partially offset by a negative impact from the calendar shift of the Easter holiday, during which the company's stores are closed, out of the second quarter and into the first quarter of fiscal 2013. For comparative purposes, the company's earnings per diluted share for the first quarter of fiscal 2012 were $0.01.

Store Openings
During the fourth quarter of fiscal 2012, the company opened eight stores, including one relocation, and closed one store. The company ended fiscal 2012 with 414 stores in operation. During the fiscal 2013 first quarter, the company currently anticipates opening one new store and has closed one store as part of a relocation that began in fiscal 2012. For the fiscal 2013 full year, the company currently anticipates opening approximately 15 to 20 new stores, including three relocations, and closing approximately three relocated stores.

( Source  SportsOneSource )