Big 5 Sporting Goods reported fourth-quarter earnings slumped 46.1 percent to $2.8 million, or 13 cents as share. Same store sales decreased 0.5 percent. The sporting goods chain had warned on Jan. 12 that earnings would come in well below guidance due to weaker than expected sales of firearm-related products and soft sales in its winter-related business as a result of significantly warmer than normal weather.

As the company previously reported, net sales for the fiscal 2014 fourth quarter increased to $250.3 million from net sales of $248.0 million for the fourth quarter of fiscal 2013.

Gross profit for the fiscal 2014 fourth quarter was $79.1 million, compared to $80.8 million in the fourth quarter of the prior year. The company's gross profit margin was 31.6 percent in the fiscal 2014 fourth quarter versus 32.6 percent in the fourth quarter of the prior year. The decrease in gross profit margin was driven primarily by a decrease in merchandise margins of 13 basis points, as well as an increase in distribution and store occupancy costs as a percentage of net sales. For comparison purposes, merchandise margins in the fourth quarter of fiscal 2013 increased by 47 basis points versus the fourth quarter of fiscal 2012.

Selling and administrative expense as a percentage of net sales was 29.7 percent in the fiscal 2014 fourth quarter versus 28.9 percent in the fourth quarter of last year. Overall selling and administrative expense increased $2.6 million during the quarter from the prior year due primarily to a pre-tax charge of $1.4 million related to legal accruals and a non-cash pre-tax impairment charge of $0.4 million related to certain underperforming stores, as well as higher employee labor and benefit-related expense and higher store-related expenses reflecting an increased store count, partially offset by a decrease in advertising expense.

Net income for the fourth quarter of fiscal 2014 was $2.8 million, or $0.13 per diluted share, including $0.04 per diluted share for a pre-tax charge for legal accruals, $0.01 per diluted share for a non-cash pre-tax impairment charge and $0.01 per diluted share in net expenses associated with the development and operation of the company's e-commerce platform, compared to net income for the fourth quarter of fiscal 2013 of $5.2 million, or 23 cents per diluted share, including $0.01 per diluted share for e-commerce development expenses.

On Jan. 12, Big 5 said it expected earnings per diluted share in the range of 14 to 16 cents a share, including 1 cent per diluted share of anticipated non-cash impairment charges, 1 cent per diluted share of expenses associated with the development of the Company's e-commerce platform and 1 cent per diluted share for a legal settlement charge.

For the fiscal 2014 full year, net sales were $977.9 million, compared to net sales of $993.3 million for fiscal 2013. Same store sales decreased 2.9 percent in fiscal 2014 from the prior year. For comparison purposes, the company's same store sales increased 3.9 percent in fiscal 2013 over the comparable period in fiscal 2012.

Net income in fiscal 2014 was $14.9 million, or $0.67 per diluted share, including $0.04 per diluted share for legal accruals, $0.03 per diluted share for non-cash impairment charges and $0.03 per diluted share for net expenses associated with the development and operation of the company's e-commerce platform, compared to net income in fiscal 2013 of $27.9 million, or $1.27 per diluted share, including $0.04 per diluted share for legal accruals and $0.02 per diluted share for e-commerce development expenses.

CEO commentary
As previously reported, the softness in our fourth quarter performance was essentially confined to the holiday period, said Steven G. Miller, the company's Chairman, President and Chief Executive Officer. Although same store sales were positive in October and November, the December selling period was impacted by weaker than expected sales of firearm-related products and soft sales of winter-related products due to the lack of favorable winter weather throughout virtually all of Big 5's market areas prior to Christmas, as well as a highly promotional holiday retail environment.”

The new year got off to a very positive start, as same store sales increased in the low double-digit range for January on the strength of outstanding winter weather conditions over the New Year holiday period. But winter weather conditions in the retailer's markets turned extremely unfavorable over the last several weeks, including the President's Day holiday, and as a result same store sales declined in the low single-digit range for its February period. For the first quarter to date, sales are comping up in the low-mid-single-digit range.

“We are encouraged that over the course of the quarter, we have experienced strength in a number of our non-winter product categories, which has contributed to each of our three major merchandise categories (footwear, apparel and hardgoods) comping positively for the period to date,” Miller continued. “While we believe that we should be positioned to produce positive same store sales in March, the shipping backlog from the tentatively resolved labor dispute at West Coast ports, through which most of our products travel, has created uncertainty about product availability and sales. We have attempted to reflect the anticipated impact of the port dispute in our outlook for the first quarter.”

Quarterly Cash Dividend

The company's Board of Directors has declared a quarterly cash dividend of $0.10 per share, which will be paid on March 16, 2015 to stockholders of record as of March 2, 2015.

Share Repurchases

In fiscal 2014, pursuant to its share repurchase program, the company repurchased 223,051 shares of its common stock for a total expenditure of $2.5 million. In fiscal 2015 through February 20, 2015, the company has repurchased 74,873 shares of its common stock for a total expenditure of $0.9 million. As of February 20, 2015, the company had $6.2 million available for future share repurchases under its $20.0 million share repurchase program.

Guidance

For the fiscal 2015 first quarter, the company expects same store sales to increase in the low to mid-single-digit range and earnings per diluted share to be in the range of $0.06 to $0.13. First quarter guidance reflects uncertainty regarding product availability and sales as a result of the tentatively resolved labor dispute at West Coast ports.

Store Openings

During the fourth quarter of fiscal 2014, the company opened 10 new stores, ending fiscal 2014 with 439 stores in operation. During the fiscal 2015 first quarter, the company has closed three stores, one as part of a relocation that began in fiscal 2014, and anticipates opening one store. For the fiscal 2015 full year, the company currently anticipates opening approximately 10 net new stores.