Big 5 Sporting Goods Corp. slashed its fourth-quarter earnings guidance as “extraordinarily dry and warm weather conditions” led to a double-digit comp decline in December.

For the fiscal 2017 fourth quarter ended December 31, 2017,  net sales were $243.2 million compared to net sales of $266.3 million for the fourth quarter of fiscal 2016.  Same store sales decreased 9.4 percent for the fourth quarter of fiscal 2017 compared to a 3.1 percent increase in same store sales for the fourth quarter of fiscal 2016.

Following same store sales declines in the low mid-single-digit range for the October period and the low single-digit range for the November period, which included positive same store sales over the Black Friday weekend, same store sales declined in the low double-digit range in December as extraordinarily dry and warm weather conditions in most of the company’s major markets had a significant negative effect on sales of cold weather and snow-related products.  During the quarter, same store sales in the company’s apparel category decreased in the low double-digit range, same store sales in the hardgoods category decreased in the high single-digit range and same store sales in the footwear category decreased in the mid-single-digit range.

The company’s merchandise margins decreased approximately 130 basis points for the fourth quarter of fiscal 2017 from the fourth quarter of fiscal 2016, when merchandise margins increased 68 basis points over the prior year.  The decline in merchandise margins primarily reflected the sales mix shift away from higher margin winter product categories, promotional efforts to drive traffic and sales and comping against favorable opportunistic buys during the prior year period.

For the fiscal 2017 full year, net sales decreased to $1.01 billion from $1.02 billion in fiscal 2016.  Same store sales decreased 1.2 percent for the fiscal 2017 full year.  The company’s merchandise margins increased approximately 45 basis points for the fiscal 2017 full year compared to fiscal 2016.

For the fiscal 2017 fourth quarter, the company now expects to realize a loss per share in the range of 8 cents to 13 cents, which excludes charges to be determined related to the recent tax legislation and potential asset impairment related to a small number of the company’s stores. The company expects to adjust its deferred tax assets based on the recent tax legislation and believes this will result in a one-time non-cash expense of approximately $5.0 million to $6.0 million (25 cents  to 30 cents per share) in the fourth quarter.

The company’s previous guidance for the fourth quarter of fiscal 2017 was for earnings per diluted share to be in the range of 16 to 28 cents.  During the fiscal 2016 fourth quarter, the company’s earnings per diluted share were 35 cents, including 2 cents per diluted share for a tax benefit related to share-based compensation.

For the fiscal 2017 full year, the company currently expects to realize earnings per diluted share in the range of 52 cents to 57 cents, which excludes the charges described above to be determined related to the recent tax legislation and potential store asset impairment, compared to fiscal 2016 earnings of 77 cents per diluted share, including 5 cents per diluted share of charges for store closing costs and the net write-off of deferred tax assets related to share-based compensation.

“Our disappointing fourth quarter performance was largely the result of an extraordinarily challenging December period,” said Steven G. Miller, the company’s chairman, president and chief executive officer.  “Our December sales were impacted by a decline of nearly 50 percent in our core winter product categories as a result of significantly warmer than normal weather conditions and one of the driest periods on record in many of our market areas.  Additionally, we continued to experience very soft sales of firearm-related products throughout the quarter.  We believe that the weakness in these categories had an impact on customer traffic throughout our stores.  Same store sales excluding winter-related and firearm-related products were down low-single digits for the quarter.  The unfavorable winter weather conditions in our markets have continued into the start of the first quarter, and sales comparisons remain very challenging, particularly given how well we performed during this period over the past few years.  As a reminder, we produced same store sales increases in the low double-digit or high-single-digit range for our January period during each of the past three years, largely on the strength of favorable winter product sales.”

Miller added, “While we are hopeful that weather conditions and winter product sales will improve during the weeks ahead, we are encouraged by the performance of a number of our core product categories.  Additionally, although merchandise inventories have been affected by the slow start to the winter selling season, we are comfortable with our inventories as we head into the first quarter.  We ended the fourth quarter with preliminary per-store inventories up approximately 6.2 percent from the prior year, with virtually all of the increase attributable to winter products.  We also have continued to manage our debt effectively, with year-end revolver borrowings of $45 million, which was below our average year-end borrowings over the past five years.”

The company expects to issue earnings results for the fiscal 2017 fourth quarter and full year by the end of February.