Big 5 Sporting Goods Corp. earned 4.0 million, or 19 cents per share, in the fourth quarter ended Dec. 31, rebounding against a loss of $9,000, or less than one cent a share, in the year-ago period.

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

The earnings came in on the high-end of its updated guidance provided in mid-January calling for EPS in the range of 17 to 19 cents a share. Citing its strong financial position and anticipated healthy cash flow, Big 5 increased its quarterly cash dividend by 33 percent to 10 cents per share.

As previously reported, sales advanced 7.5 percent to $243.6 million on a 6.5 percent comp gain. The comp gain represented the chains largest quarterly same store sales increase in over ten years.

On a conference call with analysts, Steve Miller, Big 5s president and CEO, said sales comped positively in the mid-single-digit range for October and November and comped positively in the high single-digit range for December. Said Miller, While December started off relatively soft, sales momentum picked up during the week before Christmas, and the after Christmas period was outstanding, due in part to the arrival of favorable winter weather conditions, which had generally been lacking in our markets for the majority of the quarter leading up to Christmas.

For the quarter, Big 5 experienced a low single digit decrease in traffic and a high single digit increase in average ticket versus the prior year period.
All three of its major merchandise categories comped positively for the quarter. Benefitting from strong demand for firearms and ammunition products, hard goods saw a high-single digit comp gain. Apparel comped up mid-single digits, and Miller said the category has been the biggest beneficiary of our efforts to expand assortments of branded products.

Footwear was up low single digits. Miller said footwear is probably a more mature business versus its other categories with its well-known reputation for deals, and is likely feeling more pressure from the struggling economy. Added Miller, We are going in apparel more onto the more opportunity to push upwards. We certainly see this in footwear, and we are reminded of this as we hit the so-called pay cycle phenomenon that a number in retail have spoken to. This is something that is real evident in our footwear sales.

Gross margins improved to 32.2 percent from 31.2 percent, largely reflecting lower store occupancy and distribution costs as a percentage of sales. Merchandise margins increased approximately 20 basis points, less tan expected due to the strength in firearms and ammunition.

SG&A expenses were reduced to 29.2 percent from 31.3 percent in the fourth quarter of the prior year, aided by lower advertising expense.
SG&A expenses in the prior year included a non-cash pre-tax impairment charge of $1.5 million.

On a per-store basis, inventory was flat year-over-year, and management indicated it saw a healthy sell-down of winter product during the first quarter with favorable winter weather.

For the first quarter, same-store sales are projected to rise in the positive high single-digit range and earnings per diluted share in the range of 18 cents to 24 cents, including an anticipated tax benefit of 1 cent per share. In the 2012 first quarter, it earned 1 cent a share.

Miller said first-quarter sales have benefited from favorable winter weather conditions in many markets, especially compared to warm weather the prior year, as well as from the continued high demand for firearms and ammunition products. Added Miller, Although our recent performance has been encouraging, and we are pleased with the traction we are gaining on the merchandising and marketing initiatives that we have implemented over the last year, we do recognize that the overall economic environment remains challenging for many consumers.

Big 5 plans to open 15 to 20 new stores this year, including three relocations, and closing approximately three relocated stores. Miller said a new product catalogue rolled out in November as part of its enhanced website has led to a significant increases in the number of visitors to its site and the amount of time spent browsing. A full-commerce platform is expected to go live by the end of 2013.