A widely reported rebound in retail sales has yet to lift the fortunes of Los Angeles-based Big 5 Sporting Goods Corp., which said unfavorable weather and high unemployment rates in its key markets continues to reduce traffic and average ticket at its stores.


Executives said the value-oriented chain’s concentration of stores in California and Nevada, which suffer the highest unemployment rates in the nation, continue to weigh down results.


Last week, BGFV reported that sales for the fiscal fourth quarter ended Jan. 2 slid 4.6% to $226.7 million and were down 0.7% on a same-store basis even as net merchandise inventory rose by 10.1%, or $23.3 million. Net earnings fell 37.5% to $4.0 million, or 18 cents per share, from $6.4 million, or 29 cents, a year ago. The results reflected one less week of results compared to the year earlier quarter and a net pre-tax charge of $2.3 million, or 7 cents per diluted share, for lawsuits, up from 3 cents a year earlier.


The retailer, which operates 396 stores in 12 western states and does not sell online, said apparel sales comped up in the low-single-digit range during the quarter, while footwear sales were flat and hard goods comped down in the low-single-digit range for the quarter.


Gross profit fell 6.2% to $75.8 million, or 33.4% of sales, compared to 34.0% a year earlier. The decrease was driven primarily by lower merchandise margins of 20 basis points and a higher store count.
For the current quarter, the company expects same-store sales in the negative low single-digit to positive low single-digit range and earnings per diluted share in the range of 15 cents to 22 cents a share, down from 23 cents a year earlier.


Management said the surge in inventory reflected some front-loading aimed at heading off inflation and supply issues and the rising store count.


“Having a little extra inventory in an inflationary environment may turn out to be good thing for the business,” said Chairman, President and CEO Steven G. Miller. “We're extremely comfortable with the inventory, the freshness of it. We see ourselves working through this inventory with really no mark down issues whatsoever.”