Citing attractive real estate prices and strong finances, Big 5 Sporting Goods will quintuple store openings this year, the company said last week.

 

The company anticipates opening two new stores in the current quarter and 10 to 15 net of relocations during fiscal 2010. That compares with just three last year. The company ended 2009 with 384 stores. The company also sees limited opportunities to negotiate existing leases as they come due.

 

Looking in to fiscal 2010, while we recognize that there remains uncertainty in the consumer environment, we are encouraged by opportunities we are seeing in the real estate market, with increased availability of quality locations and attractive leases, said Steven G. Miller, the retailer’s chairman, president and CEO. We expect to be able to take advantage of the favorable real estate environment to relocate approximately five stores over the course of the year.

 

Miller made his remarks in a conference call following release of audited financial results for the fourth quarter and fiscal year. Big 5 reported in mid-January that sales rose 8.2% to $237.6 million on a 0.1% rise in comp sales during the fourth quarter ended Jan. 3, while full year 2009 sales rose 3.6% to $895.5 million. 

 

Audited figures released last week showed Big 5s net income rose 70.5% to $6.4 million, or 29 cents per diluted share, in the fourth quarter, compared to the prior-year period.  Gross profit margin rose 150 basis points to 34.0% in the fourth quarter. The increase was driven primarily by an increase in merchandise margins of 89 basis points and lower distribution costs as a percentage of net sales. Miller said promotional activity was reasonably normal in the quarter, with the exception of a couple of competitors in southern California. Selling and administrative expense as a percentage of net sales was essentially flat at 29.4%. 

 

In the current first quarter, Big 5 expects same-store sales to grow in the low single-digit range and earnings per diluted share in the range of 17 to 23 cents thanks in part to strength of core winter product sales. Miller said comp gains are coming mostly from improved traffic and a small uptick in average ticket. Sustaining comps growth will become more difficult this month as the company anniversaries last years strong ammunition sales and Easter gets pushed into April.