The largest-retailer-on the west-coast said they focused on margins rather than chasing sales in the fourth quarter after good winter weather showed them a “head fake” in early November before disappearing for the balance of the quarter.

Big 5 Sporting Goods relied on “brand-name private label” product and “opportunity buys” in footwear to pull out a slightly positive fourth quarter comp store sales gain. The same may not be hold true for 2003.

Company officials told analysts on Thursday that the warm, dry weather that affected Q4 has carried over into Q1 2003, impacting any further winter sports sales in apparel and hardlines. To make matters worse, recent rains in the California market may impact baseball and other spring sports sales.

BGFV expects to pack away much of the non-fashion winter goods for next year instead of marking the goods down for liquidation.

BGFV’s estimate that first quarter 2003 comparable store sales will be down in the “low single-digit negative” to “slightly-positive” pushed shares down 18.2% for the week to close at $8.34. The balance of 2003 is expected to be in the low positive single-digit range.

The company expects EPS to be in the $0.15 to $0.18 range for Q1 2003 and $1.18 to $1.23 for the fiscal year 2003. BGFV sees a 20-30 bps improvement in GM in 2003 and expects to pay down another $20 million in debt. Big 5 will add 16-20 stores in existing or contiguous markets.

KEY METRICS:

    FOURTH QUARTER

    • Comps up 0.4%
    • Apparel comps were down mid-to-high single digits
    • Hardlines comps up low-single digits
    • Footwear comps up mid-single digits
    • Net Sales increase 4.1% to $176.6 million
    • Net Income up 110% to $8.8 million ($0.39 EPS)
    • Higher store labor costs impacted margins

    FULL YEAR 2002

    • Net sales increased 7.2% to $667.5 million.
    • Same-store sales rose 4.0%
    • Net income rose 44.2% to 11.1 million ($0.57 EPS)
    • Gross Profit Margin improved 110 bps to 35.6%

>>> The 28 continuous quarters of positive comp store growth may finally come to and end. Now if the Raiders could have pulled out the win…

>>> BGFV’s guidance may have had an impact on GRTS shares as well. They share a lot of western markets and have been very quiet so far…