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Big 5 Sporting Goods Corporation (BGFV - Analyst Report) came up with robust sales and comparable store sales results for the fourth quarter of fiscal 2012 and fiscal 2012. Concurrently, the company updated its earnings projections for the fourth quarter and fiscal 2012.

Net sales for the fourth quarter jumped 7.5% year over year to $243.6 million. Comps grew 6.5% compared to last year, marking the highest quarterly increase in over 10 years. Comps growth in the quarter was driven by a mid-single-digit rise in comps recorded in October and November, as well as high-single-digit growth registered in December.

Category-wise, the company recorded positive comps across all categories, with hardgoods being the strongest. This was followed by apparel and footwear. The company's merchandise margins improved 20 basis points from the year-ago quarter.

Additionally, Big 5 ended the fourth quarter with a strong balance sheet. During the quarter, the company used its ample cash flows to lower borrowings under its revolving credit facility to $47.5 million compared with $63.5 million at the end of fiscal 2011.

The company reported net sales of $940.5 million for fiscal 2012, up 4.3% from $902.1 million in fiscal 2011. Comps for the year rose 2.5% compared to last year.

Simultaneously, Big 5 narrowed its earnings guidance range for the fourth quarter and put forward its guidance for fiscal 2012. The company now expects fourth quarter earnings per share in the range of 17 cents – 19 cents, compared to the previously forecasted range of 13 cents – 21 cents. The current Zacks Consensus Estimate for the fourth quarter stands at 19 cents, which is at the higher end of the company’s guidance range.

For fiscal 2012, the company expects earnings per share in the 67 cents – 69 cents range, compared with 53 cents reported in fiscal 2011. The current Zacks Consensus Estimate for fiscal 2012 stands at 70 cents, which is above the higher end of the company’s guidance range. The company is expected to release its fourth quarter and fiscal 2012 earnings results by the end of February.

This leading sporting goods retailer in the western U.S. has a unique strategy of offering exclusive branded merchandise sourced from leading manufacturers that provide it with a competitive edge over its rivals like Dick’s Sporting Goods Corporation (DKS - Analyst Report). The company also leverages its strong vendor relationships to source overstock and closeout merchandise at substantial discounts, achieving dual objectives of boosting gross margin while offering compelling value to its customers.

Further, we believe Big 5 Sporting continues to progress well with its growth initiatives, which include expanding its store base and bringing in technological advancements to better serve its patrons. The company leverages an extensive network of stores to effectively penetrate into its target markets, which in turn, enables it to generate healthy sales and gain market share. The company’s fourth quarter store plans include opening of 8 locations, thereby bringing the total store count to 414 by the end of fiscal 2012.

The above mentioned positives have induced us to retain our long-term Outperform recommendation on the stock. However, the company currently has a Zacks Rank # 3 (Hold).

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