Big 5 Sporting Goods' CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb.25.14 | About: Big 5 (BGFV)

Big 5 Sporting Goods Corporation (NASDAQ:BGFV)

Q4 2013 Earnings Conference Call

February 25, 2014, 05:00 PM ET

Executives

Steven Miller - Chairman, President and Chief Executive Officer

Barry Emerson - Senior Vice President, Chief Financial Officer and Treasurer

Analysts

Sean Naughton - Piper Jaffray

Sean McGowan - Needham & Company

Mark Smith - Feltl and Company

Bill Dezellem - Titan Capital Management

Mike Baker - Deutsche Bank

Operator

Good day and welcome to the Big 5 Sporting Goods' fourth quarter 2013 earnings results conference call. Today's conference is being recorded. On the call today, from the company we have, Steve Miller, President and CEO; and Barry Emerson, CFO.

I would now like to turn the conference over to Mr. Steve Miller. Please go ahead, sir.

Steven Miller

Thank you, operator. Good afternoon, everyone. Welcome to our 2013 fourth quarter conference call. Today, we will review our financial results for the fourth quarter and full year of fiscal 2013 and provide general updates for our business, as well as provide guidance for the first quarter. At the end of our remarks, we will open the call for questions.

I will now turn the call over to Barry to read our Safe Harbor statement.

Barry Emerson

Thanks, Steve. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in current and future periods to differ materially from forecasted results. These risks and uncertainties include those more fully described in our Annual Report on Form 10-K for fiscal 2012, our quarterly report on Form 10-Q for the third quarter of fiscal 2013 and other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statements that may be made from time to time by us or on our behalf.

Steven Miller

Thank you, Barry. We are pleased to have delivered another quarter of earnings growth in what turned out to be a very challenging retail environment. Although, our fourth quarter sales comparisons were impacted by extraordinary firearms and ammunition sales from the prior year as well as unfavorable winter weather across our western markets, our team's ability to improve product margins and controlled operating expenses enabled us to achieve over 20% growth in earnings for the quarter, capping off a year of 84% earnings growth in fiscal 2013.

Now, I'll comment on sales for the fourth quarter. As we previously announced, we rang the register to the tune of $248 million, up 1.8% from $243.6 million for the fourth quarter of fiscal 2012. Same-store sales decreased 0.5% during the fourth quarter of 2013 compared to a 6.5% increase during the fourth quarter of 2012. We experienced a low single-digit decrease in customer transactions, a low single-digit increase in average ticket during the fourth quarter versus the prior year.

While the fourth quarter started-off well with positive same-store sales in October, sales comparison softened in November and December, as we began to comp against the surge in firearm and ammunition sales from the prior year and as we comped against more favorable and certainly more timely winter weather in our markets during the prior year.

Apart from the impact of these headwinds, our products generally performed well for us in what turned out to be a challenging holiday retail environment. We did comp positively over the Black Friday Weekend, even though we maintained our store hours from the previous year, in other words, we did not open on Thanksgiving Day as so many others did. We also saw a nice rush in holiday business for the several days leading up to Christmas even without the benefit of favorable weather.

From a product category standpoint, apparel was again our strongest performing category, comping up low double-digits. Sales in our footwear category were slightly positive, while sales in our hardgoods categories knocked down mid single-digits in the fourth quarter, primarily due to lower demand year-over-year for firearms and ammunition products. Merchandise margins increased by 47 basis points for the period, primarily due to the shift in our product sales mix away from firearms and ammunition products.

Now, commenting on store openings. During the fourth quarter we opened nine stores, ending the year with 429 stores in operation. New store openings were in Green Valley and Phoenix, Arizona; Coachella, Susanville, Hayward and Santa Paula, California; Kansas City, Colorado; and Gallup and Taos, New Mexico.

For the first quarter, we have closed four stores, three of which were part of relocations. At this time, our plans for 2014 call for us to open approximately 15 net new stores. In addition, we plan to continue our program of upgrading and remodeling our store base to better support our evolving merchandise mix.

Now, turning to current trends. The first quarter of 2014 has been very challenging, particularly when compared to the 10.5% same-store sales increase that we achieved in the first quarter of last year, was driven by the peak of the surge in demand for firearms and ammunition products as well as generally favorable winter weather in our markets.

As I expect most of you are aware, while much of the country has experienced near-record levels of snowfall this year, many of our key western markets have had a very warm and dry winter. Here in California, we had our third warmest and third driest January in the last 120 years, which followed our second driest December in 120 years.

These drought conditions have led to significantly reduced demand for winter-related products and coupled with the lower firearms and ammunition sales have adversely affected historic traffic levels. Our same-store sales are currently running down in the low double-digit range for the period.

To add some perspective to that figure, sales of our firearms and ammunition products are running down in excess of 50% for the period-to-date and sales of our winter and cold weather-related products are down over 30% for the period. All other product categories combined are comping up in the healthy low single-digit range for the period-to-date.

Looking beyond the first quarter, we expect to see pressures ease as we move past the winter selling season and the peak of the surge in demand for firearms and ammunition last year. Although, we anticipate that comping against last year's ammunition sales will remain a challenge over most of the year, we do believe that after the first quarter, strength in our other categories should put us in a position to produced positive same-store sales for the balance of the year.

Finally, I should note that we are pleased to be in the final stage of development of our new e-commerce platform, which is now pointing to a launch during the summer of this year.

With that said, now I will turn the call over to Barry, who will provide more information about the quarter, as well as speak to our balance sheet, cash flows and provide first quarter guidance.

Barry Emerson

Thanks, Steve. Our gross profit margin for fiscal 2013 fourth quarter improved 32.6% of sales from 32.2% of sales for the fourth quarter of fiscal 2012. This increase reflected the 47 basis point improvement in merchandise margins that Steve mentioned.

Our selling and administrative expense as a percentage of sales improved to 28.9% in the fourth quarter from 29.2% of sales for the fourth quarter of fiscal 2012. On an absolute basis, SG&A expense increased $0.5 million year-over-year.

Now, looking at our bottomline. Net income for the fourth quarter was $5.2 million or $0.23 per diluted share, including $0.01 per diluted share of expense related to the development of our e-commerce platform compared to net income of $4.0 million or $0.19 per diluted share in the same period during the prior year.

Briefly reviewing our 2013 full year results, net sales increased to $993.3 million from $940.5 million in fiscal 2012. Same-store sales for fiscal 2013 increased 3.9% versus the prior year.

Net income was $27.9 million or $1.27 per diluted share, including $0.04 for the legal settlements charges and $0.02 for e-commerce development expense. This compares to net income for fiscal 2012 of $14.9 million or $0.69 per diluted share, including $0.04 per store closing and non-cash impairment charges.

Turning to our balance sheet. Total merchandise inventory was $301 million at the end of the fourth quarter, up 11.3% from the prior year. On a per-store basis, inventory was up 7.4%, which largely reflects the impact of lower than anticipated fourth quarter sales, more normalized firearm and ammunition inventory versus the prior year and the timing of certain inventory receipts. In light of reduced demand for winter products this season, we do anticipate a greater than normal carryover of winter product to next season and plan to structure our purchasing for next season around as carryover.

Looking at our capital spending. Our CapEx, excluding non-cash acquisitions, totaled $22.0 million for 2013, primarily reflecting expenditures for 17 new stores, increases in existing store maintenance and remodeling, and computer hardware and software purchases, including investments related to the development of our new e-commerce platform.

We expect a higher level of capital expenditures for 2014, excluding non-cash acquisitions, of approximately $28 million to $32 million for new stores, store-related remodeling, increased investment in distribution center equipment, computer hardware and software and development of our new e-commerce platform.

We generated cash flow from operations of $26.3 million for fiscal 2013 compared to $39.6 million for fiscal 2012. The decrease in cash flow from operations primarily reflects higher merchandise inventory levels as a result of lower than expected sales in the fourth quarter, partially offset by higher net income for 2013.

In the fourth quarter, we continue to pay our quarterly cash dividend of $0.10 per share and also pay down borrowings under our revolving credit facility. Our long-term debt at the end of fiscal 2013 was $43.0 million, down 9% from $47.5 million at the end of fiscal 2012.

Now, I'll spend a minute on our guidance. As Steve mentioned, in the first quarter of 2014 we are comping against the peak of the surge in demand for firearms and ammunition products and favorable winter weather last year. These difficult comparisons combined with a very unfavorable dry and warm weather conditions experienced quarter-to-date have negatively impacted sales trends.

Based on results-to-date for this year's first quarter, we are projecting same-store sales in the negative high single-digit range and earnings per diluted share in the range of $0.05 to $0.11. Our first quarter guidance reflects anticipated expenses of approximately $0.01 per diluted share, associated with the development of our new e-commerce platform. For comparative purposes, in the first quarter of 2013, same-store sales increased 10.5% and earnings per diluted share were $0.34.

Operator, we are now ready to turn the call back to you for questions-and-answers.

Question-and-Answer Session

Operator

(Operator Instructions) And we'll hear first from Sean Naughton with Piper Jaffray.

Sean Naughton - Piper Jaffray

When you take a step back and you look at some of the lost traffic from the difficult comparison in firearms and ammunition, I guess specifically, is there a way to look at it from a basket perspective to see how much of the sales kind of across the store that were actually lost from those transactions that had a firearm or and ammunition on it year-over-year.

Steven Miller

Sean, I am not sure that we can precisely quantify on a basket-by-basket standpoint what was lost. We do certainly sense that we lost traffic, and then clearly the customers that were coming in buying firearms and ammunition products often added to their basket last year, not to mention the traffic that was generated in the winter business that it's lost throughout the store. That's why we're really pleased that in spite of the headwinds from the lost traffic from the firearms and ammunition phenomenon and the winter sales that the rest of our products are comping up positively for the quarter-to-date.

Sean Naughton - Piper Jaffray

And then I guess, just thinking about the surge in demand really last year, have we kind of passed peak I believe, but do we have a few more months of pretty strong trends in this particular category? Does that extend into Q2 and into Q3 or that's still going to be a material headwind for you, you believe at this point in time?

Steven Miller

It will continue, particularly, ammunition. Firearms, I think were for the most part past the surge in demand, for firearms for the most part. The ammunition headwinds extend throughout much of the year, although certainly to a lesser degree than what we've experienced thus far in the first quarter.

Sean Naughton - Piper Jaffray

And then maybe just a clarifying question on the comp. You mentioned that you're running down low doubles now, down high singles, probably for the first quarter. And then you made a comment about the balance of the year, you expect it to run positive. Do you think that each quarter is going to be a positive comp or do you just think that the next nine months after that is going to be positive?

Steven Miller

We're not guiding on a quarter-by-quarter basis for the rest of the year, but we believe we're positioned to comp positively throughout the rest of the year and for indeed each quarter.

Sean Naughton - Piper Jaffray

And then just one last question. On the SG&A side, obviously a lot of changes with healthcare, and minimum wages, specifically in one of your larger markets, its set to go higher here in the middle of 2014. How does that impact the P&L or can you move things around enough to offset that through better scheduling and et cetera?

Barry Emerson

Sean, on the healthcare, I mean clearly there is a little bit noise and moving things around is a little challenging. I mean we do have headwind a little bit on the Affordable Care Act. I mean that is adding, as it is for everybody, slightly incremental cost to our medical plan for 2014.

We are doing our best as you to kind of figure out how to work around that and try and mitigate those increases, but clearly there is pressure there. Also on the minimum wage, as you know California implemented minimum wage here, a two-tier minimum wage increasing it from $8 to $10. The first dollar is effective here in July of 2014 and then the other increase from $9 to $10 in 2016.

For the overall magnitude of that impact on our SG&A, it represents less than 1% of our overall store salaries. I mean it's clearly some thing, there is other minimum wage that states are considering as well and we have to deal with these and always have, but in terms of the California with the number of stores we have in the state, I mean there is clearly a larger impact, but overall not material clearly, I mean less than 1% of our overall store salaries.

Operator

And we'll take our next question from Sean McGowan with Needham & Company.

Sean McGowan - Needham & Company

Couple of questions. Some of them are clarifying. Tax rate expectation 2014, Barry?

Barry Emerson

Sean, I'd use 39% even.

Sean McGowan - Needham & Company

When you call out the expenses related to the e-commerce platform, I assume that those expenses will endure or are you really calling out that part of the expenses they won't endure?

Barry Emerson

Sean, these are really more of the planning upfront cost, the development cost of the overall platform. So these are consulting cost primarily that we're incurring from folks helping us, get a design and develop the overall e-commerce platform. So I mean, where there is commingling, clearly we're hiring people as we move forward for our distribution, our advertising, our marketing, those kinds of things and those headcounts are starting to ramp up and so on.

But I think what you're seeing -- what you saw in 2013 and what you're seeing at the beginning of 2014, it is more of the planning costs. And then of course, as we get closer and closer you'll see some permanent costs that are adding net cost to the business before we start generating revenues in the second half.

Sean McGowan - Needham & Company

I'm still little unclear, so would you advise us to kind of take those costs out as a base case or not? We're going to see them transition from planning for permitting cost. So this really is the base level?

Barry Emerson

Well, first of all, the overall costs that we're talking about -- look, the costs in 2013 were obviously not going to continue. These are strictly the planning costs. The costs going forward in this year, we've estimated that overall net effect on our cost for 2014 is about $0.03 to $0.06 a share. I would say that just if you had to pick something, I would say half of that, is going to be continuing, and half of it's going to go away.

Sean McGowan - Needham & Company

A couple of others. When you talk about where you are so far in the first quarter with number of closings, can you help us out a little bit on what we should expect as the net number for first quarter? Is that going to be a net negative for the first quarter?

Steven Miller

Yes, that negative before for the first quarter.

Sean McGowan - Needham & Company

And would you expect to be counted back in a net positive position by midyear?

Steven Miller

I mean, somewhere during the course -- certainly over the course of the year, we anticipate being net 15 to the positive. We will again be backend loaded. So I'm not quite sure at what point we cross the barrier for the year.

Sean McGowan - Needham & Company

And then last question. If you could just sort of help us kind of size the impact on gross margin of what might be the diminishment of the headwind from ammo? I mean is this 25 basis point thing or 100 basis point thing going forward? In other words, how much of the margin improvement that we should be expecting could come from just that shift in mix?

Steven Miller

I'm not sure if we can quantify that, Sean. I mean the ammo is historically below average margins or the ammo sales that we were achieving last year because of the supply demand issue were higher than normal ammo. So in one sense, we're going to have less sales of a lower margin item. But it wasn't dramatically apart from our typical margin. So I'm not sure that there will be a meaningful margin shift to the business, as a result of fluctuations in sales of that category, as I just think off the top of my head.

Sean McGowan - Needham & Company

I thought you were pointing to the merchandise margin improvements seen in the fourth quarter as being, to some degree, helped by that mix shift?

Steven Miller

The fourth quarter was different. Again, the sales in the fourth quarter which was stronger that of firearms sales, which are significantly below our average rate of margin and the ammunition sales in the fourth quarter were at lower margins than we achieved throughout much of 2014 when were less promotional in the category, given the supply issue.

Sean McGowan - Needham & Company

So it had more of an impact in that quarter than we could to see going forward.

Operator

And we'll hear next from Mark Smith with Feltl and Company.

Mark Smith - Feltl and Company

Just another question on merchandise margins here as we look at Q1. Barry, it sounds like you said that you guys are able to carryover a fair amount of this inventory to next year. What could be maybe negative impact on merchandise margin from discounting and trying to clear out some of this winter gear during Q1?

Steven Miller

Without much winter, you can't clear it out real well. So we'll see to what extent we still have an opportunity to get some winter weather, some which is sort of forecast for this coming weekend in some parts of our markets. It could have a little dampening effect to margins just with efforts to try to sell the products. We're anticipating our margins to be somewhat down in Q1.

Barry Emerson

That's right, but Mark, we don't sell of a lot of fashion product, as you know, and the vast majority of this product is going to be stowed away and retained and brought back out next year. And just because of the dynamics over the last couple of years, the winter products that we have today is actually quite fresh. And so we feel good about that product and really feel that we can stow it away, like I say, and bring it out again and sell it very effectively again next year.

Mark Smith - Feltl and Company

And looking at the comps year-to-date, I think you said down low double-digits, can you give us what that was last year quarter-to-date?

Steven Miller

Well, we were running up double-digits a year ago.

Mark Smith - Feltl and Company

Have we passed the comp peak?

Steven Miller

Pardon me?

Mark Smith - Feltl and Company

Have we passed the comp peak?

Steven Miller

Absolutely. The absolute peak of our comps was over the course of really January, when we were up very solid double-digits, well in excess of 20% past year, in January. Again, to try and put perspective on what we were facing, our comps down now in the low double-digit range. As I mentioned, our winter and cold weather-related business is running down over 30%. That net product represented roughly 20% of our sales at this time a year ago.

So we have that 20% of our business running down over 30%. Our firearm and ammunition business is running down, as I mentioned, over 50% quarter-to-date. And normally speaking, our firearm and ammunition is meaningfully less than 10% of our business during the surge that we experienced last year. They were running in excess of 10% quarter-to-date.

So now we have that business -- well over 10% of our business running down over 50%, the winter business over 20% of our business or roughly 20% running down over 30%. So that creates a quite a headwind in our business and certainly affects customer traffic levels. As we mentioned, given the loss of traffic, we're pleased with the sales we're experiencing in a number of other categories.

And we think this is just a very unusual situation. The firearms and ammunition phenomenon, we obviously anticipated, the winter business was not something that we can anticipate. This I think is sort of epic as the weather is back East, I think it's equally epic in the sense of what's going on in our marketplace. That clearly has an impact on our business. We basically missed the opportunity to sell winter products during the key selling periods, the New Year's, the Martin Luther King Holiday, President's Day.

Much of our geographies were tremendously lacking in snow. In the limited geographies, where we saw favorable winter weather, and most principally, like in Colorado where our winter products sales have been solid, strong and comped up there, but unfortunately much of our geography is in the areas that are impacted by the drought-like conditions. And for this first quarter, it's not simply the lack of snowfall that's affecting us, it's the warm weather, which creates a double whammy to us, so to speak to our business.

Barry Emerson

And Mark, overall, I do just want to make sure it's clear that that firearms and ammunition, even though we had the clear peak here in growth in Q1, for all of 2013, our sales for that category were still meaningfully below 10% of our overall sales.

Steven Miller

Again, just given the how dramatic this impact is, I thought it would be helpful, hopefully to just to provide more color than we typically do, particularly mid-quarter on our sales.

Mark Smith - Feltl and Company

Can you give us and update just on two programs. First, on kind of your analytic software, where you stand, the potential upside left of that? And then also on your remodel program?

Barry Emerson

In terms of analytics, we remained very excited about the benefits that we're getting in analytics. And we continue to use the experience we're gaining to, we think make better decisions, and evolving our product mix. It did help us on really the one area that was quite exciting for us in this first quarter to date and that is the licensed product aspects of our business.

We were fortunate enough to have the Super Bowl winner in our geography in Seattle. And I think the business analytics enabled us to do really a terrific job of getting products out to our stores and being able to really fine tune and get a great understanding of the stores that have the best chance and what quantities of a product they try to direct to the stores, some of it's obviously is relatively obvious, but as you go further away from Seattle, having the analytics to help guide our decision making was very helpful.

Second part of the question was that the remodel program. And specifically, what was your question?

Mark Smith - Feltl and Company

Just kind of where you are? What you've got left, what maybe we could see remodeled this year? Any uptick in sales that you're seeing out of those?

Steven Miller

Last year was I think the first year that we specifically called out a heavier investment in remodeling our store base, and we certainly touched more stores last year than we typically have been touching on a typical year, probably roughly 50 stores last year. This year we're going to continue with that program and we expect a similar capital investment in our store upgrade.

We'll probably really touch more stores this year than last, and it's just varying degrees of investments in each store, where certainly looking at the 2013 remodels what we learnt from the type of investments that had the greatest impact to our business, and we plan to apply what we learnt last year to this year's efforts.

We're excited about leveraging our merchandising initiatives by really -- and what these remodels are all about reconfiguring store space and investing in fixtures that we think will better showcase our evolving product mix. The vendor community has been excited with our efforts and they're involved and partnering with us. So we're quite happy with what we're doing and certainly excited about continuing the program this year and beyond.

Operator

And we'll take our next question from Bill Dezellem from Titan Capital Management.

Bill Dezellem - Titan Capital Management

Couple of questions. First of all, relative to the minimum wage increase, when you look back historically, is there a noticeable impact on your sales, meaning the benefit from that minimum wage increase?

Steven Miller

We've never correlated a sales benefit of the minimum wage increase. I can't say. There is or there is not, but it's not something that I recall as measuring and speaking to. Too many other variables, it's never exactly an 11 grade science experiment, where you can isolate the one variable.

Bill Dezellem - Titan Capital Management

And another question that's not an 11 grade and science experiment either is the store upgrade program. Would you discuss some of the things that you are doing, because it sounds like these are not necessarily full remodel? But talk about some of the things that you have done, quite as the overall impact, I won't ask you to isolate anyone of the items that you're doing, but what's the overall impact intended to be?

Steven Miller

Well, I think certainly the overall impact is intended to be more sales. And I think again, the more obvious area, where we see bang for the buck is in our apparel sales, which over the course of last couple of years have been very strong, and I think benefiting from a stronger presentation of some of the branded apparel items that we're carrying.

And I mean the efforts, again, involve like reconfiguring space within our stores, getting more vendor supported fixtures and vendor-specific fixtures in our stores and just improving the presentation of the product. Additionally, we're focused on some exterior facelifts to our stores, just get a little more pop into some of our stores as our folks are driving by.

Bill Dezellem - Titan Capital Management

And would it be fair to say, that we're hearing you correctly here, that you do not have a cookie-cutter model that you're coming into every store where the upgrade is really dependent upon what that store appears to need the most?

Steven Miller

Bill, very fair to say, we don't operate, never have operated in cookie-cutter stores. Our stores come in all different shapes and to some degree sizes. And so we certainly cannot apply a cookie-cutter approach. Certainly, some common themes to what we're trying to accomplish, but never on the basis of a cookie cutter.

Bill Dezellem - Titan Capital Management

And given that it's not pretty cookie cutter, this may not be an applicable question, but what is the average expense you're finding that you're spending per store as you're going through the upgrade process?

Steven Miller

It's very variable. I mean, again, in some stores, it's a major remodel, which can include carpet, wall graphics, check stands, counters and more. And others are simply a case of freshening up some fixtures and very, very variable.

Barry Emerson

Bill, our overall CapEx is going to run somewhere in the $3.5 million to $4 million. Our base maintenance is usually around $3 million and last year we spent about $7 million. We'll probably spend a similar amount this year. And we remodeled --

Steven Miller

50 last year. So, yes, like 50.

Barry Emerson

Something in the $80,000 range.

Operator

And our last question for the day will come from Mike Baker with Deutsche Bank.

Mike Baker - Deutsche Bank

So two questions if I could. One is just on expenses, thinking about, anything you guys can do in a weaker sales environment to get more aggressive? I think you're pretty lean as it is, but anything you could do to sort of cutback on expenses? And as we modeled out, you get a couple of headwinds maybe with the ACA and the internet spending. Can you do anything to offset that or should we expect amortized SG&A per foot or per store? Should we expect that to be up, or I guess can you cut anywhere?

Steven Miller

Well, I mean we manage these things that's one of the things of course we do Mike is really manage expenses and we're going to continue to do that. But I would say that just from an overall kind of leverage standpoint, costs are creeping up a little bit. But we feel good that from a leverage standpoint, we should be able to leverage our expenses. It's something close to 2% to 3% comp for 2014. And at our low single-digit expectation for the balance of the year, I mean we'll be on that cost at low single-digit.

Mike Baker - Deutsche Bank

So it's not like you can go in one quarter and really slash things, and I don't think you'll do that anyway, so you sort of deleverage this quarter, but hope to normalize for the rest of the year?

Steven Miller

Yes, absolutely. We clearly, that is the case.

Mike Baker - Deutsche Bank

And then 2% to 3% for the underlying comp, I guess, bigger picture, and we could probably do the math, but if you could help us. 2013, I think you said that full year comp was 3.9%, so if you adjust out weather and if you adjust out the ammo, and the guns at the beginning of the year, and I guess the weather probably normalized, right? It was positive in the first quarter, hurt in the fourth quarter I think. What's the sort of true underlying comps for 2013? Is it in that 2% to 3% range, and is that sort of the expectation that you guys have at least going forward?

Steven Miller

Yes, I mean please keep in mind, the 2013, if you're look at on the full year included the fourth quarter, where the comp and the firearms and ammunition was a real drag to the business. So we think it's a lift that you maybe thinking.

Mike Baker - Deutsche Bank

You got it in the first quarter, though, of 2013.

Steven Miller

Right.

Mike Baker - Deutsche Bank

So hoping I am just trying to normalize. Adjust for the weather, adjust for the firearms, what's the real comp of this business?

Steven Miller

I think we would have a comp a low single-digit, probably a healthy low single-digit sort of number for 2013, if you factor out certainly the firearm and ammunition over the course of the year. The weather was favorable in the first quarter, it was unfavorable in the fourth quarter, we thought it was unfavorable in the third quarter from a summer perspective as we've reported. So I would say somewhere in the low single-digits.

Mike Baker - Deutsche Bank

And that's a range where you have some slight SG&A leverage and maybe some leverage on the cost of goods sold? And then is that the way you think about the long-term models?

Barry Emerson

And Mike, that is not dissimilar to where we were when we entered the recession as well. And we're down from a sales productivity standpoint of same-store sales per square foot versus where we were pre-recession, we're still down 12% or so. So we've got some ground to make up. But we were low single-digit pre-recession and what we've laid out in terms of expectations for the balance of the year is again low single-digits. And as I mentioned, it looks like our leverage point is in the 2% to 3% range.

Operator

And that conclude today's' question-and-answer session. Mr. Miller, at this time, I would like to turn the conference back to you for any additional or closing remarks.

Steven Miller

Thank you, operator. Well, thank you, we appreciate you being on our call and I look forward to speaking with you in our next call.

Operator

And again, this does conclude the Big 5 Sporting Goods fourth quarter 2013 earnings results conference call. We thank you again for your participation.

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Big 5 Sporting Goods Corporation (BGFV): Q4 EPS of $0.23 in line. Revenue of $248M (+1.8% Y/Y) misses by $5.26M.