Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods Fourth Quarter 2020 Earnings Results Conference Call. Today's call is being recorded. With us today are Mr. Steve Miller, President and Chief Executive Officer; Mr. Barry Emerson, Chief Financial Officer of Big 5 Sporting Goods.

At this time for opening remarks and introductions, I'd like to turn the conference over to Mr. Miller. Please go ahead sir..

Thank you, operator. Good afternoon, everyone. Welcome to our 2020 fourth quarter conference call. Today we will review our financial results for the fourth quarter of fiscal 2020 as well as provide an outlook for the first quarter of fiscal 2021. I will now turn the call over to Barry to read our Safe Harbor statement..

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 reports on Form 10-K, our quarterly reports on Form 10-Q, and our 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..

Thank you, Barry. 2020 was a remarkable year for Big 5 Sporting Goods. Our strong fourth quarter results highlight an exceptional 2020 in which we achieved record earnings, driven by topline sales growth, merchandise margin expansion, and improved cost structure.

This year's performance enabled us to meaningfully strengthen our balance sheet, which is reflected in increases in our dividend over the past year, including the most recent we announced today.

While 2020 presented a unique set of challenges, we successfully navigated the evolving environment by focusing on executing our model, which has built on offering a broad assortment of sporting goods products with a convenient shopping experience.

Customers certainly recognize the value of our offerings and the convenience and familiarity of our stores as they look for ways to stay active and healthy in the face of the pandemic.

We are pleased with all we accomplished in 2020 and we are even more excited by the prospects than many other recreational and product trends initially driven by the pandemic will prove to be sustainable even as the disruption of the pandemic subsides.

These trends are working in our favor now and we believe that many aspects will continue into the future. Demand for home fitness products and other outdoor recreational activities remain strong.

People have made significant investments in equipment for home gyms and have newly engaged perhaps reengaged in activities such as golf, tennis, hiking, camping fishing amongst others.

We believe that even once the world begins to normalize, many customers will continue to pursue these activities and shop with us as they look to make further investments in their equipment..

Thanks Steve. Let me take a moment to discuss the year-over-year fiscal calendar differences that Steve noted at the onset. Our fourth quarter of fiscal 2020 included 14 weeks, while the fourth quarter of fiscal 2019 included 13 weeks. Similarly, for the full year, our fiscal 2020 included 53 weeks and our fiscal 2019 included 52 weeks.

However, same-store sales comparisons for the fourth quarter are reported on a comparable 14-week basis and for the full year are reported on a comparable 53-week basis. Gross profit for the fiscal 2020 fourth quarter increased 33% to $102.4 million compared to $77.0 million in the fourth quarter the prior year.

Our gross profit margin was 35.2% in the fiscal 2020 fourth quarter compared to 31.6% in the fourth quarter of last year. The increase in gross profit margin largely reflects the higher merchandise margins that Steve mentioned, which increased 143 basis points versus the prior year period -- 243 basis points versus the prior year period..

Thank you. At this time, we'll be conducting a question-and-answer session. And our first question is from Mark Smith with Lake Street Capital Partners..

Hi guys. I want to ask first just a little bit about the comps as we look at this quarter versus a year ago. Comps are obviously very strong right now through the first two months.

Can you walk us through last year in the March quarter, kind of how the sequential comps moved month-to-month last year?.

You're saying through the through the quarter?.

Yes through the quarter last year. Just I assume that March. You get pretty easy comps..

Yes, compares. Well, we had a difficult starts last year because we essentially add the winter weather in January and February. So, we were comping down--.

Minus 7.4% in January, minus 13% even in February.

In February. Then our business start -- rebounded as weather sort of normalized we finally saw, I think the first snowflake last year in early March, our team business was responding positively.

Then we entered into a period really probably the second week of March that I would call the pre-pandemic phase, when there was a surge of buying not that different than people hoarding a toilet paper in the grocery stores when people were buying wildly, I guess in anticipation of the pandemic and potential store closures or whatever they saw coming.

And then around the sort of the back half of March -- around March 20th, roughly half of our stores were closed overnight in California and then over the subsequent -- remainder of the quarter, a number of those stores were able to reopen as we were designated essential, while other stores closed and so we wound up the quarter with approximately 200 of our stores are slightly less than -- half of our stores closed at the end of the quarter.

So, there was a lot of moving parts the last year and certainly there's lots of moving parts to this year as we think about what's in front of us over the balance of the quarter. Bottom-line, we were I think, for the March period last year, we were down about 10%..

Yes, we were down 11.5 last year..

11.5..

Okay. Perfect. Thank you. And then you gave us some guidance on new openings in 2021. Any guidance you can give us on kind of the timing of these? I think you said, potentially five stores that will open..

Yes. No -- Q1 we think could be evenly distributed through the remainder of the quarter, it could be well, one or two in the second and similarly, in the third and the fourth, at this time would be our best goal..

Okay.

And then Steve, you talked about it a little bit in your commentary, but just walk us through your comfort today on inventory, it sounds like you've cleared through pretty well on the winter inventory, if you can just kind of confirm that and how much of that was really apparel and soft goods driven? And then kind of how you feel about inventory and shipments that you're getting into stores today for in some of these high demand categories?.

Sure, sure. In terms of the winter, we've had an extraordinary sell-through of our of our winter product. And our winter product, I mean, apparel is the largest component of winter, but there's a footwear component, and as well as a hard goods component and the sell-through has been significant in all those categories.

So, we're coming out, I think as clean as a -- from a winter as we perhaps ever have and, of course that bodes well for next season, when we can bring all new products into play. In terms of the other categories, we're still chasing inventory in some of the some of the hot categories.

There's certainly I think it's been widely reported significant supply chain disruptions. So, we're -- obviously, we're getting lots of inventory, we couldn't be generating the positive sales without inventory.

But it's been a rather uneven flow in a number of categories, issues from whether its factory issues with raw materials shortages or vessel issues or certainly significant issues, getting products through the port. We're seeing a number of deliveries that are later than ideal.

So, we're working hard with our vendors and managing through this and certainly optimistic that conditions will improve over the coming months..

Okay. And then the last one for me.

Just curious, your views as we look at potential for another round of stimulus checks coming out, how much you feel like maybe you benefited and got any bump in prior stimulus packages that were given out checks to consumers?.

Honestly, Mark, it's hard to quantify. I mean, it certainly can't hurt, but as strong as our sales have been, and so many strong categories, certainly we have positive weather in the start as of first quarter. It's very difficult to parse out how much of that is related to stimulus, but yet, obviously it can't hurt. It's got to be helping us somewhat..

Okay, perfect. Thank you guys..

Thank you, Mark..

Thanks Mark..

Thank you. Ladies and gentlemen, we've reached the end of the question-and-answer session. I would like to turn the call back over to Steve Miller for closing remarks..

All right. Thank you, operator and thank you all for joining us on today's call. We appreciate your interest in Big 5 Sporting Goods and look forward to speaking with you again after the conclusion of our first quarter. Have a great afternoon..