20 Nov Hibbett Sports Lifts Outlook After Q3 Easily Tops Estimates
Hibbett Sports reported third-quarter earnings fell 47.9 percent but both earnings and sales easily topped Wall Street targets. Hibbett officials credited positive comps in footwear, significant improvement in branded apparel and strength online.
Third Quarter Results
Net sales for the 13-week period ended October 28, 2017, increased 0.4 percent to $237.8 million compared with $237 million for the 13-week period ended October 29, 2016. Comparable store sales decreased 1.3 percent.
Gross margin was 32 percent of net sales for the 13-week period ended October 28, 2017, compared with 35.4 percent for the 13-week period ended October 29, 2016. The decrease was mainly due to promotions and markdowns taken to improve our inventory position. As a result, inventory turns improved significantly compared with the same period last year and inventory levels declined 9.2 percent.
Store operating, selling and administrative expenses were 24.4 percent of net sales for the 13-week period ended October 28, 2017, compared with 23.6 percent of net sales for the 13-week period ended October 29, 2016. The increase was mainly due to marketing and operational expenses associated with launching the e-commerce business.
Net income for the 13-week period ended October 28, 2017, was $7.6 million compared with net income of $14.6 million for the 13-week period ended October 29, 2016. Earnings per diluted share was 37 cents for the 13-week period ended October 28, 2017, compared with earnings per diluted share of 66 cents for the 13-week period ended October 29, 2016.
Results came well above Wall Street’s consensus target of 22 cents on sales of $219 million although the outlook was sharply lowered after the company reported second-quarter results.
Jeff Rosenthal, president and chief executive officer, stated, “We were very pleased with the results for the quarter. Sales in equipment and accessories remained soft, but were offset by positive comparable store sales in footwear and significant improvement in branded apparel. Our e-commerce sales exceeded even our high expectations, as we experienced good response from early marketing initiatives and strong conversion from online traffic. We are confident that our initiatives surrounding e-commerce, improved assortments and ongoing store rationalization are working, and we are well positioned now to compete effectively in a difficult retail environment.”
For the quarter, Hibbett opened 13 new stores, expanded one high-performing store and closed 11 underperforming stores, bringing the store base to 1,082 in 35 states as of October 28, 2017.
Fiscal Year To Date Results
Net sales for the 39-week period ended October 28, 2017, decreased 3.4 percent to $701.5 million compared with $726 million for the 39-week period ended October 29, 2016. Comparable store sales decreased 5.7 percent.
Gross margin was 32.6 percent of net sales for the 39-week period ended October 28, 2017, compared with 35.4 percent for the 39-week period ended October 29, 2016.
Store operating, selling and administrative expenses were 24.2 percent of net sales for the 39-week period ended October 28, 2017, compared with 22.8 percent of net sales for the 39-week period ended October 29, 2016.
Net income for the 39-week period ended October 28, 2017, was $25.3 million compared with $49 million for the 39-week period ended October 29, 2016. Earnings per diluted share was $1.21 for the 39-week period ended October 28, 2017, compared with $2.18 for the 39-week period ended October 29, 2016.
Liquidity And Stock Repurchases
Hibbett ended the third quarter of Fiscal 2018 with $58.3 million of available cash and cash equivalents on the consolidated balance sheet, no bank debt outstanding and full availability under its $80 million unsecured credit facilities.
During the third quarter, the company repurchased 1.2 million shares of common stock for a total expenditure of $15.9 million. Approximately $213.4 million of the total authorization remained for future stock repurchases as of October 28, 2017.
Fiscal 2018 Outlook
The company is updating its guidance for Fiscal 2018 with the following changes:
- Earnings per diluted share in the range of $1.42 to $1.50, which compares with previous guidance of $1.25 to $1.35.
- Comparable store sales in the negative mid-single-digit range, which compares with previous guidance in the negative mid to high single-digit range.
On August 18, Hibbett had significantly reduced its guidance du to soft sales and high inventories in the marketplace. Prior to August 18, its guidance for the year called for earnings in the range of $2.35 to $2.55 and same-store sales in the range of negative 1 percent to positive 1 percent.