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Can Hibbett (HIBB) Sustain its Momentum Post Q4 Earnings?
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Owing to its unimpressive past performance, Hibbett Sports Inc. (HIBB - Free Report) has underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last six months. Evidently, this Zacks Rank #5 (Strong Sell) stock has slumped 28.4% in the last six months, as against the industry’s growth of 2.1%.
However, the company’s recently reported fourth-quarter fiscal 2017 results provided some cushion to the stock, as both the top and bottom line came in line with estimates. While earnings recovered from a miss delivered in the last quarter, sales crushed its seven-quarter long negative surprise trend. Notably, shares of the company have gained 5.7% since the earnings announcement. Is this gain short lived or will the momentum gathered continue in the near term?
Coming to the fourth-quarter highlights, Hibbett’s earnings per share of 54 cents plunged 28.9% year over year, while coming in line with the Zacks Consensus Estimate. The year-over-year decline in the bottom line could be partly attributable to increased costs, which also weighed upon margins.
Net sales inched up 0.5% to $246.9 million, almost meeting our estimates. However, comparable-store sales (comps) dipped 2.2%, hurt by soft traffic during the holiday season. Further, comps were marred by softness noted across the apparel and equipment businesses, somewhat compensated by continued strength in Hibbett’s footwear business – that witnessed a mid-single digit rise in comps.
Hibbett’s gross profit fell 4.6% to $81.5 million, while gross margin contracted 180 basis points (bps) to 33%. The decline in margin was due to unfavorable markdowns and product mix, along with logistics and store occupancy cost deleverage.
Further, the operating income tumbled 30.7% to $19.1 million, whereas operating margin contracted 350 bps to 7.7%, mainly due to higher store operating, selling and administrative expenses (also as a percentage of sales). The escalated expenses stemmed from reduced comps and incremental costs associated with the company’s omnichannel initiatives.
Other Financial Aspects
Hibbett ended the year with nearly $39 million in cash and cash equivalents, no outstanding bank debt and total availability under its credit facilities worth $80 million. Total shareholders’ investment, as of Jan 28, was roughly $334.0 million.
The company’s capital expenditure was $10.2 million in the fourth quarter, while the same for fiscal 2017 amounted to $29.8 million. For fiscal 2018, the company expects capital expenditure in a range of $25–$35 million.
Hibbett repurchased 342,200 million shares worth $11.4 million during the fourth quarter, following which it had shares worth roughly $257.9 million remaining under its $300 million standing authorization, as of Jan 28. In fiscal 2018, management targets buybacks worth $45–$55 million.
Store Update
In fiscal 2017, Hibbett introduced 65 stores, expanded 8 high-performing stores and shut down 31 underperforming ones. As a result, it ended the year with 1,078 stores across 35 states.
For fiscal 2018, the company plans to open 50–60 new stores, while closing 25–35 stores.
Hibbett Sports, Inc. Price, Consensus and EPS Surprise
While management wasn’t very pleased with its fourth-quarter performance, it remains focused on its strategic growth efforts, which are expected to boost the top line from fiscal 2018 onward. In this regard, the company’s store-to-home capacity is slated to be rolled out in first-quarter fiscal 2018. Further, Hibbett is on track to launch its e-commerce site in the second half of the fiscal. These endeavors are likely to enrich customers' experience, thus placing Hibbett well for long-term growth.
That said, the company provided its fiscal 2018 outlook, where it expects comps to grow in a low-single digit range. Further, management anticipates gross margin to remain flat with fiscal 2017.
Finally, for fiscal 2018, which will have an additional week, the company expects earnings to range from $2.65–$2.85 per share. The Zacks Consensus Estimate is currently pegged at $2.75.
Further, management’s guidance includes an adverse impact of about 3–4 cents per share from Hibbett’s omnichannel investments, which is expected to lead to SG&A expenses deleverage in fiscal 2018. However, this is likely to be partly countered by increased revenues and other cost savings.
Zacks Rank
Some better-ranked retail stocks include The Children's Place, Inc. (PLCE - Free Report) , Big 5 Sporting Goods Corp. (BGFV - Free Report) and Kate Spade & Company . While Children's Place sports a Zacks Rank #1 (Strong Buy), Big 5 Sporting and Kate Spade carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters with long-term earnings per share growth rate of 10.3%.
Big 5 Sporting has an average positive earnings surprise of 1.6% in the trailing four quarters with long-term earnings per share growth rate of 12%.
Kate Spade has an average positive earnings surprise of 14.6% in the trailing four quarters with long-term earnings per share growth rate of 28.3%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Can Hibbett (HIBB) Sustain its Momentum Post Q4 Earnings?
Owing to its unimpressive past performance, Hibbett Sports Inc. (HIBB - Free Report) has underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last six months. Evidently, this Zacks Rank #5 (Strong Sell) stock has slumped 28.4% in the last six months, as against the industry’s growth of 2.1%.
However, the company’s recently reported fourth-quarter fiscal 2017 results provided some cushion to the stock, as both the top and bottom line came in line with estimates. While earnings recovered from a miss delivered in the last quarter, sales crushed its seven-quarter long negative surprise trend. Notably, shares of the company have gained 5.7% since the earnings announcement. Is this gain short lived or will the momentum gathered continue in the near term?
Coming to the fourth-quarter highlights, Hibbett’s earnings per share of 54 cents plunged 28.9% year over year, while coming in line with the Zacks Consensus Estimate. The year-over-year decline in the bottom line could be partly attributable to increased costs, which also weighed upon margins.
Net sales inched up 0.5% to $246.9 million, almost meeting our estimates. However, comparable-store sales (comps) dipped 2.2%, hurt by soft traffic during the holiday season. Further, comps were marred by softness noted across the apparel and equipment businesses, somewhat compensated by continued strength in Hibbett’s footwear business – that witnessed a mid-single digit rise in comps.
Hibbett’s gross profit fell 4.6% to $81.5 million, while gross margin contracted 180 basis points (bps) to 33%. The decline in margin was due to unfavorable markdowns and product mix, along with logistics and store occupancy cost deleverage.
Further, the operating income tumbled 30.7% to $19.1 million, whereas operating margin contracted 350 bps to 7.7%, mainly due to higher store operating, selling and administrative expenses (also as a percentage of sales). The escalated expenses stemmed from reduced comps and incremental costs associated with the company’s omnichannel initiatives.
Other Financial Aspects
Hibbett ended the year with nearly $39 million in cash and cash equivalents, no outstanding bank debt and total availability under its credit facilities worth $80 million. Total shareholders’ investment, as of Jan 28, was roughly $334.0 million.
The company’s capital expenditure was $10.2 million in the fourth quarter, while the same for fiscal 2017 amounted to $29.8 million. For fiscal 2018, the company expects capital expenditure in a range of $25–$35 million.
Hibbett repurchased 342,200 million shares worth $11.4 million during the fourth quarter, following which it had shares worth roughly $257.9 million remaining under its $300 million standing authorization, as of Jan 28. In fiscal 2018, management targets buybacks worth $45–$55 million.
Store Update
In fiscal 2017, Hibbett introduced 65 stores, expanded 8 high-performing stores and shut down 31 underperforming ones. As a result, it ended the year with 1,078 stores across 35 states.
For fiscal 2018, the company plans to open 50–60 new stores, while closing 25–35 stores.
Hibbett Sports, Inc. Price, Consensus and EPS Surprise
Hibbett Sports, Inc. Price, Consensus and EPS Surprise | Hibbett Sports, Inc. Quote
Outlook
While management wasn’t very pleased with its fourth-quarter performance, it remains focused on its strategic growth efforts, which are expected to boost the top line from fiscal 2018 onward. In this regard, the company’s store-to-home capacity is slated to be rolled out in first-quarter fiscal 2018. Further, Hibbett is on track to launch its e-commerce site in the second half of the fiscal. These endeavors are likely to enrich customers' experience, thus placing Hibbett well for long-term growth.
That said, the company provided its fiscal 2018 outlook, where it expects comps to grow in a low-single digit range. Further, management anticipates gross margin to remain flat with fiscal 2017.
Finally, for fiscal 2018, which will have an additional week, the company expects earnings to range from $2.65–$2.85 per share. The Zacks Consensus Estimate is currently pegged at $2.75.
Further, management’s guidance includes an adverse impact of about 3–4 cents per share from Hibbett’s omnichannel investments, which is expected to lead to SG&A expenses deleverage in fiscal 2018. However, this is likely to be partly countered by increased revenues and other cost savings.
Zacks Rank
Some better-ranked retail stocks include The Children's Place, Inc. (PLCE - Free Report) , Big 5 Sporting Goods Corp. (BGFV - Free Report) and Kate Spade & Company . While Children's Place sports a Zacks Rank #1 (Strong Buy), Big 5 Sporting and Kate Spade carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters with long-term earnings per share growth rate of 10.3%.
Big 5 Sporting has an average positive earnings surprise of 1.6% in the trailing four quarters with long-term earnings per share growth rate of 12%.
Kate Spade has an average positive earnings surprise of 14.6% in the trailing four quarters with long-term earnings per share growth rate of 28.3%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>