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Hibbett (HIBB) Beats on Q1 Earnings, Lowers FY18 Forecast
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Hibbett Sports Inc. (HIBB - Free Report) came out with first-quarter fiscal 2018 results, wherein both top and bottom lines declined year over year. While earnings topped estimates, sales lagged the same thus reverting to its negative surprise trend after delivering a beat in the previous quarter.
In fact, the soft sales trend is partly a reason why this Zacks Rank #4 (Sell) stock has underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last one year. Evidently, Hibbett has slumped 29% in the last one year, as against the industry’s growth of 0.9%.
Q1 Highlights
Coming to the first-quarter highlights, Hibbett’s earnings per share of 97 cents plunged 20.5% year over year, while it came a penny ahead of the Zacks Consensus Estimate. The year-over-year decline in the bottom line could be attributable to weak sales and increased costs, which also weighed upon margins.
Net sales dropped 2.3% to $275.7 million, falling short of the Zacks Consensus Estimate of $277.3 million. Further, comparable-store sales (comps) fell 4.9%, hurt by soft traffic during the holiday season. Management stated that the double-digit fall in February comps could only be partly cushioned by better trends in March and April, where comps rose in low to mid-single-digit range.
Category-wise, 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 low-single digit rise.
Hibbett’s gross profit fell 6.4% to $98.2 million, while gross margin contracted 160 basis points (bps) to 35.6%. The decline in margin was due to unfavorable markdowns associated with excess inventory, along with logistics and store occupancy cost deleverage.
Further, operating income tumbled 23% to $34.2 million, whereas operating margin contracted 330 bps to 12.4%, mainly due to higher store operating, selling and administrative expenses (also as a percentage of sales). Higher expenses resulted from reduced comps and incremental costs associated with the company’s omnichannel initiatives.
Other Financial Aspects
Hibbett ended the quarter with nearly $75.9 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 Apr 29, was roughly $335.2 million.
The company’s capital expenditure was $7.8 million in the quarter. Further, Hibbett repurchased 748,134 million shares worth $22.3 million during the quarter, following which it had shares worth roughly $236.2 million remaining under its standing authorization, as of Apr 29.
Store Update
In first-quarter fiscal 2018, Hibbett introduced 13 stores, expanded four high-performing stores and shut down nine underperforming ones. As a result, it ended the quarter with 1,082 stores across 35 states. In the long run, Hibbett targets taking its store count to 1,500.
Hibbett also implemented its “store-to-home” capacity across all stores during the quarter, which was well-received. Encouraged by the response, management anticipates greater benefits from this strategy in future, as it is likely to enhance sales and consumers’ experience. Additionally, the company introduced a fresh loyalty program in the quarter, to improve customers’ loyalty towards its brand. Moreover, the company is pleased with the progress of its e-commerce endeavors, and is on track to launch its website in the third quarter.
Outlook
Following a soft quarter, management lowered its comps and gross margin outlook for fiscal 2018, alongside reiterating its recently downgraded earnings view.
In fiscal, the company now expects comps growth to range from negative 1% to increase 1%. This compares unfavorably with the old forecast of growth in low-single digit range. Further, management now anticipates gross margin to contract 55–75 bps. Earlier, management projected gross margin to remain flat year over year.
Finally, in fiscal 2018, which will have an additional week, the company envisions earnings to range from $2.35–$2.55 per share. Hibbett recently provided a business update on its first quarter, where it lowered its earnings outlook to the aforementioned range from $2.65–$2.85 per share expected earlier. The Zacks Consensus Estimate is currently pegged at $2.46.
Key Picks in Hibbett’s Space
Better-ranked stocks in the same industry include Big 5 Sporting Goods Corp. (BGFV - Free Report) , Build-A-Bear Workshop, Inc. (BBW - Free Report) and The Michaels Companies, Inc. .
Big 5 Sporting has a long-term earnings growth rate of 12%, and has a superb earnings surprise history. Further, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Build-A-Bear, with a long-term earnings growth rate of 22.5%, currently flaunts a Zacks Rank #1.
Michaels Companies which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16%.
Zacks' Hidden Trades
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Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy).
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Hibbett (HIBB) Beats on Q1 Earnings, Lowers FY18 Forecast
Hibbett Sports Inc. (HIBB - Free Report) came out with first-quarter fiscal 2018 results, wherein both top and bottom lines declined year over year. While earnings topped estimates, sales lagged the same thus reverting to its negative surprise trend after delivering a beat in the previous quarter.
In fact, the soft sales trend is partly a reason why this Zacks Rank #4 (Sell) stock has underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last one year. Evidently, Hibbett has slumped 29% in the last one year, as against the industry’s growth of 0.9%.
Q1 Highlights
Coming to the first-quarter highlights, Hibbett’s earnings per share of 97 cents plunged 20.5% year over year, while it came a penny ahead of the Zacks Consensus Estimate. The year-over-year decline in the bottom line could be attributable to weak sales and increased costs, which also weighed upon margins.
Net sales dropped 2.3% to $275.7 million, falling short of the Zacks Consensus Estimate of $277.3 million. Further, comparable-store sales (comps) fell 4.9%, hurt by soft traffic during the holiday season. Management stated that the double-digit fall in February comps could only be partly cushioned by better trends in March and April, where comps rose in low to mid-single-digit range.
Category-wise, 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 low-single digit rise.
Hibbett’s gross profit fell 6.4% to $98.2 million, while gross margin contracted 160 basis points (bps) to 35.6%. The decline in margin was due to unfavorable markdowns associated with excess inventory, along with logistics and store occupancy cost deleverage.
Further, operating income tumbled 23% to $34.2 million, whereas operating margin contracted 330 bps to 12.4%, mainly due to higher store operating, selling and administrative expenses (also as a percentage of sales). Higher expenses resulted from reduced comps and incremental costs associated with the company’s omnichannel initiatives.
Other Financial Aspects
Hibbett ended the quarter with nearly $75.9 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 Apr 29, was roughly $335.2 million.
The company’s capital expenditure was $7.8 million in the quarter. Further, Hibbett repurchased 748,134 million shares worth $22.3 million during the quarter, following which it had shares worth roughly $236.2 million remaining under its standing authorization, as of Apr 29.
Store Update
In first-quarter fiscal 2018, Hibbett introduced 13 stores, expanded four high-performing stores and shut down nine underperforming ones. As a result, it ended the quarter with 1,082 stores across 35 states. In the long run, Hibbett targets taking its store count to 1,500.
Hibbett also implemented its “store-to-home” capacity across all stores during the quarter, which was well-received. Encouraged by the response, management anticipates greater benefits from this strategy in future, as it is likely to enhance sales and consumers’ experience. Additionally, the company introduced a fresh loyalty program in the quarter, to improve customers’ loyalty towards its brand. Moreover, the company is pleased with the progress of its e-commerce endeavors, and is on track to launch its website in the third quarter.
Outlook
Following a soft quarter, management lowered its comps and gross margin outlook for fiscal 2018, alongside reiterating its recently downgraded earnings view.
In fiscal, the company now expects comps growth to range from negative 1% to increase 1%. This compares unfavorably with the old forecast of growth in low-single digit range. Further, management now anticipates gross margin to contract 55–75 bps. Earlier, management projected gross margin to remain flat year over year.
Finally, in fiscal 2018, which will have an additional week, the company envisions earnings to range from $2.35–$2.55 per share. Hibbett recently provided a business update on its first quarter, where it lowered its earnings outlook to the aforementioned range from $2.65–$2.85 per share expected earlier. The Zacks Consensus Estimate is currently pegged at $2.46.
Key Picks in Hibbett’s Space
Better-ranked stocks in the same industry include Big 5 Sporting Goods Corp. (BGFV - Free Report) , Build-A-Bear Workshop, Inc. (BBW - Free Report) and The Michaels Companies, Inc. .
Big 5 Sporting has a long-term earnings growth rate of 12%, and has a superb earnings surprise history. Further, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Build-A-Bear, with a long-term earnings growth rate of 22.5%, currently flaunts a Zacks Rank #1.
Michaels Companies which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy).
You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>