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Hibbett Sports Inc. (HIBB - Free Report) reported top and bottom-line beat in third-quarter fiscal 2018. This marked the company’s third straight quarter of bottom-line beat. Moreover, the company reversed its trend of having missed sales estimates in nine of the past 10 quarters. Following the robust quarter, the company substantially raised guidance for fiscal 2018.
This led the shares of this Zacks Rank #3 (Hold) stock to rally 15.2% on Nov 17. Further, Hibbett has gained 57.6% in the last three months, outperforming the industry’s 0.2% upside.
Q3 Highlights
Hibbett reported earnings of 37 cents per share, surpassing the Zacks Consensus Estimate of 21 cents. However, results compared unfavorably with earnings of 66 cents per share reported in the prior-year quarter. The year-over-year decline in the bottom line can be attributable to lower margins and higher expenses.
Hibbett Sports, Inc. Price, Consensus and EPS Surprise
Net sales inched up 0.4% to $237.8 million, topping the Zacks Consensus Estimate of $218 million. Results were driven by improvement in the company’s footwear and apparel businesses, alongside strong e-commerce sales, which now accounts for nearly 5% of total sales. E-commerce sales mainly gained from the company’s early marketing plan and strong conversion from online traffic. Additionally, its ongoing marketing initiatives boosted sales by improving traffic and loyalty members, as well as site navigation strength and product assortments.
However, comparable-store sales (comps) fell 1.3% driven by declines in August and September comps, offset by growth in October.
Hibbett’s gross profit fell 9.2% to $76.1 million, while gross margin contracted 337 basis points (bps) to 32%. The decline in margin was due to increased promotions and markdowns related to clearing of excess and aged inventory, along with higher freight costs incurred for store-to-home and e-commerce shipments.
Operating income of $11.8 million declined 49.1% from $23.2 million in the year-ago quarter. This can be attributed to lower gross margin as well as higher SG&A expenses due to increased marketing expenses related to the launch of e-commerce business. However, this was partly offset by lower logistics and store occupancy expenses.
Other Financial Aspects
Hibbett ended the quarter with nearly $58.3 million in cash and cash equivalents, no outstanding bank debt and full availability under its $80 million revolving credit facility. Total shareholders’ investment, as of Oct 28, was roughly $318.4 million.
The company’s capital expenditure was $4.5 million in the quarter toward omni-channel initiatives, persistent investments in new and existing stores as well as other projects to improve business. Further, Hibbett repurchased 1.2 million shares worth $15.9 million during the quarter. As of Oct 28, the company had roughly $213 million remaining under its standing share repurchase authorization.
Store Update
In third-quarter fiscal 2018, Hibbett introduced 13 new stores, expanded one high-performing store and shut down 11 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.
Outlook
Following the robust third quarter, management raised fiscal 2018 earnings guidance and adjusted comps view. The company now anticipates comps decline in the mid-single-digit range, compared with the prior guidance of negative mid to high-single digits. Further, the company now envisions earnings for fiscal 2018 in the range of $1.42-$1.50 per share, up significantly from the previous forecast of $1.25-$1.35.
Big Lots has a long-term growth rate of 13.5% and posted positive earnings surprise of nearly 81.1% in the trailing four quarters.
Dollar General delivered a positive earnings surprise of 1.8% in the trailing four quarters and has a long-term growth rate of 11.3%.
Dollar Tree delivered a positive earnings surprise of nearly 5% in the trailing four quarters and has a long-term growth rate of 13.2%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Hibbett (HIBB) Rallies on Q3 Earnings & Sales Beat, Ups View
Hibbett Sports Inc. (HIBB - Free Report) reported top and bottom-line beat in third-quarter fiscal 2018. This marked the company’s third straight quarter of bottom-line beat. Moreover, the company reversed its trend of having missed sales estimates in nine of the past 10 quarters. Following the robust quarter, the company substantially raised guidance for fiscal 2018.
This led the shares of this Zacks Rank #3 (Hold) stock to rally 15.2% on Nov 17. Further, Hibbett has gained 57.6% in the last three months, outperforming the industry’s 0.2% upside.
Q3 Highlights
Hibbett reported earnings of 37 cents per share, surpassing the Zacks Consensus Estimate of 21 cents. However, results compared unfavorably with earnings of 66 cents per share reported in the prior-year quarter. The year-over-year decline in the bottom line can be attributable to lower margins and higher expenses.
Hibbett Sports, Inc. Price, Consensus and EPS Surprise
Hibbett Sports, Inc. Price, Consensus and EPS Surprise | Hibbett Sports, Inc. Quote
Net sales inched up 0.4% to $237.8 million, topping the Zacks Consensus Estimate of $218 million. Results were driven by improvement in the company’s footwear and apparel businesses, alongside strong e-commerce sales, which now accounts for nearly 5% of total sales. E-commerce sales mainly gained from the company’s early marketing plan and strong conversion from online traffic. Additionally, its ongoing marketing initiatives boosted sales by improving traffic and loyalty members, as well as site navigation strength and product assortments.
However, comparable-store sales (comps) fell 1.3% driven by declines in August and September comps, offset by growth in October.
Hibbett’s gross profit fell 9.2% to $76.1 million, while gross margin contracted 337 basis points (bps) to 32%. The decline in margin was due to increased promotions and markdowns related to clearing of excess and aged inventory, along with higher freight costs incurred for store-to-home and e-commerce shipments.
Operating income of $11.8 million declined 49.1% from $23.2 million in the year-ago quarter. This can be attributed to lower gross margin as well as higher SG&A expenses due to increased marketing expenses related to the launch of e-commerce business. However, this was partly offset by lower logistics and store occupancy expenses.
Other Financial Aspects
Hibbett ended the quarter with nearly $58.3 million in cash and cash equivalents, no outstanding bank debt and full availability under its $80 million revolving credit facility. Total shareholders’ investment, as of Oct 28, was roughly $318.4 million.
The company’s capital expenditure was $4.5 million in the quarter toward omni-channel initiatives, persistent investments in new and existing stores as well as other projects to improve business. Further, Hibbett repurchased 1.2 million shares worth $15.9 million during the quarter. As of Oct 28, the company had roughly $213 million remaining under its standing share repurchase authorization.
Store Update
In third-quarter fiscal 2018, Hibbett introduced 13 new stores, expanded one high-performing store and shut down 11 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.
Outlook
Following the robust third quarter, management raised fiscal 2018 earnings guidance and adjusted comps view. The company now anticipates comps decline in the mid-single-digit range, compared with the prior guidance of negative mid to high-single digits. Further, the company now envisions earnings for fiscal 2018 in the range of $1.42-$1.50 per share, up significantly from the previous forecast of $1.25-$1.35.
Key Picks
Better-ranked stocks in the retail space include Big Lots Inc. (BIG - Free Report) , Dollar General Corp. (DG - Free Report) and Dollar Tree Inc. (DLTR - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Big Lots has a long-term growth rate of 13.5% and posted positive earnings surprise of nearly 81.1% in the trailing four quarters.
Dollar General delivered a positive earnings surprise of 1.8% in the trailing four quarters and has a long-term growth rate of 11.3%.
Dollar Tree delivered a positive earnings surprise of nearly 5% in the trailing four quarters and has a long-term growth rate of 13.2%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>