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We retain our long-term ‘Outperform’ recommendation on the sports gear retailer, Hibbett Sports Inc. (HIBB - Analyst Report), primarily due to the company’s better-than-expected results, continued sales momentum along with improved cost management and margins, as well as Hibbett’s raised expectations for fiscal 2013. Moreover, Hibbett’s sharp focus on mid-sized and smaller markets and strategic product mix provide an edge over its rivals, Dick's Sporting Goods Inc. (DKS - Analyst Report) and Big 5 Sporting Goods Corporation (BGFV - Analyst Report).

Backed by double-digit sales growth along with operational efficiencies, Hibbett’s earnings of 98 cents per share for first-quarter fiscal 2013 surged 29% from the prior-year quarter, beating the Zacks Consensus Estimate of 92 cents.

Robust results in the first quarter drove Hibbett to raise its earnings forecast for fiscal 2013 in the range in $2.50 to $2.65 per share compared with its earlier guidance range of $2.35 to $2.55 per share. The company also boosted its comparable store sales guidance projecting a mid-single digit growth in fiscal 2013 against low-to-mid single-digit growth expected earlier.

Hibbett's core strategy is to expand its foothold in small towns and counties with population sizes of 25,000 to 75,000, positioning it well to benefit from its strategic mix of branded as well as localized merchandise that suit the community’s interest. Further, the company is in the midst of a brisk store expansion program and plans to augment its network by approximately 55 to 60 new stores during fiscal year ending on January 31, 2013.

In a move to support its store expansion program over the long term, Hibbett recently announced plans to double the size of its distribution facility to 360,000 square feet by fall 2014 by shifting its Birmingham-based wholesaling and logistics facility to Alabaster, Alabama. The company expects this large distribution facility to enable it to grow its store count to over 2,000 stores.

In addition, Hibbett has a healthy balance sheet with no debt. The company ended first-quarter 2013 with cash and cash equivalents of $95.8 million coupled with full availability under its $80 million unsecured credit facilities. This offers Hibbett the financial flexibility to drive future top-line expansion.

Currently, Hibbett has a Zacks #2 Rank, indicating a short-term positive (Buy) outlook on the stock and in sync with our long-term recommendation.

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