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Hibbett (HIBB) Q4 Earnings and Sales In Line, Comps Dip 1%

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Hibbett Sports Inc. (HIBB - Free Report) posted fourth-quarter fiscal 2022 results, wherein the bottom and top lines were in line with the Zacks Consensus Estimate. Increased investments in customer acquisition and retention, new store growth, improved store productivity, better omni-channel capabilities, and enhanced back-office infrastructure aided the results.

Also, strong vendor relationships contributed to growth in the Hibbett and City Gear brands. However, supply-chain disruptions, inflation and rising COVID-19 cases hurt traffic and transaction volume in the second half of the fiscal fourth quarter.

The Zacks Rank #3 (Hold) company witnessed double-digit growth across all genders and categories from the pre-pandemic levels, with apparel being the key growth driver.

Shares of the company have lost 33.5% in the past three months compared with the industry's 31.4% decline.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Highlights

Hibbett's adjusted earnings of $1.25 per share declined 10.7% from $1.40 reported in the prior-year quarter. The figure was in line with the Zacks Consensus Estimate.

Net sales rose 1.7% year over year to $383 million for the quarter under review and met the Zacks Consensus Estimate. The metric advanced 22.5% from fourth-quarter fiscal 2020.

Comparable store sales (comps) fell 1%, while in-store comps declined 1.6% for the quarter under review. In the quarter, Hibbett witnessed strong holiday sales, following which traffic and transactions declined in the second half. The decline was mainly due to supply-chain issues, particularly in the footwear category, as well as inflation and rising Omicron cases.

E-commerce sales rose 1.8% for the quarter under review, while the metric grew 48.1% on a two-year basis. It accounted for 17.1% of total sales.

Consolidated comps advanced 20.7%, while in-store comps increased 15.9% on a two-year basis.

The gross profit decreased 3.7% year over year to $134.6 million for the reported quarter. The gross margin contracted 200 basis points (bps) to 35.1% due to the delay in launches, higher promotions, elevated freight costs and rising store occupancy costs stemming from drab comps. Adjusted operating income was $23.1 million, down 26% year over year, while the adjusted operating margin contracted 230 bps to 6% for the reported quarter.

Adjusted store operating, selling and administrative (SG&A) expenses, as a percentage of sales, contracted nearly 30 bps to 26.4%.

Other Financials

Hibbett ended the quarter with $17.1 million in cash and cash equivalents, and $100 million available under its credit facilities. Total stockholders' investment, as of Jan 29, was $291.5 million.

In the fiscal fourth quarter, Hibbett repurchased 417,741 shares worth $29.6 million. Management declared a quarterly dividend of 25 cents in the quarter under review.

Capital expenditure was $27.3 million in the reported quarter, stemming from store development activities and infrastructure projects. For fiscal 2023, capital expenditure is likely to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.

Store Update

In fourth-quarter fiscal 2022, the company opened 12 stores and shut two underperforming outlets. As of Jan 29, 2022, it had 1,096 stores across 35 states. HIBB is likely to open 30-40 stores in fiscal 2023.

Hibbett, Inc. Price, Consensus and EPS Surprise

Hibbett, Inc. Price, Consensus and EPS Surprise

Hibbett, Inc. price-consensus-eps-surprise-chart | Hibbett, Inc. Quote

Looking Ahead

Management issued the fiscal 2023 view, which includes the adverse impacts of the ongoing supply-chain disruption, the lack of stimulus and unemployment benefits, inflation, and higher wages. The company now anticipates sales to remain flat year over year, with a low-single-digit decline in overall and store comps.

Meanwhile, e-commerce comps are expected to grow in the mid-single digits. Comps are forecast to decline in low-teens in the first half of fiscal 2023, with comp growth in the high-single digits in the second half.

The gross margin is envisioned to contract 130-160 basis points year over year, with the metric likely to be 36.6-36.9% on a two-year basis. SG&A, as a percent of net sales, is estimated to rise 70-100 bps year over year due to wage inflation, higher fixed costs stemming from flat sales expectations, and back-office infrastructure investments in fiscal 2022. The metric is expected to be 23.3-23.6% on a two-year basis.

The operating margin is predicted to be in the low double-digit range and is likely to remain above the pre-pandemic level. Adjusted earnings are anticipated to be $9.75-$10.50 per share, whereas it reported $11.19 last year.

Stocks to Consider

Here are three better-ranked stocks to consider — Nordstrom (JWN - Free Report) , Boot Barn Holdings (BOOT - Free Report) and Tractor Supply Company (TSCO - Free Report) .

Boot Barn Holdings, the leading lifestyle retailer of western and work-related footwear, apparel and accessories, currently flaunts a Zacks Rank #1(Strong Buy). In the last reported quarter, the company posted adjusted earnings of $2.23 per share. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period. BOOT has an expected EPS growth rate of 20% for three-five years.

Nordstrom presently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 13.9%, on average.

The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period. JWN has an expected EPS growth rate of 6% for three-five years.

Tractor Supply currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 22%, on average.

The Zacks Consensus Estimate for Tractor Supply’s current financial-year sales and EPS suggests growth of 8.2% and 8%, respectively, from the year-ago period. TSCO has an expected EPS growth rate of 9.8% for three-five years.