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Hibbett Sports Inc. (HIBB - Free Report) posted first-quarter fiscal 2023 results, wherein the bottom line missed the Zacks Consensus Estimate, while sales beat the same. Both metrics also declined year over year. Results were hurt by adverse changes in customers' spending habits, stemming from lower discretionary income due to the absence of stimulus payments. However, recovery in the supply chain and better inventory remained upsides.
The company witnessed double-digit growth across men’s, women’s and kids from the pre-pandemic levels, with fleece, licensed products, underwear and socks being the key growth drivers. Going ahead, management remains optimistic for further growth on the back of robust omni-channel capabilities, solid in-store customer service, compelling merchandise assortment and a strong customer base.
Shares of HIBB have gained 17% in the past three months against the industry's 21.5% decline.
Image Source: Zacks Investment Research
Quarterly Highlights
Hibbett's adjusted earnings of $2.89 per share declined 42% from $5.00 reported in the prior-year quarter. The figure lagged the Zacks Consensus Estimate of $3.29.
Net sales slumped 16.3% year over year to $424 million for the quarter under review but surpassed the Zacks Consensus Estimate of $406 million. The metric advanced 23.5% from first-quarter fiscal 2020.
Comparable store sales (comps) fell 18.9%, while in-store comps declined 22% for the quarter under review. However, comps rose 22.9% and in-store comps grew 13.6% on a three-year basis.
E-commerce sales rose 4.1% for the quarter under review, while the metric surged 116.9% on a two-year basis. It accounted for 14.6% of total sales, up from 11.7% of total sales in the prior-year quarter.
The gross profit decreased 25.3% year over year to $210 million for the reported quarter. The gross margin contracted 440 basis points (bps) to 37% due to elevated store occupancy, rising average product costs, and higher freight and transportation costs. Operating income was $50.7 million, down 54% year over year, while the operating margin contracted 970 bps to 12% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, expanded nearly 440 bps to 22.5% due to lower sales and rising costs stemming from higher costs associated with advertising, professional services and increased supplies to support a larger store base and higher e-commerce volume.
Other Financials
Hibbett ended the quarter with $23.2 million in cash and cash equivalents, and $125 million available under its unsecured credit facilities. Total stockholders' investment, as of Apr 30, was $306.1 million.
In the fiscal first quarter, Hibbett repurchased 491,218 shares worth $22.4 million. Management declared a quarterly dividend of 25 cents in the quarter under review.
Capital expenditure was $16 million in the reported quarter, stemming from store initiatives, including store openings, relocations, expansions, remodels and technology upgrades. For fiscal 2023, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
Store Update
In first-quarter fiscal 2023, the company opened nine stores and shut down one underperforming outlet. As of Apr 30, 2022, it had 1,105 stores across 35 states. HIBB is likely to open 30-40 stores in fiscal 2023.
This Zacks Rank #4 (Sell) company retained the fiscal 2023 view, which includes the impacts of the ongoing supply-chain disruptions, rising COVID-19 cases, the absence of stimulus and unemployment benefits, rising inflation, wage pressures and geopolitical challenges. The company 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 the 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 reported level. Adjusted earnings are anticipated to be $9.75-$10.50 per share, whereas it posted $11.19 last year.
Dillard’s operates as a departmental store chain featuring fashion apparel and home furnishings. It presently sports a Zacks Rank #1 (Strong Buy). DDS has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard’s current financial-year sales suggests growth of 6.1%, while the same for EPS indicates a decline of 33.9% from the year-ago period’s reported numbers. DDS has an expected EPS growth rate of 12.6% for three-five years.
Boot Barn, which provides western and work-related footwear, apparel and accessories, currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 25.2%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago period’s reported figures. BOOT has an expected EPS growth rate of 20% for three-five years.
Kroger, which provides an array of goods ranging from household essentials, groceries and electronics to toys and apparel for men, women and kids, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 3.2% and 4.1%, respectively, from the year-ago period’s reported figures. KR has an expected EPS growth rate of 9.9% for three-five years.
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Hibbett (HIBB) Q1 Earnings Miss, Sales Surpass Estimates
Hibbett Sports Inc. (HIBB - Free Report) posted first-quarter fiscal 2023 results, wherein the bottom line missed the Zacks Consensus Estimate, while sales beat the same. Both metrics also declined year over year. Results were hurt by adverse changes in customers' spending habits, stemming from lower discretionary income due to the absence of stimulus payments. However, recovery in the supply chain and better inventory remained upsides.
The company witnessed double-digit growth across men’s, women’s and kids from the pre-pandemic levels, with fleece, licensed products, underwear and socks being the key growth drivers. Going ahead, management remains optimistic for further growth on the back of robust omni-channel capabilities, solid in-store customer service, compelling merchandise assortment and a strong customer base.
Shares of HIBB have gained 17% in the past three months against the industry's 21.5% decline.
Image Source: Zacks Investment Research
Quarterly Highlights
Hibbett's adjusted earnings of $2.89 per share declined 42% from $5.00 reported in the prior-year quarter. The figure lagged the Zacks Consensus Estimate of $3.29.
Net sales slumped 16.3% year over year to $424 million for the quarter under review but surpassed the Zacks Consensus Estimate of $406 million. The metric advanced 23.5% from first-quarter fiscal 2020.
Comparable store sales (comps) fell 18.9%, while in-store comps declined 22% for the quarter under review. However, comps rose 22.9% and in-store comps grew 13.6% on a three-year basis.
E-commerce sales rose 4.1% for the quarter under review, while the metric surged 116.9% on a two-year basis. It accounted for 14.6% of total sales, up from 11.7% of total sales in the prior-year quarter.
The gross profit decreased 25.3% year over year to $210 million for the reported quarter. The gross margin contracted 440 basis points (bps) to 37% due to elevated store occupancy, rising average product costs, and higher freight and transportation costs. Operating income was $50.7 million, down 54% year over year, while the operating margin contracted 970 bps to 12% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, expanded nearly 440 bps to 22.5% due to lower sales and rising costs stemming from higher costs associated with advertising, professional services and increased supplies to support a larger store base and higher e-commerce volume.
Other Financials
Hibbett ended the quarter with $23.2 million in cash and cash equivalents, and $125 million available under its unsecured credit facilities. Total stockholders' investment, as of Apr 30, was $306.1 million.
In the fiscal first quarter, Hibbett repurchased 491,218 shares worth $22.4 million. Management declared a quarterly dividend of 25 cents in the quarter under review.
Capital expenditure was $16 million in the reported quarter, stemming from store initiatives, including store openings, relocations, expansions, remodels and technology upgrades. For fiscal 2023, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
Store Update
In first-quarter fiscal 2023, the company opened nine stores and shut down one underperforming outlet. As of Apr 30, 2022, it had 1,105 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-eps-surprise-chart | Hibbett, Inc. Quote
Looking Ahead
This Zacks Rank #4 (Sell) company retained the fiscal 2023 view, which includes the impacts of the ongoing supply-chain disruptions, rising COVID-19 cases, the absence of stimulus and unemployment benefits, rising inflation, wage pressures and geopolitical challenges. The company 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 the 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 reported level. Adjusted earnings are anticipated to be $9.75-$10.50 per share, whereas it posted $11.19 last year.
Stocks to Consider
Here are three better-ranked stocks to consider — Boot Barn Holdings (BOOT - Free Report) , Dillard’s (DDS - Free Report) and Kroger (KR - Free Report) .
Dillard’s operates as a departmental store chain featuring fashion apparel and home furnishings. It presently sports a Zacks Rank #1 (Strong Buy). DDS has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard’s current financial-year sales suggests growth of 6.1%, while the same for EPS indicates a decline of 33.9% from the year-ago period’s reported numbers. DDS has an expected EPS growth rate of 12.6% for three-five years.
Boot Barn, which provides western and work-related footwear, apparel and accessories, currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 25.2%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago period’s reported figures. BOOT has an expected EPS growth rate of 20% for three-five years.
Kroger, which provides an array of goods ranging from household essentials, groceries and electronics to toys and apparel for men, women and kids, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 3.2% and 4.1%, respectively, from the year-ago period’s reported figures. KR has an expected EPS growth rate of 9.9% for three-five years.