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Hibbett (HIBB) Q4 Earnings & Sales Lag Estimates on Inflation
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Hibbett, Inc. (HIBB - Free Report) posted drab fourth-quarter fiscal 2023 results, wherein earnings and sales missed the Zacks Consensus Estimate. However, both metrics improved year over year.
Results gained from robust demand for footwear brands as consumers continued to pay premium prices for the latest product launches. This, along with the solid performance in the e-commerce business, investments in infrastructure and latest technologies, and the latest merchandises, bodes well. It remains on track with its store expansion efforts across both existing and new markets, as well as building its Hibbett and City Gear brands.
Going into fiscal 2024, management expects inflation, elevated interest rates and a higher promotional retail environment. It also envisions more cautious consumer discretionary spending to dent margins. However, high footwear demand is anticipated to drive traffic and sales.
Image Source: Zacks Investment Research
Shares of the company have gained 1.2% in the past three months compared with the industry's 6.2% growth.
Quarterly Highlights
Hibbett's adjusted earnings of $2.91 per share rose more than two-fold from $1.25 reported in the prior-year quarter. However, the figure lagged the Zacks Consensus Estimate of $2.96 and our estimate of $2.97.
Net sales advanced 19.6% year over year to $458.3 million for the quarter under review. However, the figure missed the Zacks Consensus Estimate of $485 million and our estimate of $482.5 million.
Comparable store sales (comps) grew 15.5%, while in-store comps rose 14.3% for the quarter under review. Also, comps rose 39.6% and in-store comps grew 32.6% on a three-year basis.
E-commerce sales rose 21.4% year over year and 79.8% on a three-year basis. It accounted for 17.4% of the total sales, up from 17.1% in the prior-year quarter.
The gross profit increased 19.8% year over year to $161.2 million for the reported quarter. Meanwhile, the gross margin expanded 10 basis points (bps) to 35.2%, driven by lower store occupancy, reduced freight costs and efficiency gains in its logistics operations, somewhat offset by lower average product margin and higher promotional activity.
Operating income was $50.7 million, up 119.4% year over year, while the operating margin expanded 510 bps to 11.1% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, contracted nearly 480 bps to 21.6%, driven by higher sales.
Other Financials
As of Jan 28, Hibbett had $16 million in cash and cash equivalents, and total stockholders' investment of $376.2 million. The company also replaced its former $125-million unsecured credit facility with a new $160-million unsecured credit facility, effective Feb 28.
In the fiscal fourth quarter, Hibbett repurchased 5,357 shares worth $0.4 million. Management paid out a quarterly dividend of 25 cents.
Capital expenditure was $15.4 million in the reported quarter, stemming from store initiatives, including store openings, relocations, expansions, remodels and technology upgrades. For fiscal 2024, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
Store Update
In fourth-quarter fiscal 2023, the company opened nine stores and closed two. As of Jan 28, 2023, it had 1,133 stores across 36 states. HIBB is likely to open 40-50 stores in fiscal 2024.
This Zacks Rank #4 (Sell) company expects to continue witnessing business and economic challenges, including inflation, an increased promotional environment, wage pressures, higher interest rates, intermittent supply-chain disruptions, a more cautious consumer and ongoing geopolitical conflicts, for fiscal 2024.
Hibbett expects net sales to increase in the mid-single-digit range for fiscal 2024, including the impacts of the 53rd week. The company anticipates 26% sales growth in the first quarter, 22% in the second quarter, 24% in the third quarter and 28% in the fourth quarter.
The company anticipates comparable sales growth of low-single digits and in-store comps growth of flat to low-single digits. Meanwhile, e-commerce is anticipated to grow in the high-single-digit range. For the first half of fiscal 2024, total comparable sales are predicted to grow in the low to mid-single digits while the metric is likely to rise in the low-single digits in the second half of fiscal 2024.
The gross margin is envisioned to contract 20-30 basis points (bps) year over year, with the metric likely to be 34.9-35% due to higher promotions, solid e-commerce sales, potential supply-chain disruptions and inflation on certain store occupancy costs. However, the metric is expected to remain above the pre-pandemic levels.
SG&A, as a percent of net sales, is estimated to rise 40-50 bps year over year due to wage inflation, store growth, higher costs related to improvements in e-commerce, increased incentive compensation, and elevated data and transaction processing fees. SG&A, as a percentage of sales, is predicted to be 23.2-23.3%, which is likely to be below the pre-pandemic levels. The metric is envisioned to be lower in the first and fourth quarters, and higher in the second and third quarters. Also, interest expenses, as a percentage of net sales, are projected to be 25-30 bps for fiscal 2024.
The operating margin is predicted to be 9-9.3% and is likely to be above the pre-pandemic level. Earnings are anticipated to be $9.50-$10.00 per share, whereas the company posted $9.62 last year. Also, the effective tax rate is expected to be 24%.
The company also expects low sales volume for the 53rd week. Hence, the 53rd week will have no material impact on operating profit or net income in fiscal 2024.
Stocks to Consider
Here are some better-ranked stocks you may want to consider — Urban Outfitters (URBN - Free Report) , Arhaus (ARHS - Free Report) and American Eagle Outfitters (AEO - Free Report) .
Urban Outfitters, a leading lifestyle product and services company, currently carries a Zacks Rank #2 (Buy). Its expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year revenues suggests growth of 5% from the year-ago reported figure.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 at present. Its expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figures. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2. AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year sales and EPS suggests growth of 1.3% and 58.9%, respectively, from the year-ago reported figures.
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Hibbett (HIBB) Q4 Earnings & Sales Lag Estimates on Inflation
Hibbett, Inc. (HIBB - Free Report) posted drab fourth-quarter fiscal 2023 results, wherein earnings and sales missed the Zacks Consensus Estimate. However, both metrics improved year over year.
Results gained from robust demand for footwear brands as consumers continued to pay premium prices for the latest product launches. This, along with the solid performance in the e-commerce business, investments in infrastructure and latest technologies, and the latest merchandises, bodes well. It remains on track with its store expansion efforts across both existing and new markets, as well as building its Hibbett and City Gear brands.
Going into fiscal 2024, management expects inflation, elevated interest rates and a higher promotional retail environment. It also envisions more cautious consumer discretionary spending to dent margins. However, high footwear demand is anticipated to drive traffic and sales.
Image Source: Zacks Investment Research
Shares of the company have gained 1.2% in the past three months compared with the industry's 6.2% growth.
Quarterly Highlights
Hibbett's adjusted earnings of $2.91 per share rose more than two-fold from $1.25 reported in the prior-year quarter. However, the figure lagged the Zacks Consensus Estimate of $2.96 and our estimate of $2.97.
Net sales advanced 19.6% year over year to $458.3 million for the quarter under review. However, the figure missed the Zacks Consensus Estimate of $485 million and our estimate of $482.5 million.
Comparable store sales (comps) grew 15.5%, while in-store comps rose 14.3% for the quarter under review. Also, comps rose 39.6% and in-store comps grew 32.6% on a three-year basis.
E-commerce sales rose 21.4% year over year and 79.8% on a three-year basis. It accounted for 17.4% of the total sales, up from 17.1% in the prior-year quarter.
The gross profit increased 19.8% year over year to $161.2 million for the reported quarter. Meanwhile, the gross margin expanded 10 basis points (bps) to 35.2%, driven by lower store occupancy, reduced freight costs and efficiency gains in its logistics operations, somewhat offset by lower average product margin and higher promotional activity.
Operating income was $50.7 million, up 119.4% year over year, while the operating margin expanded 510 bps to 11.1% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, contracted nearly 480 bps to 21.6%, driven by higher sales.
Other Financials
As of Jan 28, Hibbett had $16 million in cash and cash equivalents, and total stockholders' investment of $376.2 million. The company also replaced its former $125-million unsecured credit facility with a new $160-million unsecured credit facility, effective Feb 28.
In the fiscal fourth quarter, Hibbett repurchased 5,357 shares worth $0.4 million. Management paid out a quarterly dividend of 25 cents.
Capital expenditure was $15.4 million in the reported quarter, stemming from store initiatives, including store openings, relocations, expansions, remodels and technology upgrades. For fiscal 2024, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
Store Update
In fourth-quarter fiscal 2023, the company opened nine stores and closed two. As of Jan 28, 2023, it had 1,133 stores across 36 states. HIBB is likely to open 40-50 stores in fiscal 2024.
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 expects to continue witnessing business and economic challenges, including inflation, an increased promotional environment, wage pressures, higher interest rates, intermittent supply-chain disruptions, a more cautious consumer and ongoing geopolitical conflicts, for fiscal 2024.
Hibbett expects net sales to increase in the mid-single-digit range for fiscal 2024, including the impacts of the 53rd week. The company anticipates 26% sales growth in the first quarter, 22% in the second quarter, 24% in the third quarter and 28% in the fourth quarter.
The company anticipates comparable sales growth of low-single digits and in-store comps growth of flat to low-single digits. Meanwhile, e-commerce is anticipated to grow in the high-single-digit range. For the first half of fiscal 2024, total comparable sales are predicted to grow in the low to mid-single digits while the metric is likely to rise in the low-single digits in the second half of fiscal 2024.
The gross margin is envisioned to contract 20-30 basis points (bps) year over year, with the metric likely to be 34.9-35% due to higher promotions, solid e-commerce sales, potential supply-chain disruptions and inflation on certain store occupancy costs. However, the metric is expected to remain above the pre-pandemic levels.
SG&A, as a percent of net sales, is estimated to rise 40-50 bps year over year due to wage inflation, store growth, higher costs related to improvements in e-commerce, increased incentive compensation, and elevated data and transaction processing fees. SG&A, as a percentage of sales, is predicted to be 23.2-23.3%, which is likely to be below the pre-pandemic levels. The metric is envisioned to be lower in the first and fourth quarters, and higher in the second and third quarters. Also, interest expenses, as a percentage of net sales, are projected to be 25-30 bps for fiscal 2024.
The operating margin is predicted to be 9-9.3% and is likely to be above the pre-pandemic level. Earnings are anticipated to be $9.50-$10.00 per share, whereas the company posted $9.62 last year. Also, the effective tax rate is expected to be 24%.
The company also expects low sales volume for the 53rd week. Hence, the 53rd week will have no material impact on operating profit or net income in fiscal 2024.
Stocks to Consider
Here are some better-ranked stocks you may want to consider — Urban Outfitters (URBN - Free Report) , Arhaus (ARHS - Free Report) and American Eagle Outfitters (AEO - Free Report) .
Urban Outfitters, a leading lifestyle product and services company, currently carries a Zacks Rank #2 (Buy). Its expected EPS growth rate for three to five years is 18%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year revenues suggests growth of 5% from the year-ago reported figure.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 at present. Its expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figures. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2. AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year sales and EPS suggests growth of 1.3% and 58.9%, respectively, from the year-ago reported figures.