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Business Strategies Aid Hibbett (HIBB): Apt to Stay Invested?

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Hibbett Inc. (HIBB - Free Report) has stayed ahead of the curve, thanks to the smooth execution of its business strategies and their effectiveness in a challenging retail environment. This investor-favorite stock is poised for growth, driven by the progress in developing e-commerce and omni-channel capabilities, and the expansion of the loyalty program.

HIBB has been focused on increasing its customer base by connecting with more customers through e-commerce and selective store expansion. Further, it is leveraging its omnichannel capabilities, such as home delivery, buy online and pick-up in-store, reserve online and pick-up in-store, buy online ship to store facility, same-day delivery, and mobile app services, to fulfill online orders and serve customers.

The company is witnessing gains from the loyalty program, backed by continued engagement from the existing members and average ticket growth on increased average unit retail. It has been making improvements to the loyalty program, evident from its partnership with Nike’s loyalty program. This further distinguishes HIBB’s retail experience, as customers can sign up to be connected in-store or online members.

Shares of this Zacks Rank #3 (Hold) company have rallied 132.7% in the past year compared with the industry’s 45.8% growth. The consumer-centric retail company also compared favorably with the Retail-Wholesale sector and the S&P 500’s improvements of 21.3% and 25.1%, respectively.

The Zacks Consensus Estimate for HIBB’s current financial-year sales and earnings indicates growth of 0.4% and 0.2%, respectively, from the year-ago reported numbers.


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What Places Hibbett Well?

Hibbett is on track with store expansion and inventory-management initiatives. The company is gaining from a small market strategy as it continues strengthening its presence across the United States. Hibbett targets expansion in markets that offer increased potential for growth.

HIBB has a target of growing to more than 1,500 stores in underserved markets. Management believes the store expansion strategy to be a major growth driver. The company has been investing in new stores, remodels, technology advancements and infrastructure to increase its footprint.

Additionally, HIBB has been benefiting from the smooth execution of its strategies, to expand market share. The company’s robust customer service, best-in-class omnichannel shopping experience, sturdy vendor relationships, in-store placement and underserved markets are other drivers. Its footwear category has been a key driver, buoyed by strength in basketball, lifestyle and running silhouettes.

Hibbett is gaining from a regular schedule of product launches, which had a positive response from the company’s loyal customers. Further, its partnership with Nike was a significant development, involving the connection between Hibbett and Nike’s loyalty programs to offer exclusive experiences.

Apart from this, HIBB stays focused on improving expense management and disciplined inventory controls.

Bottlenecks to Growth

Hibbett’s performance is affected by inflation, higher interest rates and weak consumer confidence. Elevated costs and higher promotional activity across footwear and apparel categories have been hurting margins.

Persistent inflation has continued to affect consumer sentiment and spending patterns, leading to increased operating costs, including higher wages, and prices for various goods and services. In first-quarter fiscal 2025, store operating, selling and administrative expenses, as a percentage of sales, increased 260 bps to 23.7% due to the inflationary impacts on wages and benefits, goods and services, and lower year-over-year sales volume.

3 Picks You Can’t Miss

We have highlighted three better-ranked stocks in the broader sector, namely Abercrombie & Fitch Co. (ANF - Free Report) , The Gap, Inc. (GPS - Free Report) and Canada Goose (GOOS - Free Report) .

Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter earnings surprise of 210.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings suggests growth of 10.4% and 47.3%, respectively, from the year-ago reported figures.

Gap, a leading apparel retailer, presently flaunts a Zacks Rank #1. GPS has a trailing four-quarter earnings surprise of 202.7%, on average.

The Zacks Consensus Estimate for GPS’s current financial-year sales and earnings suggests growth of 0.2% and 21.7%, respectively, from the year-ago reported figures.

Canada Goose operates as a global outerwear brand. It currently sports a Zacks Rank #1. GOOS has a trailing four-quarter earnings surprise of 70.9%, on average.

The Zacks Consensus Estimate for GOOS’s current fiscal-year earnings suggests growth of 13.7% from the year-ago reported number.

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