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Hibbett (HIBB) Up 5.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Hibbett Sports (HIBB - Free Report) . Shares have added about 5.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hibbett due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Hibbett's Q1 Earnings Miss Estimates, Sales Down Y/Y

Hibbett posted first-quarter fiscal 2021 results, wherein the bottom line lagged the Zacks Consensus Estimate. Further, both bottom and top lines declined year over year. Although both store and online comps were gaining traction, the onset of the ongoing COVID-19 pandemic hurt sales to a large extent. Moreover, it withdrew its fiscal 2021 view citing the unprecedented impacts of COVID-19. However, management highlighted that second-quarter sales remain positive.

Q1 Highlights

Hibbett’s adjusted earnings of 31 cents per share missed the Zacks Consensus Estimate of 43 cents and plunged 80.7% from $1.61 reported in the year-ago quarter.

Net sales declined 21.4% year over year to $269.8 million in the quarter under review. The downside can be attributed to majority of stores being closed or open for limited hours in a bid to fulfill online orders and curbside pick-up. E-commerce sales accounted for 22.3% of total sales in the fiscal first quarter. Moreover, digital sales surged 110.5%. However, the company started reopening Hibbett Sports and City Gear stores toward the end of April.

comps fell 19.4% in the quarter due to weak performance in the brick-and-mortar stores. Prior to the coronavirus outbreak, it witnessed sturdy growth in men’s apparel, with the women and kid’s categories making a comeback. Moreover, the footwear unit was in good shape, particularly women’s footwear.

However, sales were largely affected as the majority of stores were closed due to the emergence of the coronavirus. Nonetheless, comps got back on track toward the end of the quarter, despite few stores being opened. The company also noted that this positive momentum has continued in May as a few more stores have started to reopen.

Gross profit slumped 37.5% to $74.1 million in the reported quarter. However, adjusted gross margin contracted 540 basis points (bps) to 29.4% on account of store closures.

Operating loss was $22.1 million against operating income of $37.3 million in the prior-year quarter. Adjusted SG&A expenses expanded 280 bps to 23.9%, as a percentage of sales.

Other Financial Aspects

Hibbett ended the quarter with $106.2 million in cash and cash equivalents and $25 million available under its credit facilities. Total stockholders’ investment, as of May 2, was $304.6 million.

Further, Hibbett repurchased 458,913 shares for $10.2 million in the fiscal first quarter. As of May 2, it had $143.3 million remaining under its authorization for share repurchase through Jan 29, 2022. Capital expenditures came in at $4.1 million during the reported quarter.

Store Update

In first-quarter fiscal 2021, the company introduced three stores and rebranded two Hibbett stores to City Gear. However, it shut eight underperforming outlets. Hence, it ended the quarter with 1,078 stores across 35 states.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Hibbett has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Hibbett has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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