We retain our long-term 'Outperform' recommendation on the
sports gear retailer,
Hibbett Sports Inc.
), primarily due to the company's better-than-expected results,
continued sales momentum along with improved cost management and
margins, as well as Hibbett's raised expectations for fiscal 2013.
Moreover, Hibbett's sharp focus on mid-sized and smaller markets
and strategic product mix provide an edge over its rivals,
Dick's Sporting Goods Inc.
Big 5 Sporting Goods Corporation
Backed by double-digit sales growth along with operational
efficiencies, Hibbett's earnings of 98 cents per share for
first-quarter fiscal 2013 surged 29% from the prior-year quarter,
beating the Zacks Consensus Estimate of 92 cents.
Robust results in the first quarter drove Hibbett to raise its
earnings forecast for fiscal 2013 in the range in $2.50 to $2.65
per share compared with its earlier guidance range of $2.35 to
$2.55 per share. The company also boosted its comparable store
sales guidance projecting a mid-single digit growth in fiscal 2013
against low-to-mid single-digit growth expected earlier.
Hibbett's core strategy is to expand its foothold in small towns
and counties with population sizes of 25,000 to 75,000, positioning
it well to benefit from its strategic mix of branded as well as
localized merchandise that suit the community's interest. Further,
the company is in the midst of a brisk store expansion program and
plans to augment its network by approximately 55 to 60 new stores
during fiscal year ending on January 31, 2013.
In a move to support its store expansion program over the long
term, Hibbett recently announced plans to double the size of its
distribution facility to 360,000 square feet by fall 2014 by
shifting its Birmingham-based wholesaling and logistics facility to
Alabaster, Alabama. The company expects this large distribution
facility to enable it to grow its store count to over 2,000 stores.
In addition, Hibbett has a healthy balance sheet with no debt. The
company ended first-quarter 2013 with cash and cash equivalents of
$95.8 million coupled with full availability under its $80 million
unsecured credit facilities. This offers Hibbett the financial
flexibility to drive future top-line expansion.
Currently, Hibbett has a Zacks #2 Rank, indicating a short-term
positive (Buy) outlook on the stock and in sync with our long-term
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