Our long term 'Outperform' recommendation on the sports gear
retailer
Hibbett Sports Inc.
(
HIBB
) is backed by its sales momentum and strong operational
efficiencies. This also helped the company post solid
second-quarter fiscal 2013 earnings results.
Moreover, Hibbett's sharp focus on mid-sized and smaller markets
and strategic product mix furnish it with an edge over its rivals,
Dick's Sporting Goods Inc.
(
DKS
) and
Big 5 Sporting Goods Corporation
(
BGFV
).
Driven by robust sales performance in every category along with
operational efficiencies, Hibbett's earnings for second-quarter
fiscal 2013 surged approximately 42.9% to 30 cents per share. The
quarterly earnings also beat the Zacks Consensus Estimate of 27
cents per share.
Buoyed by better-than-expected results, the company raised its
expectations for fiscal 2013. It now forecasts earnings in the
range of $2.57 - $2.67 per share on the back of mid-single digit
growth in comparable sales, up from $2.50 - $2.65 forecasted
earlier.
Moreover, Hibbett continues with its vigorous store expansion
program and plans to augment its network by approximately 55 to 60
new stores during fiscal year ending on January 31, 2013. Hibbett
has already identified over 400 locations for future stores and has
ramped up its distribution center to support over 1,200 stores from
1,000 stores earlier. This provides a strong upside potential to
the company.
Taking a long-term view, Hibbett has a strategic plan to double the
size of its distribution facility to 360,000 square feet area by
fall 2014 by shifting its Birmingham-based wholesaling and
logistics facility to Alabaster, Alabama. We believe this plan
fully supports Hibbett's ongoing store expansion program. The
company expects this large distribution facility to enable it to
bolster its store count to over 2,000 stores. Further, the new
facility will aid the company's continued growth in mid-sized and
smaller markets, which is the company's primary focus.
In addition, Hibbett has a healthy balance sheet with no debt. The
company ended second-quarter 2013 with cash and cash equivalents of
$71.5 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
recommendation.
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