You don't have to live in a big city to buy cool running
In small and midsize towns across some 26 states,Hibbett
) fills a void that evenWal-Mart (
) can't satisfy: the latest color-splashed, lightweight running
shoes fromNike (
), Adidas and other sneaker brands.
And let's not forget high-tech performance apparel fromUnder
"We go to small, isolated markets," said Hibbett Chief
Executive Jeffry Rosenthal in a phone interview.
Typical Hibbett markets include Selma, Ala.; Pine Bluff, Ark.;
Jesup, Ga.; Hazard, Ky.; and Paris, Texas.
Birmingham, Ala.-based Hibbett operates 835 stores, mostly in
the Southeast and Texas.
They're small stores, averaging only 5,000 square feet.
They're typically set in a strip center in the shadow of Wal-Mart
to feed off the giant retailer's traffic.
"We like to be near them. In small towns, they are the centers
of commerce," Rosenthal said. "We don't carry the same
Hibbett has been enjoying a free ride on a rising industry
tide as well: the surge in athletic footwear and apparel the last
Innovations such as lightweight running shoes and high-tech
performance fabrics have sparked consumer demand. And bright
colors have lately been a factor in running shoes' popularity as
Hibbett has posted 10 straight quarters of same-store sales
gains, the most recent rising more than 11%.
"The key to Hibbett's strategy is being the only game in town
outside the Internet," said analyst Jonathan Grassi of Longbow
Except for a small slice of affiliate revenue, Hibbett doesn't
generate e-commerce revenue itself. But Rosenthal says the firm
is laying the groundwork with new infrastructure, including a new
and bigger distribution center, which will also support new-store
"In the next 18 to 24 months, we'll have our e-commerce
strategy," he promised.
Meanwhile, Hibbett had done fine without one. Profit has grown
in double digits for 11 straight quarters and is expected to keep
up the pace the next two years. First-quarter earnings grew 29%
over the earlier year to 98 cents a share.
Analysts polled by Thomson Reuters see earnings rising 23% in
the current fiscal year ending in January, to $2.65 a share.
Next year's profit is seen going up another 18% as the company
benefits from new information-system programs that take effect.
They include inventory management, pricing optimization and labor
Operating income has already doubled since 2009, to $93.5
million in fiscal 2012.
Sterne Agee analyst Sam Poser cites Hibbett as "the best
growth story in our coverage," and a company that "does not rest
on its laurels."
Companies in his coverage include athletic footwear and
apparel outfits such asDick's Sporting Goods (
),Foot Locker (FL),Finish Line (FINL) andCabela's (CAB), among
Compared to Hibbett, Dick's is a giant with stores 10 times
"We do not view Dick's as a threat as they rarely enter small
markets, and if they do, Hibbett tends to get back on track
within two years," Poser wrote in a client report.
Grassi says that 25% of Hibbett stores have a Dick's store
within five miles.
Hibbett customers are far from affluent. But they don't' seem
to balk at relatively high prices, either.
"Most of our customers are paycheck to paycheck," Rosenthal
said. "But moms still spend money on their kids when it comes to
sports and back to school no matter what the economy is
Hibbett's culture of customer service attracts "soccer moms"
buying for their kids, Grassi says.
Consumers haven't shown much resistance to price increases in
footwear and apparel, Grassi says. That's because products come
with some form of innovation.
In addition to Nike's line of featherweight running shoes,
Under Armour's new $100 Spine running shoe is expected to spark
sales as they roll out in Hibbett stores through the summer and
Rosenthal told at least one analyst that initial Spine sales
It's not all about running shoes. Last year, Hibbett stores
were overrun when the new Air Jordan Retro II men's basketball
shoe came out, priced at around $180.
Hibbett also caters to hometown tastes, stocking all manner of
products geared to local team sports, including college
"We look at customers' needs and wants and adjust assortments
to a particular demographic," said Rosenthal.
Hibbett could soon get a boost in its already strong business
selling NFL apparel in the wake of Nike's new licensing deal with
professional football. Nike recently took over from Adidas'
"Nike has a freshness that should drive demand," Grassi
A bump in sales from NFL merchandise should start showing in
August and September as the NFL season kicks into gear, with the
bulk of the spike in coming months, he says.
About 80% of Hibbett's sales come from footwear and apparel
with the rest from sporting equipment and accessories.
Sales of accessories, including socks, were up in the "mid
teens" in the last quarter, Grassi says. "High-priced socks from
Under Armour and Nike" were hot sellers, he said.
Hibbett's store base hasn't yet peaked, Rosenthal says.
"We still have a lot of growth ahead of us," he said, adding
that the concept can accommodate up to 1,300 stores across the
But growth has slowed since 2009 as commercial real estate
construction lost steam, putting a crimp in potential new store
locations. But Rosenthal says square footage should grow 5% this
year. That's a slight increase from the 3% to 4% growth the last
"New-store construction is still tight, but it seems to be
getting a little bit better," he said. "As soon as (construction)
opens we'll grow faster."