Sporting goods retailer,
Hibbett Sports Inc.
) reported strong fourth-quarter fiscal 2013 results, driven by a
robust sales performance, an improvement in comparable store
sales as well as operational efficiencies. Hibbett's
fourth-quarter earnings of 73 cents per share beat the Zacks
Consensus Estimate by a penny and climbed 23.7% from the year-ago
quarter. The fourth quarter of fiscal 2013 includes an extra week
compared with the fourth quarter of 2012.
Highlights of the Quarter
Bolstered by strong business during the holiday season, net
sales of this Zacks Rank #3 (Hold) company jumped over 14.0% year
over year to $217.4 million. We believe that Hibbett's sharp
focus on expanding its store network in mid-sized and smaller
markets, as well as better product mix are other major factors
behind this growth. However, Hibbett's net sales remained
slightly below the Zacks Consensus Estimate of $218.0
Comparable store sales (comps), on a 13-week basis, witnessed
an increase of 4.9%, marking the 13
consecutive quarterly increase for the retailer. Monthly comps
reflect a hike of 5.1% in November and 8.2% in December. However,
due to delayed tax refunds Hibbett's comps in January declined
3.7%, resulting in a negative impact of 1% for the quarterly
comps. During the quarter, Hibbett experienced positive comps
growth at all its categories.
Hibbett's gross profit surged 15.2% to $78.5 million from
$68.2 million in the year-ago comparable quarter. Gross margin
expanded 35 basis points (bps) to 36.1% during the quarter. The
year-over-year improvement in gross margin was primarily driven
by reduced warehouse and store occupancy costs, as a percentage
of sales, partially offset by lower product margin.
During the quarter, store operating, selling and
administrative (SG&A) expenses, as a percentage of revenue,
declined 56 bps to 20.32% from 20.88% in the comparable year-ago
quarter. The year-over-year improvement in SG&A expenses was
mainly due to lower store labor expenses and favorable debit card
transaction fees. As a percentage of sales, Hibbett's
depreciation and amortization expenses expanded 16 bps from last
year, due to lower costs for leasehold improvements for new
A healthy gross margin, coupled with continued operational
momentum, drove a 23.4% increase in operating income and an
expansion of 108 bps in operating margin, during the quarter. The
company reported an operating income of $30.9 million compared
with $25.1 million in the same period last year. Operating margin
for the reported quarter came at 14.22% versus 13.14% reported in
the fourth quarter of fiscal 2012.
Fiscal 2013, in Brief
Hibbett's net sales for fiscal 2013, which included an extra
week compared with fiscal 2012, increased 11.8% year over year to
$818.7 million and remain almost in line with the Zacks Consensus
Estimate of $819.0 million. Comps on a 52-week period basis
improved 6.9%. Driven by an expansion of 69 bps in gross margin,
along with an improvement of 50 bps in SG&A expenses as a
percentage of sales, Hibbett's operating margin increased 140 bps
Consequently, Hibbett's earnings for the fiscal surged 26.5%
to $2.72 per share compared with $2.15 reported in fiscal 2012.
Moreover, earnings for the period outdid the Zacks Consensus
Estimate of $2.70 per share.
Hibbett ended fiscal 2013 with a strong balance sheet with
$76.9 million in cash and cash equivalents, no outstanding debt
and $80 million available under its credit facility.
During the quarter, Hibbett bought back 203,662 shares for
$11.0 million. Moreover, during fiscal 2013, the company bought
back 903,794 shares by deploying $49.9 million. As of Feb 2,
2013, Hibbett has nearly $245.4 million remaining under its
ongoing share repurchase program - worth of $250.0 million
-authorized on Nov 15, 2012.
During the fourth quarter, Hibbett expanded its store base by
opening 27 new stores and launching 4 high performing stores,
while it shuttered 2 underperforming stores. As a result, the
company's total store count at the end of the fiscal stood at 873
in 29 states.
In fiscal 2013, the company opened 54 new stores and expanded
13 high-performing stores, while it closed 13 underperforming
Fiscal 2014 Outlook
Buoyed by better-than-expected results, continued sales
strength as well as improved cost management and margins, Hibbett
projects fiscal 2014 earnings to come between $2.85 and $3.05 per
share. Comparable store sales for the fiscal are expected to
increase in the mid-single-digit range.
Further, Hibbett expects to expand its stores network in
fiscal 2014 by opening about 65 to 70 new stores. Additionally,
the company plans to open nearly 18 high-performing stores and
close 15 to 20 stores during fiscal 2014.
Hibbett remains focused on mid-sized and smaller markets with
population sizes of 25,000 to 75,000, which offer a strategic mix
of branded and localized merchandise. It serves a niche market by
strategically aligning its merchandise to regional/local sporting
and community interests. We believe this gives Hibbett a
competitive edge over its peers, such as
Dick's Sporting Goods Inc.
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