On Jun 19, 2014, we issued an updated research report on
Hibbett Sports, Inc.
) after the company's impressive first-quarter fiscal 2015 results
that reflected strong top and bottom line growth, followed by an
upbeat guidance for fiscal 2015.
The sporting goods retailer's earnings of $1.09 per share
witnessed a 9% rise from the year-ago comparable quarter's earnings
of $1.00 per share primarily driven by robust top line growth,
partially offset by higher cost of goods sold.
Net sales of the company increased 9.1% year over year to $261.9
million and came marginally ahead of the Zacks Consensus Estimate
of $261 million. The upside was attributed to strong sales
performance at the company's stores due to high demand for footwear
and branded apparels.
We remain impressed with Hibbett's sustained focus on expansion
of its store network and improvement of productivity, which are the
key revenue drivers for the stock. Moreover, we believe the
strategy of doubling the size of its distribution facility will aid
in maintaining its growth momentum in mid-sized and smaller
markets, which are the primary areas of focus for the company. The
company's debt-free balance sheet also provides it with financial
flexibility to drive future growth.
Hibbett is strongly focused on small towns and counties with
population ranging from 25,000 to 75,000. It serves a niche market
by strategically aligning its merchandise to regional/local
sporting and community interests. We believe that operating in
small markets provide a competitive advantage to Hibbett over
larger rivals due to less intense competition and lower operating
However, we remain slightly apprehensive about Hibbett's growth
prospects as its competitor and leading sporting goods retailer,
DICK'S Sporting Goods Inc.
), is entering the smaller and mid-sized markets. We believe that
DICK'S Sporting's strategy will heighten competition and pose
challenges to Hibbett's retail space acquisitions. This may
increase Hibbett's store occupancy costs and operating expenses.
Therefore, at present, Hibbett carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some other stocks in the retail space worth considering include
Five Below, Inc.
Office Depot, Inc.
). Both the stocks have a Zacks Rank #2 (Buy).
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