Hibbett (HIBB) Down on Q2 Loss & Sales Miss, Trimmed '19 View

Hibbett Sports Inc.HIBB reported loss along with lower-than-expected top and bottom line in second-quarter fiscal 2019. Notably, this marked the company's second straight top- and bottom-line miss. Moreover, management trimmed its guidance for the fiscal year, which is also shy of analysts' expectations.

Consequently, shares of the company plunged 30.2% during the trading hours on Aug 24. In the past three months, this Zacks Rank #3 (Hold) stock has declined 16% against the industry 's 12.9% growth.

Q2 Highlights

Hibbett incurred quarterly loss of 6 cents per share, narrower than loss of 15 cents in the year-ago quarter. However, the Zacks Consensus Estimate for the second quarter stood at earnings of 8 cents.

Net sales grew 12.3% to $211.1 million but came below the Zacks Consensus Estimate of $219 million. The year-over-year improvement in the metric was driven by comparable sales (comps) and e-commerce growth coupled with favorable week shift from the 53rd week prior year. Comps edged up 4.1% in the quarter owing to comps growth of 3% in May, 5.4% in June and 3.7% in July. Notably, e-commerce sales accounted for nearly 8% of total sales in the fiscal second quarter.

Although, the company witnessed significant improvement in branded apparel and footwear in the reported quarter, its licensed equipment and accessory business remained soft.

Gross profit increased 22.1% to $66.4 million, with gross margin expansion of 248 basis points (bps) to 31.4%. The upside was primarily driven by fewer clearance markdowns along with lower logistics and store occupancy expenses, and higher sales.

Hibbett incurred operating loss of $1.9 million compared with a loss of $5.2 million in the year-ago quarter. This can be attributed to higher store operating, selling and administrative expenses, somewhat mitigated by increase in gross margin. The increase in SG&A expenses stemmed from marketing and omni-channel investments along with increased employee benefit costs.

Hibbett Sports, Inc. Price, Consensus and EPS Surprise

Hibbett Sports, Inc. Price, Consensus and EPS Surprise | Hibbett Sports, Inc. Quote

Other Financial Aspects

Hibbett ended the fiscal second quarter with $119.6 million in cash and cash equivalents, no bank debt outstanding and full availability under its $60-million unsecured credit facility. Total shareholders' investment, as of Aug 4, totaled roughly $333.6 million.

Further, Hibbett repurchased 336,302 shares for $8 million. As of Aug 4, it had roughly $195.7 million remaining under its standing share repurchase authorization.

Store Update

In second-quarter fiscal 2019, Hibbett introduced six new stores, expanded, relocated or remodeled three stores while shut down 15 underperforming outlets. Consequently, it ended the quarter with 1,059 stores across 35 states.


Following Hibbett's soft quarterly results, management updated its guidance for fiscal 2019. Comps are now anticipated in the range of negative 1% to positive 1%, versus earlier projection in the band of negative 1% to positive 2%. Further, SG&A expenses are likely to increase between 7% and 9% compared with 6-8% increase guided earlier.

Management envisions earnings of $1.57-$1.75 per share, down from $1.65-$1.95 range expected earlier. In fiscal 2018, the company delivered earnings of $1.71 per share. The Zacks Consensus Estimate for fiscal 2019 is pegged at $1.86, which is likely to witness downward revisions in the coming days.

Capital expenditures are expected to be between $18 million and $22 million compared with $20 million and $25 million projected earlier.

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Five Below, Inc. FIVE has an impressive long-term earnings growth rate of 28% and a Zacks Rank of 2.

The Michaels Companies, Inc. MIK , also a Zacks Rank #2 stock, delivered an average positive earnings surprise of 5.5% in the last four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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