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Hibbett (HIBB) Soars on Q3 Earnings Beat, Raises FY16 View

Shares of Hibbett Sports, Inc.HIBB rose 16.2% in the last trading session after the company posted better-than-expected earnings for the third quarter of fiscal 2016 and raised its outlook for fiscal 2016.

The company's quarterly earnings per share of 74 cents surpassed the Zacks Consensus Estimate of 68 cents and increased 10.4% from 67 cents reported in the prior-year quarter. The increase in bottom line was due to solid back-to-school sales, improved margins and lower costs, and continued gains from the company's merchandise initiatives.

Hibbett Sports Inc. (HIBB) - Earnings Surprise | FindTheCompany

Net sales climbed 4.6% year over year to $228.3 million. However, the top line fell short of the Zacks Consensus Estimate of $233 million. Results were impacted by significant sales decline in the company's colder weather category items. However, the year-over-year increase in top line was aided by solid back-to-school sales and tax free shipments earlier in the quarter. On the other hand, comparable-store sales (comps) rose 0.6% during the fiscal quarter.

Hibbett's gross profit grew 4% to $82.4 million, while gross margin contracted 20 basis points (bps) to 36.1%. The contraction in margin was due to higher logistics and store occupancy costs (as a percentage of sales) owing to lower comps.

Further, operating income during the fiscal quarter increased 11.4% to $29.9 million, with operating margin expanding 80 bps to 13.1%.

Other Financial Aspects

Hibbett ended the fiscal quarter with $45.5 million in cash and cash equivalents, no outstanding bank debt, and full availability under its $80 million credit facility. Total shareholders' investment, as of Oct 31, 2015, was at $295.8 million.

During the fiscal quarter, Hibbett repurchased 1.3 million shares for $50.5 million. By the end of the reported quarter, Hibbett had nearly $87.5 million remaining under its share repurchase program.

Further, on Nov 19, 2015, the company authorized a new share repurchase program of $300 million, due to expire on Feb 2, 2019. The new stock repurchase program replaces the existing program due to expire on Jan 30, 2016, effective immediately.

Store Update

During the fiscal quarter, Hibbett introduced 20 stores, expanded one high-performing store and shut down three underperforming stores. As a result, it ended the quarter with 1,031 stores across 33 states.

Fiscal 2016 Guidance

Following a robust fiscal third quarter, this Zacks Rank #3 (Hold) company raised its guidance for fiscal 2016. The company now envisions earnings in the range of $2.87-$2.94 per share, compared with $2.80-$2.90 projected earlier.

However, Hibbett now anticipates comps growth to be close to flat, compared with flat-to-low single-digit growth expected earlier.

Stocks to Consider

A couple of better-ranked stocks in the same industry include Regis Corp. RGS and CST Brands, Inc. CST . While Regis sports a Zacks Rank #1 (Strong Buy), CST Brands holds a Zacks Rank #2 (Buy). Another stock worth considering in the related industry is NIKE Inc. NKE , carrying a Zacks Rank #1.

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CST BRANDS INC (CST): Free Stock Analysis Report

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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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