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Hibbett Stock Down on Soft Preliminary Results and Outlook

Hibbett Sports, Inc.HIBB came out with preliminary results for fourth-quarter fiscal 2017, which remained soft owing to a tough retail environment. Following the results, Hibbett also provided a drab earnings outlook for the fourth quarter, alongside issuing guidance for fiscal 2018.

The murky results and outlook created a negative sentiment among investors, leading shares of this sporting goods retailer to decline 5.4% in the after-market trading session yesterday. In fact, Hibbett has been underperforming the Zacks categorized Retail - Miscellaneous/Diversified industry for three months now. Evidently, Hibbett's shares have slumped 25.6% in the last three months, as against the industry's stable performance.

Coming back to the preliminary results, the company stated that its net sales for the fourth quarter inched up 0.5% to $246.9 million. However, the figure compares unfavorably with the Zacks Consensus Estimate that is currently pegged at $255 million. This will mark Hibbett's eight consecutive sales miss, thus underscoring its dismal trends. Further, comparable store sales (comps) for the fourth quarter slipped 2.2%.

Management blamed the disappointing holiday quarter comps on sluggish traffic and weaker than anticipated apparel and equipment sales. This was partly compensated by strength noted across the footwear category, backed by enhanced collections at stores. However, management stated that the dismal sales caused the company to turn highly promotional, balance inventory and augment top line. This in turn, weighed upon Hibbett's gross margin in the quarter.

Considering all the aforementioned factors, management envisions fourth quarter earnings in the range of 53-55 cents per share, as against 76 cents recorded in the year-ago period. Also, this stands way below the Zacks Consensus Estimate of 68 cents, thus giving out signals of downward revisions.

Hibbett also issued its preliminary guidance for fiscal 2018, where it anticipates earnings to lie in the band of $2.65-$2.85 per share, based on constant efforts to invest in Store-to-Home and e-commerce operations. Also, this guidance includes an estimated positive impact of roughly 10 cents per share for an additional 53rd week. Additionally, management projects comps for fiscal 2018 to lie in a flat to low-single digit range.

Talking of Hibbett's growth initiatives, the company's store expansion program seems to be on track. Looking ahead, the company expects to gain from its small market strategy as it continues to strengthen its presence across the country. Additionally, the company is piloting its new store system, which will enable it to view its actual in-store inventory across all its stores and accordingly increase sales. The company believes this is the beginning of its strategy which will integrate its stores and enhance digital presence.

Further, this Zacks Rank #3 (Hold) company is scheduled to release its fourth-quarter fiscal 2017 earnings on Mar 10, which should include more details on the company's top-line trends and guidance.

Key Picks

Until then, investors can either count on better-ranked retail stocks like Big 5 Sporting Goods Corp. BGFV sporting a Zacks Rank #1 (Strong Buy) or Barnes & Noble, Inc. BKS and Cabela's Incorporated CAB carrying a Zacks Rank #2 (Buy) each. You can see the complete list of today's Zacks #1 Rank stocks here.

Big 5 Sporting has an average positive earnings surprise of 4.8% in the trailing four quarters. The stock, with a long-term growth rate of 12%, has seen positive estimate revisions in the last 30 days.

Barnes & Noble has an average earnings beat of nearly 4% in the last four quarters. Moreover, the company's long-term growth rate of 10% bodes well.

Cabela's solid long-term EPS growth rate of 12.5% and positive estimate revisions over the past 60 days help it stand strong in the industry.

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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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