Last Friday, Hibbett Sports Inc. (HIBB) came up with mixed financial results for the first quarter of fiscal 2014 wherein its bottom-line recorded a year over year improvement but missed the Zacks Consensus Estimate.
The sporting goods retailer’s first quarter 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 strong top line growth, partially offset by higher cost of goods sold.
However, the company’s quarterly earnings fell short of the Zacks Consensus Estimate by a penny. This spread negative sentiments among investors resulting in a decline of over 7% in the company’s share prices during the trading session on Friday.
Highlights of the Quarter
Net sales of the company increased by 9.1% year over year to $261.9 million and surpassed 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.
Comparable-store sales (comps) for the quarter increased 4.1%. Monthly comps reflected an increase of 7.2% in February, 2.9% in March and 0.9% in April. However, the company revealed that comps for May are running in the negative low-single-digit range.
Hibbett’s gross profit increased approximately 8.1% to $98.2 million from $90.9 million in the year-ago comparable quarter. However, gross margin contracted 38 basis points (bps) to 37.49% during the quarter. Product margin was down 44 bps in the quarter due to higher markdowns, while warehouse and store occupancy expenses as a percentage of sales improved 6 bps.
During the quarter, store operating, selling and administrative expenses increased 8.5% to $49.0 million, while as a percentage of revenue it contracted 11 bps to 28.69%. The year-over-year improvement in store operating, selling and administrative expenses as a percentage of sales was due to higher sales and some cost benefits.
Gross margin contraction impacted the company’s operating margin. Hibbett’s operating margin for the quarter contracted 24 bps to 17.44% compared with 17.68% in the year-ago quarter. However, in dollar terms, operating income increased 7.6% year over year to $45.7 million.
Financials
Hibbett ended the quarter with a strong balance sheet comprising $110.3 million in cash and cash equivalents, no outstanding debt and $80 million available under its credit facility.
During the quarter, Hibbett bought back 198,000 shares for $10.8 million. As of May 3, 2014, Hibbett had nearly $219.0 million remaining under its share repurchase program worth $250.0 million, authorized on Nov 15, 2012.