Hibbett Sports Inc. HIBB has kept its positive earnings surprise streak alive for the third consecutive quarter in fiscal 2015 with earnings of 79 cents a share that outdid the Zacks Consensus Estimate of 68 cents. Earnings also surged 23.4% from the prior-year quarter figure of 64 cents. Results benefited from strong comps, particularly in January, which came on the back of improved weather and early tax refunds this year.
Hibbett Sports Inc. - Earnings Surprise | FindTheCompany
Net sales of this Zacks Rank #3 (Hold) company grew 9.9% year over year to $239.3 million and surpassed the Zacks Consensus Estimate of $236 million. Comparable-store sales (comps) increased 5.4% driven by strong holiday comps and better customer response to its products. Moreover, the company’s comps gained from the aforementioned factors, favorable weather and tax refunds in January.
However, Hibbett revealed that so far in fiscal 2016, mainly in February, comps remained soft due to increased store closures owing to bad weather across many of the markets where the company operates. Nevertheless, the company believes this to be a temporary trend and expects it to normalize as the weather improves. Further, the company remains optimistic of its performance given its product assortments and inventory position.
Hibbett’s gross profit increased nearly 9% to $85 million, while gross margin contracted 30 basis points (bps) to 35.5%. The contraction in margin was due to increased markdowns to manage inventory. Operating income during the quarter increased 18.1% to $31.9 million, whereas operating margin expanded 90 bps to 13.3%.
Other Financial Aspects
Hibbett ended the year with a strong balance sheet comprising $88.4 million in cash and cash equivalents, no outstanding bank debt and full availability under its $80 million credit facility.
During the quarter, the company bought back 133,711 shares for $6.4 million. As of Jan 31, 2015, Hibbett had nearly $173.3 million remaining under its share repurchase program.
Store Update
During fiscal 2015, Hibbett successfully completed its target of opening 80 stores while expanding 9. Additionally, the company shut down 19 underperforming stores. As a result, it ended the year with 988 stores across 31 states.
Fiscal 2016 Guidance
Management expects fiscal 2016 earnings to come between $2.95 and $3.09 per share, along with comps growth in the low-to-mid single-digit range. The company also remains on track to open 80 to 85 stores, expand about 10–15 stores and close 15–20 stores during fiscal 2016.
Other Stocks to Consider
Better-ranked stocks in the same industry include Build-A-Bear Workshop Inc. BBW and Marinemax Inc. HZO, both sporting a Zacks Rank #1 (Strong Buy) along with Tractor Supply Company TSCO, carrying a Zacks Rank #2 (Buy).
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