Hibbett Sports Inc., in line with updated guidance, reported fourth-quarter earnings slumped 19.8 percent while comps grew 1.6 percent.

Fourth Quarter Results

The fourth quarter and Fiscal 2018 ended on February 3, 2018, included 14 weeks of results in the fourth quarter and 53 weeks of results in Fiscal 2018. Net sales for the 14-week period ended February 3, 2018, increased 8.0 percent to $266.7 million (including $13.5 million for the 53rd week) compared with $246.9 million for the 13-week period ended January 28, 2017. Comparable store sales increased 1.6 percent on a 13-week to 13-week basis. E-commerce sales represented 7.6 percent of total sales for the fourth quarter.

Gross margin was 31.5 percent of net sales for the 14-week period ended February 3, 2018, compared with 33.0 percent for the 13-week period ended January 28, 2017. The decrease was mainly due to promotions and markdowns taken to improve our inventory position, and a $0.9 million one-time charge to establish a reserve against the company’s Team Division inventory as a result of selling the business.

Store operating, selling and administrative expenses were 23.2 percent of net sales for the 14-week period ended February 3, 2018, level with 23.2 percent of net sales for the 13-week period ended January 28, 2017. The fourth quarter of Fiscal 2018 included a one-time gain of $3.1 million due to the sale of the company’s Team Division.

Net income for the 14-week period ended February 3, 2018, was $9.7 million compared with net income of $12.1 million for the 13-week period ended January 28, 2017. Earnings per diluted share were $0.51 for the 14-week period ended February 3, 2018, compared with earnings per diluted share of $0.54 for the 13-week period ended January 28, 2017. Earnings per diluted share for the 14-week period ended February 3, 2018, included a one-time gain of 7 cents per diluted share due to the sale of the company’s Team Division and a benefit of 8 cents per diluted share due to the 53rd week in Fiscal 2018. As expected, the recent tax reform legislation did not have a significant impact on earnings in the fourth quarter.

On February 26, Hibbett said it expected net earnings to come in the range of 47 to 51 cents a share, including the gain on the sale of the company’s Team Division of 7 cents per share. On an adjusted basis, the updated guidance called for earnings to come in between 40 to 44 cents a share, well ahead of Wall Street’s consensus estimate of 30 cents.

Jeff Rosenthal, president and chief executive officer, stated, “We continue to expand our customer base by connecting with more and more customers through e-commerce and selective new store growth. Ease of shopping continues to improve across both channels, and we are expanding our assortment every day to better serve our customers. We will continue to place a significant focus on omni-channel in Fiscal 2019, which will bring exciting new functionality to improve the shopping experience and to help us improve the long-term profitability of the business.”

For the quarter, Hibbett opened 12 new stores, expanded two high-performing stores and closed 14 underperforming stores, bringing the store base to 1,079 in 35 states as of February 3, 2018.

Fiscal 2018 Results

Net sales for the 53-week period ended February 3, 2018, decreased 0.5 percent to $968.2 million compared with $973.0 million for the 52-week period ended January 28, 2017. Comparable store sales decreased 3.8 percent on a 52-week-to-52-week basis.

Gross margin was 32.3 percent of net sales for the 53-week period ended February 3, 2018, compared with 34.8 percent for the 52-week period ended January 28, 2017. The 53-week period ended February 3, 2018, included a $0.9 million one-time charge to establish a reserve against the company’s Team Division inventory as a result of selling the business.

Store operating, selling and administrative expenses were 23.9 percent of net sales for the 53-week period ended February 3, 2018, compared with 22.9 percent of net sales for the 52-week period ended January 28, 2017. The 53-week period ended February 3, 2018, included a one-time gain of $3.1 million due to the sale of the company’s Team Division.

Net income for the 53-week period ended February 3, 2018, was $35.0 million compared with $61.1 million for the 52-week period ended January 28, 2017. Earnings per diluted share for the 53-week period ended February 3, 2018, were $1.71 compared with $2.72 for the 52-week period ended January 28, 2017. Earnings per diluted share for the 53-week period ended February 3, 2018, included a one-time gain of $0.07 per diluted share due to the sale of the company’s Team Division and a benefit of $0.07 per diluted share due to the 53rd week in Fiscal 2018.

For the year, Hibbett opened 44 new stores, expanded 11 high performing stores and closed 43 underperforming stores.

Liquidity and Stock Repurchases

Hibbett ended the fourth quarter of Fiscal 2018 with $73.5 million of available cash and cash equivalents on the consolidated balance sheet, no bank debt outstanding and full availability under its $60.0 million unsecured credit facilities.

During the fourth quarter, the company repurchased 611,596 shares of common stock for a total expenditure of $9.3 million. For Fiscal 2018, the company repurchased 2,842,809 shares of common stock for a total expenditure of $54.5 million. Approximately $204.1 million remained authorized for future stock repurchases as of February 3, 2018.

Fiscal 2019 Outlook

The company provided the following guidance for Fiscal 2019, which will have 52 weeks versus 53 weeks in Fiscal 2018:

  • Earnings per diluted share in the range of $1.65 to $1.95
  • Comparable store sales in the range of -1.0 percent to 2.0 percent
  • Approximately 30 to 35 new store openings with approximately 55 to 60 store closures
  • Improvement in gross margin rate in the range of 70 to 100 basis points
  • SG&A expense increase of 6.0 percent to 8.0 percent, including spending of $3.0 million to $4.0 million due to benefits of tax reform, additional marketing and operational expenses related to the omni-channel initiative and increased compensation and benefits costs
  • Capital expenditures of approximately $20.0 million to $25.0 million
  • Share buyback of approximately $40.0 million to $50.0 million

Photo courtesy Hibbett Sports