Hibbett, Inc., the soon to be component of SD Sports Fashion’s U.S portfolio that also includes the Finish Line, JD, Shoe Palace and DTLR retail brands, reported fiscal Q1 net sales decreased 1.8 percent to $447.2 million for the three-month period ended May 4, compared with $455.5 million for the 2023 comparative Q1 period.

  • Comparable sales decreased 5.8 percent versus the prior-year Q1 period.
  • Brick & mortar comparable sales declined 5.8 percent while e-commerce sales also decreased 5.8 percent on a year-over-year basis.
  • E-commerce represented 13.4 percent of total net sales for the 2024 quarter, compared to 13.7 percent in the 2023 Q1 period.

Gross margin was 35.8 percent of net sales for the first quarter, compared with 33.7 percent of net sales for the year-ago Q1 period. The approximate 210-basis-point increase was said to be driven primarily by higher average product margin, which was approximately 195 basis points favorable to the prior-year Q1 period.

The improved product margin was said to be the result of a lower promotional and clearance environment. The company said the slight year-over-year sales decline coupled with a higher store count resulted in deleverage of store occupancy costs of approximately 60 basis points. Other favorable gross margin impacts as a percent of net sales included freight and shipping costs of approximately 50 basis points, logistics expenses of approximately 15 basis points and an approximate 10-basis-point improvement in shrink.

Store operating, selling and administrative (SG&A) expenses were 23.7 percent of net sales for the first quarter, compared with 21.1 percent of net sales for the year-ago Q1 period. The increase of approximately 260 basis points is primarily the result of inflation on wages, benefits and goods and services plus deleverage from the lower year-over-year sales volume. In addition, SG&A expense for the current quarter includes approximately $2.6 million of non-recurring professional fees associated with the pending JD Sports transaction.

Net income for the first quarter was $32.5 million, or $2.67 per diluted share, compared with net income of $35.9 million, or $2.74 per diluted share, for the year-ago Q1 period.

For the first quarter, HIBB opened six stores and closed six stores, leaving the store base unchanged from the prior quarter at 1,169 in 36 states.

As of May 4, 2024, Hibbett Inc. had $28.7 million of available cash and cash equivalents on its unaudited condensed consolidated balance sheet and $7.5 million of debt outstanding on its $160.0 million unsecured line of credit.

Inventory at quarter-end was $371.3 million, a 15.2 percent decrease compared to the prior-year first quarter and up 7.8 percent from the beginning of the fiscal year.

During the first quarter, HIBB did not repurchase shares of common stock under its Stock Repurchase Program.

The company paid a quarterly dividend equal to 25 cents per outstanding common share that resulted in a cash outlay of $2.9 million.

“As previously disclosed, per terms of the merger agreement with JD Sports, we have suspended the Repurchase Program and payment of future dividends through the closing of the transaction,” the company said in a release.

Transaction with JD Sports Fashion plc
On April 23, 2024, Hibbett Inc. entered into a definitive agreement to be acquired by a subsidiary of UK-based JD Sports Fashion plc (JD Sports). Under the terms of the agreement, Hibbett stockholders will receive $87.50 in cash per share at closing. The transaction with JD Sports is expected to create immediate, certain and substantial value for Hibbett stockholders while ensuring that Hibbett’s brands are well-positioned to continue to serve the customers and communities that have always been the central focus of Hibbett’s business.

As previously disclosed, the transaction is expected to close in the second half of 2024, subject to Hibbett stockholder approval, receipt of required regulatory approvals, and the satisfaction of other customary conditions to closing. The transaction is not subject to a financing condition.

Following the closing of the transaction, Hibbett will join JD Sports, a leading global omnichannel retailer of sports fashion brands, and will cease to be a publicly traded company.

Image courtesy Hibbett, Inc.