Hibbett Sports’ Q3 Profit Declines Despite Comp Gain

The 53rd week last year resulted in a calendar shift and as a result, revenue was approximately $14 million (7.1 percent) lower in the third quarter compared to the reported period last year.

Gross profit was 36.8 percent of net sales for the 13-week period ended Nov. 2, 2013, compared with 37.2 percent for the 13-week period ended October 27, 2012.

Store operating, selling and administrative expenses were 21.9 percent of net sales for the 13-week period ended November 2, 2013, compared with 20.7 percent of net sales for the 13-week period ended October 27, 2012.

Net income for the 13-week period ended November 2, 2013 decreased 9.0 percent to $17.3 million compared with $19.0 million for the 13-week period ended October 27, 2012. Earnings per diluted share decreased 7.0 percent to 66 cents for the 13-week period ended November 2, 2013, compared with 71 cents for the 13-week period ended October 27, 2012. The week shift associated with the fiscal calendar resulted in an approximate 11 cents reduction in earnings per diluted share for the period ended November 2, 2013. Wall Street's average estimate was 65 cents a share.

Fiscal Year to Date Results

Net sales for the 39-week period ended November 2, 2013 increased 5.5 percent to $634.2 million compared with $601.3 million for the 39-week period ended October 27, 2012. Comparable store sales increased 1.8 percent on a calendar basis (comparable 39-week period).

Gross profit was 36.5 percent of net sales for the 39-week period ended November 2, 2013, compared with 36.7 percent for the 39-week period ended October 27, 2012.

Store operating, selling and administrative expenses were 21.2 percent of net sales for the 39-week period ended November 2, 2013, compared with 20.9 percent of net sales for the 39-week period ended October 27, 2012.

Net income for the 39-week period ended November 2, 2013 was $54.0 million compared with $53.2 million for the 39-week period ended October 27, 2012. Earnings per diluted share increased 3.0 percent to $2.05 for the 39-week period ended November 2, 2013, compared with $1.99 for the 39-week period ended October 27, 2012.

Jeff Rosenthal, President and Chief Executive Officer, stated, “We delivered solid comparable store sales in the quarter driven by a strong Back to School led by improved performance in footwear, apparel, and accessories. Demand for our fall assortment has been positive as well, and we are well positioned going into the holiday season. We continue to be encouraged by the pace and performance of new store openings, and feel confident that our investments in the business will provide a solid foundation for future success.”

For the quarter, Hibbett opened 16 new stores, expanded 4 high performing stores and closed 4 underperforming stores, bringing the store base to 904 in 31 states as of November 2, 2013. For Fiscal 2014, the company expects to open 72 to 75 new stores, expand approximately 15 high performing stores and close 17 to 20 stores.

Liquidity and Stock Repurchases

Hibbett ended the third quarter of Fiscal 2014 with $69.9 million of available cash and cash equivalents on the consolidated balance sheet, no bank debt outstanding and full availability under its $80.0 million unsecured credit facilities.

During the third quarter, the company repurchased 134,406 shares of common stock for a total expenditure of $7.1 million. Approximately $230.9 million of the total authorization remained for future stock repurchases as of November 2, 2013.

Fiscal 2014 Outlook

The company narrowed its guidance for the 52 weeks ending February 1, 2014, to earnings per diluted share in the range of $2.68 to $2.77, and an increase in comparable store sales (on a calendar basis) in the low single-digit range. This compares to previous guidance of earnings per diluted share in the range of $2.65 to $2.77, and an increase in comparable store sales (on a calendar basis) in the low single-digit range. Fiscal 2013 had an approximate $0.07 benefit in earnings per diluted share due to the 53rd week.