Hibbett Sporting Goods bested analysts’ second quarter earnings estimates by a penny and then went on to tell the market that business is starting to get better.
HIBB said it expects third quarter earnings per share of about 24 cents to 26 cents, up 14.2% to 23.8% from the 21 cents delivered in the year-ago quarter. The retailer also raised full-year EPS guidance to about $1.10 to $1.12, a penny higher than previous guidance.

“We offset a lower-than-expected comparable store sales figure during the quarter by selling more merchandise at full price,” said President and Chief Executive Mickey Newsome in a release.

Apparel led the charge in the quarter, with comps up in the high single-digits. The gains were driven by strong Pro Licensed Apparel sales, which jumped 70% on a comp store basis for the quarter. NBA product was up 147%, while NFL and MLB gained 20% in the quarter.

Total Licensed Apparel sales are now 20% of sales.
Jersey sales were particularly hot. HIBB received 9,000 Michael Jordan Washington Bullets jerseys and sold 95% at $45. The first of the LeBron James jerseys came in and Hibbett sold 3,300 of the 3,700 units received the first weekend. The new LBJ jersey releases Oct. 1.

On the NFL side, Michael Vick was the hot ticket, selling 4,500 of 5,500 jerseys at full pop.

Conversely, College Licensed Apparel sales were a bit problematic, posting low double-digit comp declines for the quarter. The stores carried 25% less college inventory. HIBB does not see an issue here going forward as sales have already started to improve in August, prompting a positive forecast for Q3.

Activewear was flat for Q2, up against increased clearance in the year-ago quarter. Margins gained against the year-ago period. Nike and Under Armour were the two leaders in Q2.

Footwear comps were flat in the quarter, with all genders posting flat results. Units were slightly up, but unit pricing was slightly down. On a category basis, Basketball and Cross-Training were positive, but Running was negative.

The Footwear segment has turned positive so far in the third quarter. On a brand basis, HIBB saw Nike, Converse, Reebok and K-Swiss all gain market share in footwear. The retailer indicated that Classic and retro shoes are still “what's hot”.

Equipment comps were negative, down low single-digits for the quarter. Baseball and Softball both went south, but have become a bigger piece of the business in Q3 and Q4. The first few weeks of August are trending higher in the segment, with comps in the positive for the third quarter-to-date.


KEY METRICS:

  • GM improved 20 bps to 30.65 on lower clearance
  • SG&A decreased 35 bps on greater expense leverage and lower inventory costs
  • Ended Q2 with $23mm in cash vs. $5mm in debt LY
  • Believe inventory turns can get to 2.5x from 2.3x
  • August comps up mid singles Month-to-date
  • Inventory is down 12% on a comp basis


>>> Speeding turns and selling more goods at full price.  What novel ideas!