Hibbett Sporting Goods posted another record quarter and continues to improve upon its model that enabled the company to deliver an 8.1% return on sales for the first quarter versus its sector-leading 7.1% ROS for the 2003 full year and a 6.6% ROS in Q1 last year. Comp store sales increased 8.8% on top of a 3.8% gain in the year-ago period.
The 150 basis point gross margin improvement was said to be due to “selling a larger percentage of merchandise of full price, improved markup, and favorable mix with the positive leverage of occupancy and warehouse costs.” SG&A declined 110 basis points due mainly to the favorable leveraging of store and corporate salaries as well as other store related costs.
Strip center stores, which represent 70% of all stores, comped up 9.3% in the quarter versus a 7.2% comp gain in the mall locations.
Apparel posted double-digit gains. Men's activewear continues to be driven by Under Armour and Nike performance products. Women's activewear was up double-digits led by Nike performance and cheerleading shorts. Licensed apparel was also strong. College licensed increased in the high-single-digits led by Nike. Pro licensed was up high-double-digits led by NBA and NFL jerseys.
“We see that performance is getting better like with Under Armour and Nike, and we also see some of the urban brands getting stronger so we feel like we can overcome that,” said Jeff Rosenthal, HIBBs VP of Merchandising. Ecko and Enyce are emerging urban brands for Hibbett.
Footwear increased in the mid-single-digits. Trend Classic footwear was led by K-Swiss, Reebok and New Balance 574, as well as performance shoes such as Nike Shox. Kids and women's FW was up double-digits.
Team equipment was low-single-digits. Baseball increased high-single-digits led by uniforms, bats from Easton and Louisville Slugger, and baseball accessories by Nike. Soccer was up double-digits, led by Adidas.
Nike is 34% to 36% of purchases and increased as a percentage of sales in the quarter, reversing the decline noted by Hibbett in their year-end call. Nike allocated styles are now carried in the majority of the stores.
Hibbett chairman and CEO Mickey Newsome said the Nike product “really looks good, back-to-school and for Christmas for that matter”, indicating that they had grown the Nike penetration, “even in equipment” he said “because they're not in the discounters”.
Average inventories per store were down approximately 3.5% on a year-to-year comparison.
Mr. Newsome said second quarter trends are consistent with Q1 and expects to report EPS of approximately 18 cents to 20 cents per diluted share on a comparable store sales increase in the range of 5% to 6%.
Earnings guidance for fiscal 2005 is estimated at approximately $1.06 to $1.09 per diluted share on a 5% to 6% comp store sales increase. He said they had “expected second half sales momentum to ease a bit” as they lapped strong sales results from a year ago, but said they “have yet to see that pace abate to any degree”.
The company opened eight new stores in the quarter and closed three. There were 433 stores in operation at quarter-end. The company is still on target to open 65 new stores this year net of any closings. All new stores will be in the 21 states where HIBB currently operates.
