Hibbett Sports Inc. slightly lowered its earnings guidance for the year after reporting third-quarter earnings declined 21.9 percent.

Third Quarter Results
Net sales for the 13-week period ended October 29, 2016 increased 3.8 percent to $237 million compared with $228.3 million for the 13-week period ended October 31, 2015. Comparable-store sales increased 0.7 percent.

Gross profit was 35.4 percent of net sales for the 13-week period ended October 29, 2016, compared with 36.1 percent for the 13-week period ended October 31, 2015. The decrease was mainly due to markdowns taken to reduce inventory, a negative effect of product mix resulting from soft sales in seasonal apparel and deleveraged logistics and store occupancy expenses associated with lower comparable-store sales.

Store operating, selling and administrative expenses were 23.6 percent of net sales for the 13-week period ended October 29, 2016, compared with 21.1 percent of net sales for the 13-week period ended October 31, 2015. These expenses were higher as a percentage of net sales, partially due to a low comparable-store sales increase. Additionally, the company incurred increased expenses related to investments in its omni-channel initiative and higher expenses related to employee benefit costs, credit card fees and store maintenance.

Net income for the 13-week period ended October 29, 2016, was $14.6 million compared with $18.7 million for the 13-week period ended October 31, 2015. Earnings per diluted share was 66 cents for the 13-week period ended October 29, 2016, compared with 79 cents for the 13-week period ended October 31, 2015.

Jeff Rosenthal, president and chief executive officer, stated, “We were pleased with our back-to-school sales and continue to see high-single-digit comps in our footwear category. Sales softened in September and October as apparel sales became more challenging, principally in our colder-weather categories. Gross margin rate declined due to a mix shift to footwear as a result of softness in seasonal apparel sales. As expected, expenses were higher in the quarter due to investments in our ongoing omni-channel initiative, but we also experienced higher expenses in other areas against a favorable third quarter last year.

“At the end of the quarter, we opened our first store in California and are excited about the growth opportunity for this state in the future,” Rosenthal continued. “Additionally, we are pleased with the progress we are making on our omni-channel initiative and expect to see benefits from our new POS system and store-to-home capability in the first half of fiscal 2018.”

For the quarter, Hibbett opened 13 new stores, expanded two high-performing stores and closed five under-performing stores, bringing the store base to 1,067 in 34 states as of October 29, 2016.

Fiscal Year To Date Results
Net sales for the 39-week period ended October 29, 2016 increased 4.1 percent to $726 million compared with $697.4 million for the 39-week period ended October 31, 2015. Comparable-store sales increased 1 percent.

Gross profit was 35.4 percent of net sales for the 39-week period ended October 29, 2016, compared with 35.5 percent for the 39-week period ended October 31, 2015.

Store operating, selling and administrative expenses were 22.8 percent of net sales for the 39-week period ended October 29, 2016, compared with 21.5 percent of net sales for the 39-week period ended October 31, 2015.

Net income for the 39-week period ended October 29, 2016 was $49 million compared with $53.1 million for the 39-week period ended October 31, 2015. Earnings per diluted share were $2.18 for the 39-week period ended October 29, 2016, compared with $2.17 for the 39-week period ended October 31, 2015.

Liquidity And Stock Repurchases
Hibbett ended the third quarter of fiscal 2017 with $41.2 million of available cash and cash equivalents on the un-audited consolidated balance sheet, no bank debt outstanding and full availability under its $80 million unsecured credit facilities.

During the third quarter, the company repurchased 53,519 shares of its common stock for a total expenditure of $1.9 million. Approximately $269.3 million of the total authorization remained for future stock repurchases as of October 29, 2016.

Fiscal 2017 Outlook
The company is updating its guidance for the 52 weeks ending January 28, 2017, to earnings per diluted share in the range of $2.82 to $2.88 from a previously reported range of $2.93 to $3.02. Additionally, merchandise margin is expected to be relatively flat compared with a previously reported expectation of flat to slightly positive versus the prior year.