Hibbett Sporting Goods got a nice contribution from Footwear and Team Sports in the third quarter to push comps store sales up 5.4% in the period on top of a 6.9% increase in the year-ago quarter. A decline in Apparel sales, coupled with lower margins in the category, led to an overall decline in gross margins for Q3 that limited net income gains in the period. The company estimated that a third of the margin decline came from a change in mix, with the balance coming from a decline in Apparel margins.
Branded Activewear sales were down in low-single-digits despite continued strength in Nike, Under Armour, and urban brands such as Enyce and Dickies. The Licensed Apparel business was down in double-digits on the Pro side of the category, while the College side appeared to rebound in September and October after a slower August.
Pro Licensed continues to be soft, according to Jeff Rosenthal, VP of Merchandising, and the College Licensed business was bolstered by strength of Womens and Kids.
Footwear jumped double-digits in the period, driven by double-digit growth across all genders. Hibbett estimated that 25% of the Footwear gain came from increased price-points. Cleated product was up in high-single-digits. Average selling prices continue to rise on strength of performance and technical product. Rosenthal called out Nike Land Sharks and adidas TRX in the Cleated business and Nike Shox, Nike Impax, K-Swiss classics, and New Balance classics as key performers.
Hardgoods were up mid-single-digits, with Team Sports up in double-digits for the period, driven by the Football category. Hibbett said higher-end product in the team accessories market are driving some of the increase. Rosenthal called out items like the Shock Doctor mouthpiece at $10 to $20 versus a previous focus below $5 per item. He also pointed to receivers gloves and skateboards as key contributors.
Comp sales dipped a bit in September but bounced back nicely in October. August comps were up in the 5% to 6% range, September comps rose 4% to 5%, and October comps were up in the 6% to 7% range. Mickey Newsome, chairman, president and CEO, said that comps in the first 19 days of November were up in the 4% to 5% range.
Rosenthal said part of the reason for the declining margins in Apparel was that they saw less full price sales in the category. They are trying to grow their average price per hanger and “be a little more technical”. This was offset a bit by increasing margins in footwear and more sales in Team Sports product that carries a “nice gross margin”. Mr. Newsome said that merchandise margins are increasing across the board due to an increase in Team Sports and less emphasis on dual and individual sports equipment.
CFO Gary Smith said that Hibbett is also getting better going in margins from vendors as they become more important.
Nike represents about 40% of Hibbett purchases.
Hibbett opened 21 new stores and closed 2 stores in Q3, bringing the store base to 468 at quarter-end.
For fourth quarter, HIBB expects to report EPS in the 27 cents to 30 cents per diluted share range on a 2% to 3% increase is same-store sales. For the full year, earnings are seen in the range of 99 cents to $1.02 per diluted share on a 4% to 5% increase in comparable store sales.
