Hibbett Sporting Goods reported that net sales for second quarter ended July 31, 2004 increased 14.1% to $81.8 million compared with $71.7 million for the year-ago period. Comparable store sales increased 2.5% in the quarter.
Net income declined 6.4% to $3.0 million, or 13 cents per diluted share, compared with $3.2 million, or 14 cetns per diluted share, in Q2 last year.
Net sales for the 26-week period ended July 31, 2004, increased 17.8% to $178.3 million compared with $151.3 million for the 26-week period ended August 2, 2003. Comparable store sales increased 5.8% in the first half of fiscal 2005. Net income for the first half of fiscal 2005 increased 30.5% to $11.1 million compared with $8.5 million in the first half of fiscal 2004. Basic earnings per share increased 27.0% to $0.47 from $0.37 in the prior year, while diluted earnings per share increased 27.8% to $0.46 from $0.36 in the prior year.
Comparable store net sales data reflects sales for the Hibbett Sports and Sports Additions stores open throughout the 13-week and 26-week periods and the corresponding periods of the prior fiscal year.
Hibbett opened 19 new stores and closed three stores during the second quarter, bringing the store base to 449 as of July 31, 2004. The Company plans to open a total of approximately 65 new stores, net of store closings, in fiscal 2005.
Mickey Newsome, Chairman, President and Chief Executive Officer, stated, “Consistent with our announcement last month, the second quarter sales and earnings results were influenced by the weaker sales in pro and college-licensed apparel and fitness equipment as well as the unusual amount of rainy weather in markets served by the Company during June. The aggressive markdowns initiated brought our inventory levels in line with our expectations, but as anticipated, brought our gross margins below the levels we are accustomed to achieving. Given that our sales slowed significantly in late July and have rebounded in August, we believe the sales tax-free holidays, available to our customers by various state governments on certain products, which fell later in the year in some of our markets also affected our results by shifting some sales into the third quarter.”
“On a more positive note, footwear, especially children's and women's shoes, and team equipment sales increased in the high single digits over second quarter of the prior year. The higher-priced technical footwear and the continued demand for classics led the way in footwear, while baseball and football were our most important categories in team equipment. Activewear was also positive as sales in performance apparel continued to be strong.”
For the third quarter ending October 30, 2004, the Company expects to report earnings per diluted share of approximately $0.22 to $0.25 and a comparable store sales increase in the range of 2% to 3% compared with earnings of $0.23 per diluted share in the prior-year period. Guidance for fiscal 2005 is estimated at approximately $0.96 to $1.02 per diluted share and a comparable store sales increase in the range of 3% to 4% compared with earnings of $0.86 per diluted share in fiscal 2004.
Mr. Newsome added, “Our plan for fiscal 2005 was to transition to a higher mix of footwear and team equipment heading into the fall season. As we discussed last quarter, this timetable has been accelerated somewhat due to the slower sales of pro-licensed apparel to date. We feel good about our other categories and we are well positioned for the remainder of the year. With this plan in place and our store opening program on track for a net 65 new stores this year, we still expect to report earnings growth of approximately 12% to 18% for the year.”
The per share results reported for all periods presented herein reflect the effect of the three-for-two stock split that was distributed on April 16, 2004, to stockholders of record on April 1, 2004.
The Board of Directors has approved the purchase by the Company of up to $30 million of the Company's outstanding common stock. Approximately 23.4 million shares of Hibbett common stock are currently outstanding. Repurchases may be made over time in the open market or in negotiated transactions, with the amount and timing of repurchases dependent on market conditions, at the discretion of the Company's management for the period of one year, beginning August 19, 2004.
In other news, the HIBB Board of Directors has appointed Alton E. “Al” Yother to serve on the Board until the company's 2006 annual meeting. Mr. Yother replaces F. Barron Fletcher III, who has resigned from the Board to pursue other interests.
A 24-year veteran of SouthTrust Bank, Mr. Yother is currently Executive Vice President, Treasurer and Controller of SouthTrust Corporation. He is responsible for general accounting, financial reporting, management accounting, tax and asset liability management, shareholder relations, legal, corporate governance and acquisition functions. Before being named to his current position, Mr. Yother held a number of positions in the finance and strategic planning areas of SouthTrust.
Mr. Fletcher, a partner at SKM Growth Investors, had served on the Board of Directors since 1995. He most recently served on the Nominating Committee of the Board. Mr. Newsome added, “On behalf of my fellow shareholders and directors, I would also like to thank Barron Fletcher for his dedication and service to the Company. We wish him well in his future endeavors.”
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
Unaudited Statements of Operations
(Dollars in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended
------------------ ------------------
July 31, August 2, July 31, August 2,
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $ 81,795 $ 71,731 $178,313 $151,324
Cost of goods sold, including
warehouse, distribution, and
store occupancy costs 58,116 49,744 122,904 104,379
-------- -------- -------- --------
Gross profit 23,679 21,987 55,409 46,945
Store operating, selling, and
administrative expenses 17,076 15,105 34,194 30,056
Depreciation and amortization 1,858 1,796 3,699 3,550
-------- -------- -------- --------
Operating income 4,745 5,086 17,516 13,339
Interest income 88 20 162 43
-------- -------- -------- --------
Income before provision
for income taxes 4,833 5,106 17,678 13,382
Provision for income taxes 1,800 1,864 6,585 4,884
-------- -------- -------- --------
Net income 3,033 3,242 11,093 8,498
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Net Income per common share:
Basic earnings per share $ 0.13 $ 0.14 $ 0.47 $ 0.37
======== ======== ======== ========
Diluted earnings per
share $ 0.13 $ 0.14 $ 0.46 $ 0.36
