Hibbett Inc. said fourth-quarter results will come in below guidance due to lower traffic and transaction counts in the back half of the quarter. EPS is now expected in the range of $1.18 to $1.25 against guidance of $1.85 to $2.05. Same-store sales decreased 1.0 percent, below guidance of positive high single-digit comp sales.

Mike Longo, president and chief executive officer, said, “Sales results in the fourth quarter fell short of our previous expectations. Ongoing supply chain challenges, inflation concerns for the consumer and increased COVID-19 cases resulted in lower traffic and transaction counts in the back half of the quarter. Despite these headwinds, we are confident in the resilience of our omnichannel business model, the compelling merchandise assortment that is difficult to find elsewhere in our underserved communities and the customer-centric focus of over 11,000 team members in our stores, distribution facilities and Store Support Center. We are hopeful the previously mentioned factors negatively impacting traffic and transaction volume will begin to subside in the coming months. Our company is much better equipped to manage these challenges than it was prior to the pandemic. As a result, our outlook remains positive, and we expect to continue delivering strong sales and profit performance in the years to come.”

Longo further commented, “We also want to point out our impressive results over the last 24 months. During that time, the company generated a nearly 43 percent increase in annual sales volume, an increase in GAAP earnings per diluted share of over 600 percent and an approximate 380 percent increase in adjusted diluted earnings per share. None of this would have been possible without the hard work and dedication of our team. While we did not hit our goal in this quarter, we are very proud of these results and remain confident in our future.”

Fourth Quarter Results
Net sales for the 13-week period ended January 29, 2022, increased 1.7 percent to $383.3 million compared with $376.8 million for the 13-week period ended January 30, 2021, and reflected a two-year increase of 22.5 percent in comparison to the $313.0 million for the 13-week period ended February 1, 2020. Compared to the 13-week period ended January 30, 2021, comparable sales decreased 1.0 percent which is below its guidance of positive high single-digit comp sales. After a strong sales trend leading up to the Christmas holiday, traffic and transactions declined in the back half of the quarter. Hibbett said it believes disruption in the supply chain, most notably in the footwear category, coupled with consumer concern over inflation and an increase in COVID-19 cases driven by the Omicron variant were significant contributors to the sales shortfall.

Brick-and-mortar comparable sales decreased 1.6 percent and e-commerce comparable sales increased 1.8 percent. E-commerce represented 17.1 percent of total net sales for both the 13-week period ended January 29, 2022 and the 13-week period ended January 30, 2021. On a two-year basis, comparable sales increased 20.7 percent versus the 13-week period ended February 1, 2020. Brick and mortar comparable sales increased 15.9 percent and e-commerce sales grew 48.1 percent over this two-year period.

Consistent with previous guidance, gross margin for the 13-week period ended January 29, 2022, is expected to be lower as a percent of net sales than the 13-week period ended January 30, 2021, due to shifting launch schedules, additional promotional activity, higher freight costs and deleverage in store occupancy costs resulting from the negative comp sales performance.

Store operating, selling and administrative (SG&A) expenses as a percent of net sales are expected to be lower for the 13-week period ended January 29, 2022, than the comparable 13-week period ended January 30, 2021. This is also consistent with previous guidance. The expected SG&A percentage improvement is the result of more efficient management of wage and related employee benefit expenses and lower impairment charges partially offset by increased costs of advertising, professional services, transaction fees and back-office infrastructure expenses.

Net income per diluted share for the 13-week period ended January 29, 2022, is expected to be in the range of $1.18 to $1.25, below the previous guidance of $1.85 to $2.05 per diluted share. This range of $1.18 to $1.25 per diluted share compares to $1.39 per diluted share for the 13-week period ended January 30, 2021, prior to adjustments related to the acquisition of City Gear. As there were no adjustments in the fourth quarter of Fiscal 2022, the range of $1.18 to $1.25 per diluted share for the 13-week period ended January 29, 2022, compares to adjusted diluted earnings per share for the 13-week period ended January 30, 2021, of $1.40.

Full Year Results
Net sales for the 52-week period ended January 29, 2022, increased 19.1 percent to $1.69 billion compared with $1.42 billion for the 52-week period ended January 30, 2021, and increased 42.8 percent over two years from $1.18 billion in the 52-week period ended February 1, 2020. Comparable sales increased 17.4 percent, consistent with its most recent guidance, versus the 52-week period ended January 30, 2021. Brick and mortar comparable sales were up 21.4 percent and were nominally offset by a decline in e-commerce sales of 1.6 percent. E-commerce sales represented 13.8 percent of total sales in the 52-week period ended January 29, 2022, compared to 16.7 percent of total sales in the 52-week period ended January 30, 2021. Over two years, comparable sales increased 43.7 percent versus the 52-week period ended February 1, 2020. Brick and mortar comparable sales increased 37.9 percent and e-commerce sales grew 89.0 percent over this two-year period.

Gross margin for the 52-week period ended January 29, 2022, as a percent of net sales, is expected to be favorable to the 52-week period ended January 30, 2021, consistent with its guidance. This is the result of historical margin performance in the first half of the year driven by higher sell-through, a low promotional environment and a greater mix of in-store sales which carry a higher margin than e-commerce sales. The expected gross margin percentage for Fiscal 2022 is expected to be well above results noted in the fiscal years prior to the pandemic.

As noted in its most recent guidance, SG&A expenses as a percent of net sales are expected to be lower for the 52-week period ended January 29, 2022, than the comparable 52-week period ended January 30, 2021. The expected SG&A percentage improvement is the result of wage and related employee benefit expense leverage and lower impairment charges partially offset by increased costs of advertising and professional services.

Net income per diluted share for the 52-week period ended January 29, 2022, is expected to be in the range of $11.15 to $11.20, below its previous guidance of $11.70 to $11.90 per diluted share. This range of $11.15 to $11.20 per diluted share compares to $4.36 per diluted share for the 52-week period ended January 30, 2021, prior to adjustments related to COVID-19 and the acquisition of City Gear. As there were no adjustments in the current year, the range of $11.15 to $11.20 per diluted share for the 52-week period ended January 29, 2022, compares to adjusted diluted earnings per share for the 52-week period ended January 30, 2021, of $6.12.

Full Year Fiscal 2023 Outlook
Hibbett said, “We expect to face a number of business and economic challenges in the 52-week period ending January 28, 2023 (Fiscal 2023). This includes ongoing supply chain disruption, a lack of stimulus and unemployment benefits, inflation, wage pressures and a more cautious consumer. These factors contribute to the complexity and volatility in forecasting Fiscal 2023 results.”

  • Net sales are expected to be relatively flat in dollars compared to its Fiscal 2022 results. This implies comparable sales in the negative low-single-digits.
  • Net new store growth is expected to be in the range of 30-to-40 stores.
  • As a result of supply chain challenges, a higher mix of e-commerce sales, increased promotional environment and inflationary pressures, gross margin as a percent of net sales is anticipated to decline by approximately 130 to 160 basis points compared to expected Fiscal 2022 results. At this level, gross margin as a percent of sales is expected to be well above pre-pandemic levels.
  • SG&A as a percent of net sales is estimated to increase by 70 to 100 basis points in comparison to expected Fiscal 2022 results due to wage inflation, deleverage of fixed costs driven by relatively flat sales expectations and annualization of back-office infrastructure investments in Fiscal 2022. At this level, SG&A as a percent of sales is expected to remain below pre-pandemic levels.
  • Operating profit is expected to be in the low double digits as a percent of sales.
  • Diluted earnings per share are anticipated to be in the range of $9.75 – $10.50.

Hibbett will report full fourth-quarter results on March 4.

Photo courtesy Hibbett