While the balance of the sporting goods channel is working their way back to profitability after a tough Q2, Hibbett Sporting Goods just kept the momentum going, even indicating a sharp uptick in business from the impact of Hurricane Katrina. While the retailer did lose a few stores from the storm – and one will not re-open – they also benefited from the location of many of their stores in the region in towns where many people from New Orleans and Southern Mississippi relocated after the storm.

HIBB posted a 34% increase in the bottom line on a 20% sales increase. Comps sales were up 8.4% for the period on 5% less comp inventory. (see chart page 3)

Company Chairman and CEO Mickey Newsome said they had 28 stores affected by Katrina, but those stores “came back very strong” after reopening, adding about 2% to 3% to the comp sales gain for the fiscal third quarter ended October 29. Company-wide comps were up 7% in August and increased 8% in September and were said to be even stronger in October.

Excluding the positive impact of Hurricane Katrina, Hibbett comps were up 5.5% for the quarter.

Active apparel was up in double-digits, led by performance product from adidas, Under Armour, and Nike. Men’s, women’s, and kid’s all comped positive. Enyce and Dickies were again called out on the urban end of the apparel business. The licensed apparel business continued to be a drag, comping down in double-digits for the period, but the college business was described as “flat” for the period. The women’s college business has been “very good across the board,” according to Jeff Rosenthal, VP of merchandising. He said losses came as expected in MLB and NBA apparel, but said the NFL was unexpectedly “performing very well,” comping up in single-digits.

Footwear strengthened even more during the period, posting a double-digit gain, with men’s women’s, kid’s, and cleated all comping positive.

Team sports was up in single-digits, with all categories contributing to the gain. Rosenthal called out Shock Doctor and McDavid as key performers here.

Fitness was the lone declining category, reversing the positive trend in Q2 to post a low-single-digit decline for the period. Rosenthal feels they can move positive again going into the holiday period with better product to anniversary the Ab Lounger numbers from last year.

Gross margins remained essentially flat to last year as product margins decreased slightly on a change in mix to lower margin footwear sales that outpaced other high margin categories. HIBB also sped up the liquidation cycle a bit to put them in very good shape to take advantage of opportunity buys in the fourth quarter. They wisely used the 28 stores affected by the storm as key distribution points for clearance goods.

Hibbett opened 19 new stores and closed one store during the quarter, bringing the store base to 526 in 22 states at quarter-end. The company plans to open a net of approximately 65 to 70 new stores this year, including a net of approximately 21 to 26 stores in the fourth quarter.

HIBB expects EPS in the range of 27 cents to 29 cents per diluted share in Q4 on a comparable store sales increase of 3.0% to 5.0%. Mid-point of the EPS range would net a 21.7% increase in earnings for the period. Full year earnings are seen in the 96 cents to 98 cents per diluted share range on a mid-single-digit increase in comp store sales.


>>> Last quarter, Mr. Newsome saw an opportunity in higher gasoline prices; this quarter they benefited from a hurricane… Sounds like the glass is always half full in Birmingham…