Hibbett Sports Inc. reported net sales increased 2.8 percent to $199.3 million in fiscal second quarter ended Aug. 1, 2015, compared with $193.9 million for the 13-week period ended August 2, 2014. Comparable store sales decreased 1.1 percent.
Gross margin slipped to 32.7 percent for the 13-week period ended August 1, 2015, compared with 33.2 percent for the 13-week period ended August 2, 2014. The decline was partially due to markdowns taken early in the quarter to liquidate excess inventory. The Company has since seen positive trends in gross profit as its inventory position has improved. Gross profit was also impacted by store occupancy costs, as these expenses increased as a percentage of net sales due to lower comparable store sales.
Store operating, selling and administrative expenses were 25.2 percent of net sales for the 13-week period ended August 1, 2015, compared with 24.0 percent of net sales for the 13-week period ended August 2, 2014. These expenses were in line with the Company’s original expectations, but were higher as a percentage of net sales mainly due to lower comparable store sales.
Net income for the 13-week period ended August 1, 2015, was $7.0 million compared with $8.4 million for the 13-week period ended August 2, 2014. Earnings per diluted share totaled $0.28 for the 13-week period ended August 1, 2015, compared with $0.32 for the 13-week period ended August 2, 2014.
For the quarter, Hibbett opened 16 new stores, expanded 4 high-performing stores and closed 3 underperforming stores, bringing the store base to 1,014 in 32 states as of August 1, 2015. Estimated square footage for the store base increased 6.2 percent to approximately 5.8 million square feet at August 1, 2015, compared with 5.5 million square feet at August 2, 2014.
Jeff Rosenthal, president and CEO, stated, “Comparable store sales were under expectations for the quarter, and we experienced especially slow sales in the last two weeks of July. As stated in the recent business update, we anticipated the impact from the shift in tax-free weekends for 10 states during this period, but we experienced softness in other states as well. Sales trends in early August have improved, and we feel confident that we have plans in place to continue this improvement going forward.”
Fiscal Year to Date Results
Net sales for the 26-week period ended August 1, 2015, increased 2.9 percent to $469.1 million compared with $455.8 million for the 26-week period ended August 2, 2014. Comparable store sales for the period decreased 1.0 percent.
Gross profit was 35.2 percent of net sales for the 26-week period ended August 1, 2015, compared with 35.7 percent of net sales for the 26-week period ended August 2, 2014.
Store operating, selling and administrative expenses were 21.7 percent of net sales for the 26-week period ended August 1, 2015, compared with 21.0 percent of net sales for the 26-week period ended August 2, 2014.
Net income for the 26-week period ended August 1, 2015, was $34.4 million compared with $36.8 million for the 26-week period ended August 2, 2014. Earnings per diluted share totaled $1.38 for the 26-week period ended August 1, 2015, compared with $1.42 for the 26-week period ended August 2, 2014.
Liquidity and Stock Repurchases
Hibbett ended the second quarter of Fiscal 2016 with $85.3 million of available cash and cash equivalents on the unaudited consolidated balance sheet, no bank debt outstanding and full availability under its $80.0 million unsecured credit facilities.
During the second quarter, the Company repurchased 601,455 shares of common stock for a total expenditure of $27.9 million. Approximately $138.0 million of the total authorization remained for future stock repurchases as of August. 1, 2015.
Fiscal 2016 Outlook
The Company is revising its guidance for the 52 weeks ending January 30, 2016, to earnings per diluted share in the range of $2.80 to $2.90, which compares to previous guidance of earnings per diluted share in the range of $2.95 to $3.04. Comparable store sales are expected to be flat or increase in the low single-digit range for the year, which compares to previous guidance of comparable store sales increasing in the low single-digit range for the year.
| HIBBETT SPORTS, INC. AND SUBSIDIARIES | ||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||
| August 1, 2015 | August 2, 2014 | August 1, 2015 | August 2, 2014 | |||||||||
| Net sales | $ | 199,261 | $ | 193,918 | $ | 469,085 | $ | 455,827 | ||||
| Cost of goods sold, including wholesale, logistics and store occupancy costs | 134,082 | 129,510 | 304,192 | 293,223 | ||||||||
| Gross profit | 65,179 | 64,408 | 164,893 | 162,604 | ||||||||
| Store operating, selling and administrative expenses | 50,181 | 46,625 | 101,951 | 95,577 | ||||||||
| Depreciation and amortization | 4,276 | 4,060 | 8,418 | 7,640 | ||||||||
| Operating income | 10,722 | 13,723 | 54,524 | 59,387 | ||||||||
| Interest expense, net | 65 | 70 | 134 | 144 | ||||||||
| Income before provision for income taxes | 10,657 | 13,653 | 54,390 | 59,243 | ||||||||
| Provision for income taxes | 3,626 | 5,273 | 19,950 | 22,475 | ||||||||
| Net income | ||||||||||||
