Hibbett Sports Inc. (Nasdaq:HIBB) was able to grow net sales 4.6 percent in the third quarter by expanding retail square footage 6.1 percent and eking out 0.6 percent more from its comp store base compared with the third quarter a year ago.

The Birmingham, AL sporting goods retailer reported sales reached $228.3 million in the 13 weeks ended October 31. Its gross margins came in at 36.1 percent, or just 20 basis points below the level reported for the comparable period ended November 1, 2014. Product margin was flat, although store occupancy and logistics costs increased as a percentage of net sales due to the deleveraging effect of lower comparable store sales.

“Sales softened late in the quarter due to significant declines in our
colder weather categories, although footwear remained strong due to
benefits from a strong assortment and an improved in-stock position,”
said President and CEO Jeff Rosenthal. While continued warm weather is expected to dent sales in the fourth quarter, Hibbett’s primary market in the southern U.S. states lends it some protection as it carries less heavy outwear than its national and northern U.S. peers, Rosenthal said on the company’s Nov. 20 conference call.

Store operating, selling and administrative expenses were 21.1 percent of net sales, down 100 basis points thanks primarily to a favorable legal settlement. Net income rose 10.7 percent to $18.7 million, and diluted earnings per share increased 17.9 percent due to a stock buyback that reduced average outstanding shares by 5.9 percent and the a 5 cent bump from the legal settlement.

Hibbett ended the quarter with 1,031 stores in 33 states after opening 20 new stores, expanding one high-performing store and closing three underperforming stores during the quarter. The company opened its first store in the state of New York in the quarter. On October 31, inventory per store was $268,611, up 7.2 percent from Nov. 2, 2014.

The company issued new guidance, which calls for earnings per diluted share to reach $2.87 to $2.94 in the 52 weeks ending Jan. 30, 2016, up from its previous forecast of $2.80 to $2.90. Comparable store sales are expected to be close to flat for the year, which compares to previous guidance of flat to a low single-digit increase.

–Charlie Lunan