Hibbett Sports Inc. reported net sales for the fourth quarter ended January 28, 2017, increased 0.5 percent to $246.9 million compared with $245.7 million for the 13-week period ended January 30, 2016.

Comparable store sales decreased 2.2 percent. Apparel and equipment both experienced declines in comparable store sales, while footwear continued to show stronger sales with a mid-single digit increase.

Gross profit was 33.0 percent of net sales for the 13-week period ended January 28, 2017, compared with 34.8 percent for the 13-week period ended January 30, 2016. The decrease was mainly due to markdowns taken to reduce inventory, a negative effect of product mix due to higher footwear sales, and de-leverage of logistics and store occupancy expenses associated with lower comparable store sales.

Store operating, selling and administrative expenses were 23.2 percent of net sales for the 13-week period ended January 28, 2017, compared with 21.8 percent of net sales for the 13-week period ended January 30, 2016. The increase was mainly due to de-leverage associated with lower comparable store sales and continued investments in the company’s omni-channel initiative.

Net income for the 13-week period ended January 28, 2017, was $12.1 million compared with $17.4 million for the 13-week period ended January 30, 2016. Earnings per diluted share was 54 cents a share for the 13-week period ended January 28, 2017, compared with $0.76 for the 13-week period ended January 30, 2016.

On February 13, Hibbett warned that it expected EPS in the range of  53 to 55 cents in the quarter. When it reported third-quarter earnings on November 18, the company guided earnings to be in the range of 64 to 70 cents a share.

Jeff Rosenthal, president and chief executive officer, stated, “Results did not meet our expectations for the quarter, although we were pleased with continued strength in our footwear business. The decline in comparable store sales was driven mainly by softer sales in apparel and equipment. Licensed products accounted for much of the weakness in apparel, while equipment was negatively impacted by weakness in team sports, fitness and accessories.

“Looking forward, we are excited about the progress we are making on our major initiatives, and expect them to have a favorable impact on revenue growth in Fiscal 2018 and beyond. Our store-to-home capability is scheduled to begin rollout in the first quarter of this year, which will enable us to use our entire chain to locate an item and send it directly to the customer’s home. We are also on track to launch our e-commerce site in the back half of Fiscal 2018, which will be fully integrated with our stores, and will include an enriched customer loyalty program. Once implemented, we believe these initiatives will provide an outstanding customer experience, and will position us well to drive long-term growth and shareholder value.”

Fiscal 2017 Results

Net sales for the 52-week period ended January 28, 2017, increased 3.2 percent to $973.0 million compared with $943.1 million for the 52-week period ended January 30, 2016. Comparable store sales increased 0.2 percent.

Gross profit was 34.8 percent of net sales for the 52-week period ended January 28, 2017, compared with 35.3 percent for the 52-week period ended January 30, 2016.

Store operating, selling and administrative expenses were 22.9 percent of net sales for the 52-week period ended January 28, 2017, compared with 21.6 percent of net sales for the 52-week period ended January 30, 2016.

Net income for the 52-week period ended January 28, 2017, was $61.1 million compared with $70.5 million for the 52-week period ended January 30, 2016. Earnings per diluted share was $2.72 for the 52-week period ended January 28, 2017, compared with $2.92 for the 52-week period ended January 30, 2016.

For the year, Hibbett opened 65 new stores, expanded 8 high performing stores and closed 31 underperforming stores, bringing the store base to 1,078 in 35 states as of January 28, 2017.

Liquidity and Stock Repurchases

Hibbett ended the fourth quarter of Fiscal 2017 with $39.0 million of available cash and cash equivalents on the consolidated balance sheet, no bank debt outstanding and full availability under its $80.0 million unsecured credit facilities.

During the fourth quarter, the company repurchased 324,200 shares of common stock for a total expenditure of $11.4 million. Approximately $257.9 million of the total authorization remained for future stock repurchases as of January 28, 2017.

Fiscal 2018 Outlook

The company provided the following guidance for Fiscal 2018, which will have 53 weeks versus 52 weeks in Fiscal 2017:

  • Earnings per diluted share in the range of $2.65 to $2.85, including an increase of approximately $0.09 to $0.11 per diluted share due to the 53rd week.
  • An estimated negative impact of $0.03 to $0.04 per diluted share due to the company’s omni-channel initiative. This includes additional SG&A and depreciation expenses, partially offset by additional revenue.
    Increase in comparable store sales in the low-single digit range.
  • Approximately 50 to 60 new store openings with approximately 25 to 35 store closures.
  • Relatively flat gross margin rate compared to Fiscal 2017.
  • Capital expenditures of approximately $25 million to $30 million.
  • Share buyback of approximately $45 million to $55 million.