Hibbett Sports, Inc. net sales increased 4.6 percent to $228.3 million in the third quarter ended Oct. 31 on a 0.6 percent increase in comparable store sales compared with the third quarter a year ago.
The Birmingham, AL sporting goods retailer reported gross margin reached 36.1 percent for the 13-week period, compared with 36.3 percent of net sales for the 13-week period ended Nov. 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.
Store operating, selling and administrative expenses were 21.1 percent of net sales for the 13-week period ended Oct. 31, 2015, compared with 22.1 percent of net sales for the 13-week period ended Nov. 1, 2014. These expenses were lower as a percentage of net sales mainly due to a favorable legal settlement.
Net income for the 13-week period ended Oct. 31, 2015, was $18.7 million compared with $16.9 million for the 13-week period ended Nov. 1, 2014. Earnings per diluted share totaled $0.79 for the 13-week period ended Oct. 31, 2015, compared with $0.67 for the 13-week period ended Nov. 1, 2014. The impact of the favorable legal settlement contributed $0.05 per diluted share to the 13-week period ended Oct. 31, 2015.
“We were very pleased with our back-to-school sales, our margin performance and expense controls, and are encouraged by the great progress we are making with our merchandising initiatives,” said President and CEO Jeff Rosenthal. “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. Looking forward, we believe that our ongoing improvements in merchandise strategies, execution and replenishment capabilities have us well-positioned for the holiday season.”
For the quarter, Hibbett opened 20 new stores, expanded one high performing store and closed three underperforming stores, bringing the store base to 1,031 in 33 states as of Oct. 31, 2015. The company also opened its first store in the state of New York in the quarter. Estimated square footage for the store base increased 6.1 percent to approximately 5.9 million square feet at Oct. 31, 2015, compared with 5.6 million square feet at Nov. 1, 2014.
Liquidity and Stock Repurchases
Hibbett ended the third quarter of Fiscal 2016 with $45.5 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 third quarter, the company repurchased 1,341,170 shares of its common stock for a total expenditure of $50.5 million. Approximately $87.5 million of the total authorization remained for future stock repurchases as of Oct. 31, 2015. On Nov. 19, 2015, the Board of Directors of the company authorized a new Stock Repurchase Program (Program) of $300.0 million expiring on February 2, 2019. Effective immediately, the new Program replaces the existing authorization that was due to expire on January 30, 2016.
Fiscal 2016 Outlook
The company is updating its guidance for the 52 weeks ending Jan. 30, 2016, to earnings per diluted share in the range of $2.87 to $2.94 from a previously reported range 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.
|HIBBETT SPORTS, INC. AND SUBSIDIARIES|
|Unaudited Condensed Consolidated Statements of Operations|
|(Dollars in thousands, except per share amounts)|
|Thirteen Weeks Ended||Thirty-Nine Weeks Ended|
|Cost of goods sold, including wholesale, logistics and store occupancy costs||145,949||139,171||450,140||432,394|
|Store operating, selling and administrative expenses||48,255||48,202||150,206||143,778|
|Depreciation and amortization||4,238||4,136||12,656||11,777|
|Interest expense, net||67||73||201||216|
|Income before provision for income taxes||29,792||26,739|