By Eric Smith
For a company that admittedly was “late to the ballgame” with implementing all the digital capabilities a retailer should offer its customers in today’s competitive landscape, Hibbett Sports Inc. has certainly made up for lost time.
Just one year ago, on May 1, 2018, the Birmingham, AL-based sporting goods retailer unveiled its new mobile app to help consumers order anything they want at any time and from anywhere, all on their smartphones.
And in October of last year, Hibbett rolled out its Buy Online, Pick Up In Store (BOPIS) and Reserve Online, Pick Up in Store (ROPIS) initiatives that allow customers nationwide to shop their local store on hibbett.com and either reserve items or make a purchase before arriving at their nearest Hibbett Sports location for pickup.
These moves, Hibbett CEO Jeff Rosenthal told SGB for a feature last year on the company’s digital efforts, signaled the right direction for the company, but they were only part of the journey—not the final destination. Especially because Hibbett was playing catch-up with other retailers already in their second, third or even fourth iterations of these platforms.
“You’re never caught up completely because as soon as you think you are, there’s something new, some type of initiative that’s out there,” Rosenthal said at the time. “Now that we have all the tools that we need to continue to compete, that doesn’t mean we stop here. We’ve got to continue to push the envelope and look for other ideas that are out there, and there plenty of other things that we can do.”
Fast forward to Friday’s first-quarter earnings call, and it’s apparent that Hibbett’s insistence on continuing to “push the envelope” is paying off. In a stellar first quarter (more on that below), here are a few digital highlights Hibbett executives shared on Friday morning’s conference call with analysts:
- Online sales grew at a 46 percent comp.
- E-commerce sales represented 8.3 percent of total sales for the first quarter.
- The online sales mix is shifting to full-price items from clearance items.
- Digital (as well as in-store) growth is coming from a mix of existing and new customers.
- Digital growth is driving in-store growth, as evidenced by about 20 percent of BOPIS transactions result in a customer buying something else at the store in addition to the item they came in for.
- In Q1, new members to Hibbett’s loyalty program grew 25 percent year-over-year, with stores growing at 19 percent and the digital growing at 64 percent.
- The number of omnichannel shoppers grew 119 percent year-over-year.
For all the progress Hibbett has made in digital capabilities, however, the company knows it has work to do in this department, such as dealing with freight pressure from fulfilling e-commerce orders.
Mostly, however, it revolves around bringing its newest asset, City Gear—the Memphis, TN-based “city specialty” retailer it bought last year—up to speed digitally.
“Our e-commerce penetration there is very low and we have plans and timelines to quickly advance this business,” Rosenthal said.
Quickly advancing is something Hibbett has pulled off with aplomb lately, but as the retail landscape evolves, the company knows it can’t hope the moves it made over the last year won’t be sufficient. Hibbett also knows it can’t be late to the ballgame ever again.
“With City Gear and Hibbett, we believe that we can win for many years to come,” Rosenthal said. “Although Hibbett has made up ground on its digital business and its omnichannel capabilities, we are committed to continuous improvement and innovation. In retail, the bar continues to be raised on customer expectations. Hibbett has more robust enhancements in the pipeline over the next year that will create experiences to meet and exceed our customers’ expectations.
“We will continue to innovate both digitally and in our stores, and we will be testing a new store concept in the fall for Hibbett. We also are working hard on speeding up on innovations on how to get products to consumers more efficiently.”
The digital advancements came in a period that saw Hibbett blow past Wall Street’s consensus target and raise its outlook for the year.
The company reported net income for the first quarter ended May 4 of $27.4 million, up from net income of $21.5 million for the first quarter ended May 5, 2018. Excluding non-recurring costs, non-GAAP net income for Q1 was $29.8 million. Earnings per diluted share were $1.48, up from earnings per diluted share of $1.12 for the year-ago period.
Excluding non-recurring costs, non-GAAP earnings per diluted share were $1.61 for the first quarter, easily beating Wall Street’s consensus target of $1.32.
Hibbett also reported net sales for the first quarter increased 25 percent to $343.3 million, including $59.4 million for City Gear, compared with $274.7 million for the year-ago quarter. Sales topped Wall Street’s consensus target of $327 million.
Comparable store sales increased 5.1 percent, well ahead of Wall Street’s consensus target of a 0.7 percent decline. Comparable store sales did not include sales from City Gear, and they won’t until the fourth quarter of Fiscal 2020. Looking at product trends for Hibbett in Q1, strength in footwear and sneaker-connected apparel & accessories continued to offset softer sales in licensed products and team sports.
Category trends for Hibbett include:
- Footwear business increased in the high-single digits and posted the seventh consecutive quarter of comp sales gains. Men’s was up double digits, women’s and kids were up mid-single digits.
- Apparel grew in the low-single digits. Men’s was up in the high-single digits, women’s was up in the low-single digits and kids was down in the low-single digits.
- Accessories grew in the high-single digits.
- License business decreased in the high-single digits.
- Team sports business dipped in the mid-single digits; strong results in softball, volleyball and track were offset by declines in other categories, including football, baseball bats and inflatables.
Other notes from Hibbett’s first-quarter earnings report include the company opening three new stores, rebranding two Hibbett stores to City Gear stores, expanding one high-performing store and closing 24 underperforming stores. Hibbett’s store base, as of May 4, is 1,144 locations in 35 states.
Wall Street reacted positively to the outstanding quarter. Shares of Hibbett closed the day up $4.14, or 20.9 percent, to $23.96.
Meanwhile, plenty of change is happening at Hibbett, with last quarter’s announcement that Rosenthal was retiring and the subsequent news that CFO Scott Bowman had resigned to take a job at Dave & Buster’s Entertainment Inc.
Bowman was replaced on an interim basis by Christine Skold, who handled financial reporting duties on Friday’s earnings call. But neither executive opening, including the search process, was mentioned on the call.
Hibbett raised its outlook for the rest of the year. The company now expects comp store sales in the range of 0.5 percent to 2 percent, up from the previously expected range of (1) percent to 1 percent.
It also raised earnings per diluted share guidance to a range of $1.70 to $1.85 from the previous range of $1.50 to $1.70, and non-GAAP earnings per diluted share guidance to a range of $2 to $2.15 from the previous range of $1.80 to $2.
Photo courtesy Hibbett Sports Inc.