Hibbett, Inc. reported fourth-quarter earnings declined 23.9 percent as same-store sales dipped 1.0 percent. Results and guidance were in line with an update given on February 18.

Mike Longo, president and CEO, stated, “As we previously communicated, fourth-quarter comparable sales decreased 1.0 percent while full-year comparable sales increased 17.4 percent versus the prior year. We have also achieved significant growth on a two-year basis as fourth-quarter comparable sales have grown nearly 21 percent and full year comparable sales have increased by almost 44 percent versus the same periods in Fiscal 2020. Although the second half of the fourth quarter was weaker than anticipated due to ongoing supply chain challenges, inflation concerns for the consumer and increased COVID-19 cases, we believe these negative factors that impacted traffic and transaction volume from late December through January will begin to subside in the coming months.”

Longo continued, “The rapid growth of our business over the last two fiscal years has been accompanied by significant investments in customer acquisition and retention, new store growth, improving existing store productivity, enhancing omnichannel features and functionality, optimizing our delivery capabilities and modernizing the back-office infrastructure. We believe this upgraded business model differentiates us from our competition and is more capable of sustained profitable growth than prior to the pandemic. Our vendor relationships remain strong, allowing us to offer a unique assortment of difficult to find products in the communities we serve. In addition, we have approximately 11,000 team members across our organization committed to providing every consumer with an outstanding experience. We are excited to continue building our Hibbett and City Gear brands and expect to continue delivering strong sales and profitability results in the years to come.”

Fourth Quarter Results
Net sales for the 13-weeks ended January 29, 2022, increased 1.7 percent to $383.3 million compared with $376.8 million for the 13-weeks ended January 30, 2021, and reflected a two-year increase of 22.5 percent in comparison to the $313.0 million for the 13-weeks ended February 1, 2020. Compared to the 13-weeks ended January 30, 2021, comparable sales decreased 1.0 percent. On February 18, Hibbett said it expected a same-store sales decline of 1.0 percent compared with previous guidance of positive high single-digit comp sales.

After a strong sales trend leading up to the Christmas holiday, traffic and transactions declined in the back half of the quarter. Hibbett said it believes disruption in the supply chain, most notably in the footwear category, coupled with consumer concern over inflation and an increase in COVID-19 cases driven by the Omicron variant were significant contributors to the sales shortfall.

Brick-and-mortar comparable sales decreased 1.6 percent and e-commerce comparable sales increased 1.8 percent. E-commerce sales represented 17.1 percent of total net sales for both the 13-weeks ended January 29, 2022, and the 13-weeks ended January 30, 2021. On a two-year basis, comparable sales increased 20.7 percent versus the 13-weeks ended February 1, 2020. Brick and mortar comparable sales increased 15.9 percent and e-commerce sales grew 48.1 percent over this two-year period.

Gross margin was 35.1 percent of net sales for the 13-weeks ended January 29, 2022, compared with 37.1 percent of net sales for the 13-weeks ended January 30, 2021. The approximate 200 basis point decline was primarily due to shifting launch schedules, additional promotional activity, higher freight costs and deleverage in store occupancy costs resulting from the negative comp sales performance.

Store operating, selling and administrative (SG&A) expenses as a percent of net sales were 26.4 percent of net sales for the 13-weeks ended January 29, 2022, compared with 26.8 percent of net sales for the 13-weeks ended January 30, 2021. This slight improvement is the result of more efficient management of wage and related employee benefit expenses and lower impairment charges partially offset by increased costs of advertising, professional services, transaction fees, and back-office infrastructure expenses. Excluding certain City Gear acquisition and integration expenses that occurred during the 13-weeks ended January 30, 2021, SG&A expenses were 26.4 percent of net sales for the 13-weeks ended January 29, 2022, compared to 26.7 percent of net sales for the 13-weeks ended January 30, 2021.

Net income for the 13-weeks ended January 29, 2022, was $17.7 million, or $1.25 per diluted share, compared to $23.9 million, or $1.39 per diluted share for the 13-weeks ended January 30, 2021. As there were no adjustments in the fourth quarter of Fiscal 2022, net income of $17.7 million, or $1.25 per diluted share for the 13-weeks ended January 29, 2022, compared to adjusted net income of $24.1 million, or $1.40 per diluted share for the 13-weeks ended January 30, 2021. On February 18, Hibbett said it said expected earnings in the range of $1.18 to $1.25 against previous guidance of $1.85 to $2.05.

During the fourth quarter, Hibbett opened 12 new stores and closed two stores, bringing the store base to 1,096 in 35 states as of January 29, 2022. Included in open and closed stores is one Sports Additions store rebranded to a Hibbett store.

Hibbett ended the fourth quarter of Fiscal 2022 with $17.1 million of available cash and cash equivalents on its unaudited condensed consolidated balance sheet. As of January 29, 2022, Hibbett had no debt outstanding and full availability under its $100.0 million unsecured credit facility.

Inventory at the end of the fourth quarter of Fiscal 2022, was $221.2 million, a 9.5 percent increase compared to the prior-year fourth quarter, although continuing supply chain constraints have not allowed us to get inventory back to ideal levels.

Capital expenditures during the 13-weeks ended January 29, 2022, were $27.3 million compared to $14.0 million in the 13-weeks ended January 30, 2021. The current quarter capital expenditures were mainly related to store development activities in addition to corporate infrastructure projects.

During the 13-weeks ended January 29, 2022, the Company repurchased 417,741 shares of common stock for a total expenditure of $29.6 million, including 850 shares acquired from holders of restricted stock unit awards (“RSUs”) to satisfy tax withholding requirements of $0.1 million. The Company also paid a quarterly dividend equal to $0.25 per outstanding common share that resulted in a cash outlay of $3.3 million.

Fiscal Year Results
Net sales for the 52-weeks ended January 29, 2022, increased 19.1 percent to $1.69 billion compared with $1.42 billion for the 52-weeks ended January 30, 2021, and increased 42.8 percent over two years from $1.18 billion in the 52-weeks ended February 1, 2020. Comparable sales increased 17.4 percent, versus the 52-weeks ended January 30, 2021. Brick-and-mortar comparable sales were up 21.4 percent and were nominally offset by a decline in e-commerce sales of 1.6 percent. E-commerce sales represented 13.8 percent of total sales in the 52-weeks ended January 29, 2022, compared to 16.7 percent of total sales in the 52-weeks ended January 30, 2021. Over two years, comparable sales increased 43.7 percent versus the 52-weeks ended February 1, 2020. Brick and mortar comparable sales increased 37.9 percent and e-commerce sales grew 89.0 percent over this two-year period.

Gross margin was 38.2 percent of net sales for the 52-weeks ended January 29, 2022, compared with 35.5 percent of net sales for the 52-weeks ended January 30, 2021. This is the result of historically high margin performance in the first half of the year driven by higher sell-through, a low promotional environment and a greater mix of in-store sales, which carry a higher margin than e-commerce sales. Excluding adjustments to its non-cash inventory reserves in the 52-weeks ended January 30, 2021, the current year gross margin of 38.2 percent is comparable to the adjusted gross margin of 35.8 percent in the prior year.

SG&A expenses, including goodwill impairment in the prior year, were 22.6 percent of net sales for the 52-weeks ended January 29, 2022, compared with 26.5 percent of net sales for the 52-weeks ended January 30, 2021. This improvement is the result of wage and related employee benefit expense leverage and lower impairment charges partially offset by increased costs of advertising and professional services. Excluding certain City Gear acquisition and integration expenses and pandemic related impairment and valuation costs that occurred in the 52-weeks ended January 30, 2021, SG&A expenses were 22.6 percent of net sales for the 52-weeks ended January 29, 2022, compared with 23.7 percent of net sales for the 52-weeks ended January 30, 2021.

Net income for the 52-weeks ended January 29, 2022, was $174.3 million, or $11.19 per diluted share, compared to $74.3 million, or $4.36 per diluted share for the 52-weeks ended January 30, 2021, prior to adjustments related to COVID-19 and the acquisition of City Gear. As there were no adjustments in the current year, net income for the 52-weeks ended January 29, 2022, of $174.3 million, or $11.19 per diluted share, compares to adjusted net income of $104.3 million, or $6.12 per diluted share for the 52-weeks ended January 30, 2021.

During Fiscal 2022, Hibbett opened 36 new stores, which included one Sports Additions store rebranded as a Hibbett store, and closed seven stores. Store closures were composed of underperforming stores and one rebranded store.

Capital expenditures during the 52-weeks ended January 29, 2022, were $71.2 million compared to $34.8 million in the 52-weeks ended January 30, 2021. Current year capital expenditures were mainly related to store development activities (new store units, remodels, expansions and relocations) in addition to corporate infrastructure projects.

During the 52-weeks ended January 29, 2022, the Company repurchased 3,416,846 shares of common stock for a total expenditure of $271.1 million, including 46,095 shares acquired from holders of RSUs to satisfy tax withholding requirements of $3.3 million. The Company also initiated a recurring quarterly dividend earlier in the year that resulted in a cash outlay of $10.9 million.

Full Year Fiscal 2023 Outlook
Hibbett said it expects to face a number of business and economic challenges in the 52-weeks ending January 28, 2023 (Fiscal 2023). This includes ongoing supply chain disruption, a lack of stimulus and unemployment benefits, inflation, wage pressures and a more cautious consumer. These factors contribute to the complexity and volatility in forecasting Fiscal 2023 results.

Considering the factors noted above, Hibbett said it is providing an overview of its estimated GAAP results for Fiscal 2023.

Sales Guidance

  • Total net sales are expected to be relatively flat in dollars compared to its Fiscal 2022 results. This implies comparable sales are expected to be in the negative low-single digits for the full year. Brick and mortar comp sales are expected to be in the negative low-single-digit range while e-commerce revenue is anticipated to be in the positive mid-single-digit range.
  • It is anticipated that comparable sales will be in the negative low-teen range in the first half of the year with an expectation of positive high-single-digit comp sales in the second half of the year. Sales forecasts are based on assumptions that as the year progresses, supply chain constraints ease, the timing of inventory receipts becomes more consistent and predictable and its overall inventory position strengthens.
  • Net new store growth is expected to be in the range of 30 to 40 stores with new units relatively evenly spread throughout the year.

Additional Guidance

  • As a result of ongoing supply chain challenges, a higher mix of e-commerce sales, an increased promotional environment, inflationary pressures and some deleverage of store occupancy costs, gross margin as a percent of net sales is anticipated to decline by approximately 130 to 160 basis points compared to Fiscal 2022 results. This expected full year gross margin range of 36.6 percent to 36.9 percent as a percent of net sales is above pre- andemic levels. Hibbett said it expects gross margin results in comparison to the prior year will become more favorable as the year progresses.
  • SG&A as a percent of net sales is expected to increase by 70 to 100 basis points in comparison to Fiscal 2022 results due to wage inflation, deleverage of fixed costs driven by relatively flat sales expectations and annualization of back-office infrastructure investments in Fiscal 2022. The expected full year SG&A expense range of 23.3 percent to 23.6 percent as a percent of net sales is below pre-pandemic levels. Hibbett said it expects the year-over-year quarterly SG&A comparisons will become less challenging in the back half of the year due to an expectation of an improving inventory and sales environment.
  • Operating profit is expected to be in the low double-digit range as a percent of sales, also above pre-pandemic levels.
  • Diluted earnings per share are anticipated to be in the range of $9.75- $10.50 using an estimated full year tax rate of 24.5 percent and an estimated weighted average diluted share count of 13.5 million.
  • Capital expenditures are anticipated to be in the range of $60to $70 million dollars with a focus on new store growth, remodels and additional technology and infrastructure investments.
  • Hibbett’s capital allocation strategy continues to include share repurchases and recurring quarterly dividends in addition to the capital expenditures noted above.